Popular Fine-Dining Restaurant In Halifax Could Close Permanently
HALIFAX – A little more than a year ago, Najib Faris opened Mabata restaurant so the people of Bedford could enjoy a fine dining experience. The restaurant got off to a hot start, receiving award nominations and nearing five-star reviews online. But then COVID-19 happened, and Faris is now negotiating the termination of his lease and is just days away from closing Mabata for good.
“I have a passion for food and wine, and I met amazing chefs here and decided to bring those chefs together and start a business here in Bedford, where I felt the market really needs it,” said Faris.
“We’re just starting to turn a corner, and now this happens. So, for me, it looks like the best option is to close down permanently.”
Mabata closed temporarily on March 14 due to the COVID-19 outbreak. Unlike some other restaurants, using take out and delivery wasn’t an option, given the type of dishes on Mabata’s menu.
“It doesn’t work for delivery; it doesn’t carry well,” said Faris. “If you order a medium-rare steak, by the time it’s delivered to you it’s going to be well done because it’s going to keep cooking in the box.”
Despite being closed to the public, Faris’ bills haven’t stopped coming in. He still has rent, utilities, and service charges to pay. Also, to prevent food from spoiling, he gave away $8,000 of ingredients to staff and friends, which will have to be replaced if Mabata ever opens again.
Faris has investigated the various government programs to help his restaurant survive but, so far, hasn’t found one that is tailored to a business that is completely shutdown.
The biggest program is the federal government’s 75 percent wage subsidy, designed for businesses that have seen a 15 percent revenue drop in March and/or a 30 percent decrease in April. While this is a big break for businesses trying to stay alive, says Faris, it does nothing for businesses like his that have $0 coming in.
“I’ve looked into accessing all the various programs that were put in place. We are a new business, which means we don’t have the cushioning cashflow as a buffer to keep me afloat.”
The other option for Faris is to apply for a loan through the BDC. But, taking on new debt right now is a huge risk given the financial uncertainty of the times, and having no revenue for the foreseeable future.
“I’m not against taking loans. I’m all for adding more loans when the business is operational, and they’re loans to grow (the restaurant). But loans to lose, at a time when we are closed, does not make sense to me,” said Faris.
Luc Erjavec, the Atlantic Canada vice president of The Canadian Restaurant and Foodservices Association, echoes the same concerns Faris has about the wage subsidy program. He believes there needs to be something in place to help the many businesses that are closed and have no revenue coming in.
“Absolutely there are some difficulties with this program. It works for some; it doesn’t work for others. We want to work with the federal government to refine the program So it can help all restaurateurs because we are important to every single community.”
“This program can help some who are just trying to stay open but for businesses that are closed, it doesn’t quite work, but there has to be more for the businesses that have zero revenue coming in.”
Another major hurdle is the delay in getting the cash from the government to the business owners. Not long after the wage subsidy was announced, Finance Minister Bill Morneau said it could take several weeks for the actual money to start flowing. According to Erjavec, nine percent of restaurants have already closed, and 18 percent say they will close within 30 days if they don’t get any money. Time is of the essence.
“Restaurant operators can not wait four to six weeks for this subsidy … we need to find a way to get money into the hands of restaurant owners quicker,” said Erjavec.
This sentiment was echoed by Conservative Finance Critic, Pierre Poilievre who called out the Liberals for the slowness of the money transfer.
“Not a single emergency loan has been delivered to small businesses … not a single salary has been subsidized,” said Poilievre. “In other words, small businesses have literally not received one red cent to keep them alive during this period when government shave shut them down.”
Erjavec has also heard concerns from restaurant owners about the loan programs. Like Faris, many business owners are in no position to take on more debt.
“That’s the ultimate concern,” said Erjavec. “If you happen to qualify for loans … how are you going to survive under a mountain of debt and new debt from new loans.”
The Association has calculated that Atlantic Canadian restaurants have seen an 80 percent drop in revenue during the COVID-19 crisis and most staff have been laid off. Given how big the industry is, and the severe financial problems it’s facing, Erjavec wants a support program designed specifically for struggling restaurants.
“We are the third or fourth-largest employer in Atlantic Canada and I think there needs to be (a program) unique to the industry,” he said.
Back in Bedford, Faris is desperately looking for restaurant investors in a last-minute push to keep his restaurant alive. But he knows it’s unlikely anyone will be pouring money into the restaurant industry under these economic conditions. Mabata’s run may soon end but Faris, who has had a long career in business development, is optimistic he will be okay.
“What does the future hold? I don’t know; I’ve worn many shoes throughout my career, so there will be light at the end of the tunnel.”
“Good luck to all the entrepreneurs in Canada; I wish them better luck than I’ve had.”