Restaurants on the ropes

Hey there, time traveller!
This article was published 07/05/2020 (2002 days ago), so information in it may no longer be current.

After a four-star review in the Free Press in February, business was very good at Altanour, Talal and Dounia Dalank’s one year-old Lebanese restaurant in the West End.

But since the coronavirus hit and social distancing became a public health imperative, they had to lay off three staff. Now it is only family members left making and preparing takeout and delivery only.

“It is very hard in this situation,” said Dounia Dalank. “We are trying our best to make ends meet. We are doing our best to stay open.”

Even so, Talal made a point of telling a reporter that the family wants to show its appreciation for health-care workers by offering them 50 per cent discount on meals.

Altanour is one of about 2,600 restaurants in Manitoba facing the unprecedented shutdown and whose industry, many officials now believe, may face the cruelest of fates.

A new survey from Restaurants Canada shows that 70 per cent of restaurants in Manitoba might not have the cash flow to be able to reopen.

And while the province has released a reopening timetable, many believe that does not make the odds of success any better.

Shaun Jeffrey, executive director of the Manitoba Restaurant & Foodservices Association (which is not affiliated with Restaurant Canada), said the notice that restaurants could reopen patios this week was a “kick in the head” to the industry.

“We were not given any notice about that,” Jeffrey said. “We were blindsided by it. It has caused chaos. No one was prepared to open patios. Now everyone is scrambling to get some sort of revenue stream.”

After operating on very low profit margins at the best of times, restaurants — in particular, independent restaurants — largely find themselves on the outside looking in when it comes the suite of federal financial support programs that has been getting pumped out by Ottawa.

James Rilett, Restaurants Canada vice-president, Central Canada, said the government programs that have deferred expenses have been welcome.

“But we are looking for any mechanism that will enable restaurants to get some cash in their pockets,” he said. “If any of them could be forgiven rather than deferred that would help.”

The program that allows access to a $40,000 business loan, 25 per cent of which would be forgiven, can be helpful for some, he said, “But unfortunately our industry is not well known for being able to get loans form the banking community.”

The wage subsidy program only works if a business has been able to retain staff and at least 50 per cent of restaurants have remained closed completely, not offering pickup or delivery.

The survey said that 20 per cent have not been able to negotiate terms with landlords and Rilett said that there’s probably another 20 per cent who just can’t pay their rent at all.

“No one understands how bad the industry is right now,” Jeffrey said. “These guys operate normally on a five per cent profit margin. They are losing atrocious amounts of money. It is brutal. The number of restaurants who are not going to come out of this will be substantial.”

Norm Pastorin, executive chef of Cornerstone, The Grove and the Black Bird Brasserie, said all those restaurants are definitely planning to reopen.

He said they have chosen to make their staff and customers’ safety their first priority and have been closed even for pick-up and delivery.

“We do not feel it is completely safe,’ he said. “We are waiting for phase II.”

That’s in reference to Manitoba’s Pandemic and Economic Roadmap for Recovery, which says that restaurants can reopen no earlier than June 1 at 50 per capacity.

Pastorin said they are sticking to the guidelines and have been grateful that they have “been afforded some concessions on rent.”

It’s one thing to say a business can only open at 50 per capacity, it is another thing to be able to figure out exactly how to practically do that (never mind figuring out how to be profitable with the same overhead but only 50 per cent of allowable revenue).

Jeffrey said next week the Manitoba association is unveiling a new training assistance program that it will be able to offer free to its members that will help them comply with the regulations.

It will also be making a formal request for more financial assistance from the province.

Many fear that when the dust settles, the majority of restaurant offerings that will be available on the market will be national chain restaurants.

Even Rilett believes that the chains will have a distinct advantage.

“They would definitely have more resources behind them to help them with redo floor plans for social distancing and for sanitization and things like that,” he said.

Restaurants will have to reorder supplies, maybe redo menus and maybe even redesign the restaurant.

He said, “A franchise would have some resources behind them and a better chance of staying at it. Yes.”

In a survey the national organization did two months ago, it found that 50 per cent of independents would not able to reopen if the shut down lasted three months. Only 25 per cent of chains said they would have to close locations.

martin.cash@freepress.mb.ca