With Ontario in the grip of the second wave of Covid-19, following a gradual reopening that many officials claim will be worse than the first, it has never been more critical for business owners and investors to plan for an uncertain future. Few industries are more affected by this environment of uncertainty than restaurant owners and restaurant groups, who must now evaluate whether previous models are sustainable and what new approaches must be taken for their businesses to remain viable.

Restaurants Will Need Government Assistance

The grim reality is that most restaurants will likely need government support to support Ontario’srecovery from the pandemic. A recent Q2-2020 survey from Restaurants Canada – the largest not-for-profit food service industry association in Canada – found that a majority of food service businesses are still operating at a loss and will likely need at least a year to return to levels of profitability. Over 50% say they expected it would take 12-18+ months and only 13% say they expected it would take six months or
less. Furthermore, and for the third month in a row, more than 90% of survey respondents reported lower sales compared to the same month last year. Yet the importance of supporting and reviving the restaurant business remains of paramount importance to policymakers and industry leaders alike. Not only for the 1.2 million restaurant and foodservice workers, but for the countless more who participate in this complex supply chain and whose livelihoods depend on the continued existence and success of restaurants and food service providers, from farmers to manufacturers and wholesalers, agents, brokers, and real estate investors who lease their properties to restaurants, most of which do not own the properties they operate on.

Steps Restaurants Can Take

There are, of course, certain steps that restaurant owners and restaurant groups can take to mitigate their losses, prepare for a period of turbulence, and eventually transition towards new and profitable business models. These include keeping up-to-date regarding federal and provincial relief measures, staying updated on local reopening plans, redesigning post-COVID profit models, finding ways tincrease online and delivery revenue, rebuilding the workforce, and getting customers back, as well as navigating tenant/landlord agreements. On the crucial real estate front, rent relief and commercial tenant protections must be guaranteed.  Since most restaurants do not own their real estate, a necessary first step is for their landlords and lenders higher up the chain to receive help. The Canada Emergency Commercial Rent Assistance (CECRA) program is already in place to provide some much-needed assistance. However, even as late as June, half of restaurant operators across Canada were still dealing with landlords unwilling to participate in CECRA. Clearly, more must be done to protect food service businesses and landlords, from expanding eligibility requirements to providing landlords with better information and assistance to participate in these programs, as well as providing tenants themselves the opportunity to apply for rent relief arrangements.

Contact Creiland Consultants Realty Today

We can assist you with either expanding or downsizing your retail expectation!  Creiland Consultants Realty is a full service disciplined commercial real estate advisory firm based in Toronto, Ontario. The management team consists of Certified Commercial Investment Member (CCIM) with extensive experience in a wide range of asset classes across the Greater Toronto Area.  We are here to support your goals and take pride in being a commercial real estate partner you can trust. Visit www.creiland.com to learn more.