Restaurants are key to feeding Canada’s recovery, but first they need to survive
Christmas decorations are up and spirits are high at O’Reilly’s Irish Newfoundland Pub (above), yet proprietor Brenda O’Reilly (below) says revenue losses due to the coronavirus pandemic keep her up at night. supplied
Two years ago, Brenda O’Reilly’s four restaurants in St. John’s, Newfoundland, were on a growth trajectory – until the coronavirus pandemic brought everything to a hard stop. The closing date, March 16, 2020, is especially memorable since it was the day before St. Patrick’s Day, which is traditionally one of the busiest days for O’Reilly’s Irish Newfoundland Pub.
“Suddenly, everything was shuttered due to a situation totally beyond our control,” recalls Ms. O’Reilly. “We were going from restaurant to restaurant, and had to lay off about 200 people in one day. Not knowing how our staff would manage, this was very traumatic.”
Even Ms. O’Reilly, who says she doesn’t cry easily, couldn’t hold back tears. Yet she also resolved to do everything in her power to keep her community together.
“I found it helpful to focus on something constructive rather than dwell on this negative situation,” she says. It started with staying abreast of public health protocols and government measures in order to keep everyone informed, and soon went beyond advocating for her own businesses to supporting the restaurant and hospitality industry in general.
Like Ms. O’Reilly, Todd Barclay, president and CEO of Restaurants Canada, followed the unfolding situation closely. “The 90,000+ small and medium-sized businesses that make up our critically important foodservice sector have been fighting to keep their doors open,” he says. “Restaurants are key to reviving main streets across Canada and feeding our country’s economic recovery, but first, they need to survive.”
Since the first wave of lockdowns ended last year, eight out of 10 operations have either been consistently losing money or scraping by with a profit margin of 2 per cent or less.
“Support from the federal government and provincial governments has helped to keep the lights on, but the programs are now going to be much more restrictive,” says Mr. Barclay. “As we move into what is typically the toughest time of year for restaurants, we’re really concerned that many will meet their demise.”
Restaurants Canada data shows that 90 per cent of foodservice businesses have relied on federal rent and wage subsidies to help them survive the pandemic, but only 20 per cent qualify for the new Tourism and Hospitality Recovery Program. Restaurants have to show a loss of 40 per cent to qualify – an unrealistic threshold for an industry where even a single-digit loss can present significant challenges, he explains.
“Federal support programs need to be more inclusive to drive the results the government is looking for, such as businesses staying open and people staying employed,” says Mr. Barclay. “When the programs are too restrictive, they will leave far too many hardworking restaurant operators out in the cold.”
Recovery remains out of sight for many, including Ms. O’Reilly. “Newfoundland and Labrador bounced back faster than other regions in Canada due to closed borders and geographical isolation. But while we were able to reopen [all our venues] with limited capacities and public health protocols, revenues are severely decimated.”
“Federal support programs need to be more inclusive to drive the results the government is looking for, such as businesses staying open and people staying employed. ”
One of the restaurants, for example, is located in the departure lounge of the airport at St. John’s. “It went from being my most successful business to the most stressful one,” says Ms. O’Reilly. At first, suspended flights meant zero customers. And although travel volumes have crept up since restrictions were eased, they are nowhere near pre-pandemic levels. The result? The 170-seat restaurant still operates at about a quarter of its capacity.
“The sales of our group of companies were down $7-million in 2020, and that’s before tax,” she says. “We collectively lost about half a million dollars that we aren’t able to recoup, and this keeps me awake at night.”
At the same time, overhead has gone up, including food costs, wages and insurance, and there are no breaks on taxes or credit card processing fees.
Investments were also required for adapting to new conditions. The Irish Newfoundland Pub held virtual events, for example, and Ms. O’Reilly’s gastropub and brewery developed take-out and delivery services to stay relevant, she says. “As entrepreneurs, we used to focus on growth. Now, we’re just trying to keep costs down and revenues up.”
Despite the challenges, Ms. O’Reilly declares herself a “glass half-full kind of girl.”
And decked out with holiday decorations, all four businesses exude a cheery and hopeful atmosphere. “If there’s a good thing coming out of this, it’s that people really want to support us,” says Ms. O’Reilly. “Our staff and our customers love being back, and they appreciate our efforts to provide a comfortable and safe environment.
“I’ve been in the industry all my life, and I love what I do,” she adds. “I’ve worked too hard to just let it fade away.”
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To view the full report as it appeared in The Globe's print edition: Restaurants Canada