I am the founder of View the VIBE. I launched it in 2010, and today it’s beautifully run by Steven Branco, our editor-in-chief and partner. I have not been as involved since 2016. Why? Because I decided to go back to my true passion: the restaurant business.
In May of 2016, Bar Reyna opened, and it was quite literally the happiest day of my life.
In January 2018, I opened Reyna in Assembly Chef’s Hall and in April of 2019, I opened Reyna on King. In January 2020, I rented the space next door to the King location for catering and private events–something we were planning to launch this past March.
On March 11th, the reality of COVID-19’s impact on small businesses kicked in. During the following 5 days, I lost 80% of Reyna’s revenue. On March 16th, prior to the province ordering all restaurants to close (except for take-out), I made the difficult decision to prioritize the health of my staff and closed all my restaurant locations. Laying off 62 employees was hard – and something that I was not expecting given the success of Reyna.
Two weeks later, we are all living a reality that is hard to process and accept.
While I fully acknowledge we are all going through fear, grief, sadness and anxiety, I am fearful not only of my own livelihood, but the future of the hospitality industry as a whole.
I’m not saying our industry is more important than another. Everyone has been hit differently, and certainly our front-line workers are living a very different and scary reality. But every industry is experiencing different problems so to put all small businesses in the same category with federal solutions that don’t serve us, seems ineffective.
Here’s a fact that many don’t realize: most restaurants operate with little to no profit. Overhead is very high, and profit is very low. We work in this extremely grueling industry because we love it and are passionate about it. I can’t say I know anyone who opened a restaurant to get rich. The concern is then: how will the small business hospitality industry survive a global pandemic when nothing is done to address our needs?
Thanks to the immediate reaction of Ascari Hospitality Group’s John Sinopoli and Erik Joyal, Andrew Oliver from O & B, and Dyson Forbes from the Food Navigator group on Facebook, SaveHospitality.ca was launched. This is a group that has initiated a petition calling on the various levels of government for their help with all food related small businesses – because the devastating effects are on not just restaurants but also food suppliers who work with little to no profit as well. The fact is the impact is not limited to just restaurants – it has a severe ripple effect into the overall food industry in Canada.
The Save Hospitality group has created a list of requests that include some form of rent forgiveness to ease the effects for all parties–tenants then have a shot at getting back on their feet, and landlords don’t lose funds from small businesses going bankrupt. The reality is that nobody wants to be at war at this time, but sadly some are.
April 1st means rent is due–but most restaurants haven’t been opened since March 17th. The math is simple: no revenue = no money to pay rent. Some landlords are being nice, many are not. Unfortunately, the rent for my three locations will not be paid–because I simply don’t have the funds to do so.
Other requests include temporary property tax suspension, immediate EI benefits for laid off staff, and support for re-opening and re-hiring, which is a big cost many can’t afford. We’ll require capital to re-open or we’ll remain closed. Another group called #OneTable has also built a video campaign that asks chefs and restaurant owners to tell their stories and post them online.
It seems as though the Canadian government is failing to realize that offering loans and deferrals will not help small businesses, especially those in hospitality. We will not be able to pay those loans back and survive, especially if commercial rents are not being frozen. The reason we are urging for the government’s help is not to protect profits, but instead, to protect the livelihood of the people who have literally sacrificed everything to run their coffee shop, bar, or restaurant… we are not a retail store who can re-open with products ready to sell.
For many of us, re-opening is akin to restarting and buying everything from scratch. We’ll need to re-purchase all of our food materials, and rehire staff to prep prior, all prior to even making the first sale. Add 2-3 months of rent debt to pay back, and many small businesses will not have the means to re-open.
The numbers for the hospitality business don’t lie. Simon Benstead of Marben Restaurant posted a very in-depth look at the reality of the numbers for a restaurant generating $1 million in annual revenue, while illustrating the powerful economic impact, how much the government takes and how little we actually make. It may help you understand the finances of a restaurant – despite us doing all the work, putting up all the capital and taking all the risk. Here is a breakdown of the figures he’s recently shared in a Facebook group:
– Payroll, $300k
– Tips for employees, $200k
– Suppliers (including the government run LCBO), $300k
– Rent and other occupancy costs, $100k
– Administration (bookkeeping, accounting, insurance), $40k
– Maintenance and supplies, $50k
– Bank and credit card charges, $40k
– Marketing and technology (fees for booking sites, advertising, promotion), $25k
– Other miscellaneous expenses, $50k
– HST remitted, $90k
– Employee taxes remitted, $40k
– Employee portion of EI and CPP remitted, $25k
– Employer portion of EI and CPP remitted, $20k
TOTAL in tax revenue remitted: $175k
Our question likely is… Why is the government telling us all to go get a loan, when it won’t allow for the sustainability of our industry? As Benstead articulates in his commentary, the approach of Denmark towards the hospitality business would be the ideal template–a frozen economy that focuses on small businesses vs. Wall Street. This allows citizens to stay at home and flatten the curve, so that less are sick and health workers are not being exhausted, which should be a priority. My home country of France has also taken precautions to help small businesses survive by freezing rents, mortgages and utilities.
So far, the government of Canada has offered small businesses rent deferrals, easy access to loans, and a 75% wage subsidy–which doesn’t apply if we’ve had to close our doors based on the current information. Additionally, access to a $40K loan with a “chance” of a $10K forgiveness, for many, is not the solution.
For those that do make it through and actually re-open, the reality is that the industry won’t get on its feet for at least a year. It’s expected that public behaviour will change once the pandemic is over and a high chance of a recession. Does adding debt actually make sense?
Is it fair to force this burden on small businesses who were forced to close their doors to keep the population safe? Shouldn’t it be shared with banks, landlords, insurance companies and the government? Seems unfair that some will lose everything, and some will lose minimal or nothing (considering landlords are currently set to recover 100% of rent due to deferrals).
The hospitality industry includes 1.2-million people across Canada. So far, it is estimated that over 800,000 have been laid off–with more coming soon. Add to that, all the small businesses that sell to restaurants, who have now had to find other ways to make money or close their doors. The ripple effect is devastating.
If you or someone else in hospitality is affected by this pandemic, please share SaveHospitality.ca. More information about Simon Benstead’s commentary around this, it can be found in this Facebook post.
Lastly, a huge thank you to our health heroes. We’re fighting our fight, but you’re risking your lives for us daily. We can’t thank you enough, you are the true superheroes–thank you!
Owner, Reyna Restaurants
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