Canada’s restaurant apocalypse is bad, and about to get a lot worse in the next few weeks. Restaurants Canada estimates the industry lost 800,000 jobs in March, and a tenth of restaurants have already permanently closed. The organization is forecasting Canada will lose almost a third of restaurants by month end.
Why Do You Care?
The restaurant industry is one of Canada’s biggest industries by GDP and employment. The industry brings in an estimated $93 billion worth of GDP, about 4% of last year’s total. Accommodation and food service employed 1,215,700 people in 2019 – about 6.38% of the total workforce. Restaurants are a significant part of the country’s economies, and a major contributor to spin-off activity.
Toronto Change In Restaurant Diners
The year-on-year change in diners for the Open Table platform in Toronto. This includes phone, online, and walk-in diners.
Source: Open Table, Better Dwelling.
The Industry Lost 800,000 Jobs Last Month
The restaurant industry was one of the first and hardest hit by COVID-19. Since March 1, the industry estimates over 800,000 jobs have been lost. They also further estimate 1 in 10 restaurants have permanently shut their doors. This means a good portion of those jobs aren’t coming back. The chances of a v-shaped recovery get further and further away, as more permanent losses materialize.
Vancouver Change In Restaurant Diners
The year-on-year change in diners for the Open Table platform in Vancouver. This includes phone, online, and walk-in diners.
Source: Open Table, Better Dwelling.
Canada Is Permanently Losing Restaurant Jobs At A Rapid Pace
The industry lobby group is warning this picture is going to get more bleak by the day. Another 18% of restaurants will permanently close by the end of April, if it’s similar to March. The Canadian restaurant industry is expected to lose $20 billion in sales in Q2 as is. This will shed at least 0.86% of Canada’s GDP… in just one quarter.
Canada’s restaurant industry was already squeezed by high rents, and tightening household budgets. The inability to operate is inflicting permanent damage on the industry. Once operating restrictions are lifted, things won’t go back to normal. At least not immediately. Household cash flow is at a minimum, so it’ll take a while to rebuild spending confidence.
Like this post? Like us on Facebook for the next one in your feed.
This is going to be the challenge. The government can offer cheap loans, but without cashflow to cover them, it’s just going towards lease payments.
The people likely to use loans to start restaurants after this, will still be recovering from the losses incurred now. This will not be an easy recovery, and patching inefficiencies with more credit is going to make this situation even more unstable.
Commerce in Canada and the US has virtually ground to a halt, unless your market is in emergency supply chain, you’re not doing any business.
There is no discretionary income in the western world currently, and there will not be any for many months. Our grandparents were content to wear old clothes because they remembered WW2 when they couldn’t afford new clothes. PTSD from that era kept them wearing the same coat for 10 years.
Restaurants, fashion, and electronics are not on the list of priority spending. The father and boy in Cormack McCarthys The Road weren’t walking to Nordstroms. As such, commercial landlords do not have a list of tenants clamoring for space. Threatening restaurateurs, retailers, and other commercial tenants into submission or bankruptcy is pointless and short sighted.
They need to take a breath and foster good will in our united moment of crisis, and prepare the garden for rebirth in 2021.
Its going to be a real mess…They are controlling everything now…government, police state…its here, eyes open…wait til the housing crash begins here in Canada…it will be epic…We need to get back to work , now……bloody governments bankrupting private business globally , destroying our livelihood with fear mongering, bs…while parasites in government get full pay…sick!, sick!!
But hey stocks are still finding a way to go up!
I’m of the belief that this virus is going to be with us for ever..And sooner or later we’ll have to learn to live with it. We all learned to live with AIDS and Cancer in society.
At present we’re going through this initial shock period, but in 6 months people will start to adjust to the virus and it’s effect on society..
I definitely believe that society will learn to alter some of it’s choices..Lifestyles that are not sustainable will no longer exist. The $80,000 truck and the $1.6 million dollar home financed by flipping and heloc loans will be a relic.
My problem moving forward is the prudent CDN’s will have to pay for choices made by those that believed high living is a norm.
Everybodies taxes going up going forward. WAY up. This stimulus money isn’t free. Wait until Governments start raiding principal home sales for taxes. It’s the last whale out there and they’ve already quietly done the first steps through the CRA by tracking principal sales.