Restaurants And Small Businesses Worried About Finances As Winter Looms
HALIFAX–Winter in Nova Scotia is fast approaching, which is traditionally a slow time for restaurants and other small businesses. And this year, there is a perfect winter storm brewing that could hurt a lot of businesses financially.
Most worrisome for the business community is the fact that it is going into 2022 without major federal support programs, such as the Canada Emergency Response Benefit (CERB) and Canada Emergency Wage Subsidy (CEWS). The programs expired in October, despite the fact that many businesses are still feeling the effect of the Covid-19 pandemic. industries.
In their place, the feds have brought in a new support program. However, businesses must see a 40 percent drop in revenue to qualify.
Bill Pratt is the owner of Chef Inspired Group of Restaurants in Halifax. The group operates popular restaurants like Cheese Curds, Habaneros, and Studio East. Pratt says the 40 percent threshold is way too high; any restaurant suffering that much revenue loss would already be closed.
“I’m down 25 percent. That’s why the offer from Minister Freeland is a death sentence to restaurants. Because I’m down 25 percent, it means I don’t qualify because I didn’t hit the 40 percent,” says Pratt.
“My landlord doesn’t give me a 25 percent discount; my electrical bill doesn’t get a 25 percent discount…food costs have increased dramatically in this period.”
Luc Erjavec is Atlantic Canada’s vice president for Restaurants Canada. The industry group estimates that 80 percent of restaurants won’t qualify for the new program. He is hoping the federal government will reevaluate the threshold.
He says anecdotal evidence suggests most businesses are down 20-30 percent.
“They need to return to subsidies to some of the previous higher levels, back where we were earlier in the year. This idea of a 40 percent threshold doesn’t work,” Erjavec says.
Pratt says the old programs are still needed as restaurants struggle to get back to pre-Covid-19 revenue levels. He notes how hard it is to increase sales because (adding to the storm of misfortune) there is a huge labour crunch right now.
It’s hard to generate more revenue when there’s not enough staff to keep the doors open seven days a week. It also doesn’t help that a decent chunk of the population can’t enter restaurants because they aren’t vaccinated.
“We’re trying to get back up to regular business, but we’re not alone, everybody’s in a staffing crunch. We need people to get back to work,” said Pratt.
“There’s nothing I can do to increase sales, because I can’t find staff and people are still afraid to come back to restaurants, or not allowed because they haven’t had vaccines.”
The third wind adding to this perfect storm comes in the form of Canada Emergency Business Account (CEBA) loans. These loans, funded by the federal government, allowed businesses to access up to $60,000. Businesses can get 33 percent, up to $20,000. forgiven if they pay the remainder off by the end of 2022. With only a year left until that deadline, businesses are feeling the crunch to find a way to earn that $20,000 debt forgiveness.
Cavell Ferguson, owner of Vintner’s Cellar in Bedford says money has become tight as she prepares to pay off the loan in time. Ferguson only used a few thousand out of the $60,000 she received from the loan, but she still must put $500 aside each month to make the full repayment.
“We’re not quite where we were this time last year (with revenues),” says Ferguson, who is now operating her business on a tight budget. “If I could just put in $300 a month, that would be better at this time.”
Ferguson believes the federal government should make more of the loan forgivable, or at least extend the timeline for repayment.
Bill Pratt agrees that struggling businesses shouldn’t have to pay back the full amount of the CEBA loans. He suggests that up to 75 percent be forgiven, while businesses pay off the remainder. He insists that will be a better use of the billions of dollars the government has put aside for the new program most won’t qualify for.
“I don’t believe we should get a free ride. I believe we should pay our part, but not the full amount,” he said. “If they did that, a lot more people will fight to stay in the business.”
Luc Erjavec says Restaurants Canada is aware of concerns restaurant owners have over the CEBA loans and has informed the government.
“We have been very clear that that is one of our major asks, but we have no response yet from government on that.”
With the perfect storm brewing for small business owners, operators like Pratt are worried about the coming winter.
“Right now, we’re panicking, and we’re tightening up everything. We’re trying to hire more staff, but we can’t,” he said.
Pratt says he may have to shut down a couple of his restaurants if the situation doesn’t improve but wasn’t willing to give specifics on which locations he is looking at.
“We’re not going to talk about that because we don’t want to scare the landlords and we don’t want to scare our customers,” he said.
Erjavec, meanwhile, isn’t sugarcoating the winter outlook for the Atlantic Canadian restaurant industry.
“January, February, March of this year are going to be tough; there’s no way of cutting it.”
Derek Montague is a Huddle reporter in Halifax. Send him your feedback and story ideas: [email protected].