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Coronavirus: Restaurants, bars operating at almost 40% sales loss. Can they recover?

Click to play video 'Staying safe while dining out in the age of COVID-19' Staying safe while dining out in the age of COVID-19
Staying safe while dining out in the age of COVID-19

Restaurants and bars were hit especially hard during the country’s economic shutdown to fight the novel coronavirus, according to a new Statistics Canada report.

While parts of the economy are now reopening, experts say social distancing may dash any hopes restaurateurs have for a quick recovery.

The report, which was released on Wednesday, found 56 per cent of food and drinking service respondents said their venues were closed at some point in April, while 41 per cent reported being closed for the entire month.

Read more: Restaurants are set to reopen, but your meal will come with a side of COVID-19 rules

Full-service restaurants across the country took the brunt of the fallout at a 57.6 per cent loss in sales, while limited-service restaurants that were able to offer take-out and delivery options saw a 22.8 per cent drop in sales.

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The federal government has helped a bit. Its Canada Wage Subsidy program chips in up to 75 per cent of employee wages for up to 24 weeks, although it is expected to end on Aug. 29.

It’s a “bit of a conundrum” for restaurateurs, said David Soberman, Canadian National Chair and professor at the University of Toronto Rotman School of Management.

A restaurant is the one place a person can’t don a mask full-time, he said, and even with extra support, social distancing measures could dash any hope of recovery in the long run.

Click to play video 'B.C. bars, pubs and restaurants need help to survive limited reopening' B.C. bars, pubs and restaurants need help to survive limited reopening
B.C. bars, pubs and restaurants need help to survive limited reopening

“You’re never going to make up for the lost sales. But what you’re hoping is that your level of business will eventually return to something like what it was before the pandemic,” he said.

“Even if restaurants are able to recuperate and start generating revenues again, it’s unlikely that any time soon they’re going to be able to generate the same revenues that they were generating before the pandemic.”

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Coming out of the pandemic, Soberman said many restaurants will have to operate differently.

“If restaurants have to reduce capacity in order to satisfy social distancing guidelines, then they may be producing less food,” he said, which could mean reducing kitchen and serving staff, smaller seating capacities and shorter menus in order to cover rent and utilities until they recover.

Read more: Summer patios beckon, but thanks to COVID-19, they won’t be quite the same

“If you’ve done all that, then the question is: are you still generating enough business to cover the fixed costs?”

Bars and nightclubs took on the most substantial losses at 79.1 per cent, StatCan reported. They found 89 per cent of venues without food options were closed at some point in April, while 79 per cent have remained closed for the entire month.

“Across the country, dining rooms were closed for the entire month of April, with take-out and delivery being the only options,” the report read.

“Nearly two-thirds (65 per cent) of full-service restaurants were closed for part of April, while almost half (47 per cent) were closed for the entire month.”

Click to play video 'The impact of COVID-19 on Canadian restaurants' The impact of COVID-19 on Canadian restaurants
The impact of COVID-19 on Canadian restaurants

The report said food contractors and caterers also saw a severe drop of 59.5 per cent of sales while schools, businesses, flights, sporting events, concerts remained closed and conferences and weddings were cancelled.

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“More than half (60 per cent) of special food services were reported being closed in April, while roughly half (49 per cent) reported being closed for the entire month,” wrote StatCan.

Restaurants Canada vice president Mark von Schellwitz said the numbers were “nothing surprising,” but that it would be a “long road to recovery” for many in the industry.

Based on the agency’s modelling, Schellwitz said the average restaurateur will take between 17 and 35 months to get into a positive cash flow situation.

Read more: Can we really socialize again? How to do it safely

Last year, he said Restaurants Canada was predicting roughly $97 billion in foodservice sales. Now, he said they’re anticipating a drop of as much as $44.8 billion.

“Our members are saying (they’re) going to need ongoing government support from all levels of government in order to be able to be viable and hire staff back as a result of COVID-19 restrictions,” said Schellwitz.

“Labour costs, commercial tenant eviction, protection and rent relief and help with cash flow and those rising debt levels are ways that governments can help us survive this crisis and get through the other side.”

Many restaurants will also incur additional costs when they reopen in order to follow new sanitation and personal hygiene protocols.

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Click to play video 'COVID-19’s impact on the hospitality industry' COVID-19’s impact on the hospitality industry
COVID-19’s impact on the hospitality industry

Jeff Carefoote, owner of the Amsterdam Brewery Company in Toronto, has two of those restaurants.

He told Global News he reopened the brewhouse on Wednesday after 15 weeks of being closed due to COVID-19 restrictions. On top of only being able to operate at a 25 per cent capacity, Carefoote said the Toronto restaurant was footing the bill for personal protective equipment for all of its current employees, as well as extra cleaning supplies and wash monitoring.

While the company is normally able to employ 500 staff members during the summer, he said it currently operates with 100.

“It’s a huge blow,” said Carefoote. “But we have done everything we possibly can to make it a safe environment. It may affect the experience a little bit, but we think it’s the right thing to do. We want people to feel safe.”

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Read more: ‘You can’t live off 4 customers a day’: Toronto restaurateur reveals stark reality of reopening

There are positives. Since reopening, Carefoote said he’s had a “tremendous” amount of support and calls for both his Harbourfront and Leaside locations.

“I was at our Leaside location at lunch and we were full, and down at the lake we also had a line. So first day is positive in terms of people showing their support,” he said.

He said government initiatives have been a substantial help, but the money will eventually “come to an end” — just, hopefully before their busy season ends.

“It’s part of a bigger picture and hopefully this phase will go well and the government will be in a position to get back closer to a larger seating capacity,” he said.