As I finished off in yesterday’s post I’d be expanding on my thoughts on saving the restaurant industry.
I woke up this morning to read news stories like this. The industry has never experienced trauma on this scale in it’s history. Which is why such vital an drastic measures must be taken to ensure it’s survivability through COVID 19.
There are a number of reasons why I think we need to give priority to the ideas of rent or loan deferment and even possible forgiveness for the next few months.
- The industry is a major part of our national GDP. In 2019, the industry contributed over $90 billion to the economy. More remarkable is that for an industry of it’s size, it is incredibly competitive. There are sizable franchise and chain restaurants in the industry, but none that I’d say dominate entirely. A collapse of the industry would result in catastrophic hollowing out of our hospitality and tourism industries, which would set back our economic recovery immeasurably.
- If restaurants are allowed to go under, we will be faced with numerous boarded up windows and storefronts. Landlords who do not look into giving their restauranteurs flexibility in rent payments, could be looking at a plethora of empty spaces post COVID 19. I doubt retail will be able to step up after the crisis ends. All trends point towards a huge uptick in online shopping, particularly with Amazon. And I for one don’t see why that trend would stop post COVID 19. For landlords, keeping your existing restaurants in their places right now, is best for long term profitability once this crisis has abated.
- My argument for banks working with restauranteurs is very similar to my above stated point. Essentially, to have a $90 billion industry default on their loans and debts to the banks would be indeed catastrophic for business. Allowing restaurants to go under, with a possible expectation of them restarting a new concept in a few months is unrealistic. New and establishing restaurants are no doubt already leveraged to the max, and if they are allowed to go bankrupt they may never recover.
- The bright side to all this is that it is indeed temporary. One day this COVID 19 crisis will end and we will all be allowed to socialize as we normally do. When that happens, where do you think 30 million Canadians will be wanting to congregate to? Our restaurants will see a surge of revenue post COVID 19 as we all make our way to our favourite establishments, and even some new ones that we may have taken for granted. The industry is not facing an image or trust issue. The demand is there, in fact I’d argue its being pent up for the time being. When we are finally allowed outside, the windfall is going to be tremendous.
The catch is of course we need to get past this. Any help provided by the government or other industries is going to be temporary. The issues facing the restaurant industry right now are not structural, which is good. Help is just that help. Movements such as #onetable are shining a necessary light on the crunch the industry is in right now. What they are asking for is reasonable and will pay off in dividends down the road. I suggest you take a look.
One day all of this will pass. I have no doubt big changes to our economy and our way of life will result of COVID 19. One thing that will not change though, is the need for humans to interact with each other. Let’s face it, if anything that will be magnified ten fold after this is over. Restaurants in the post-COVID 19 will be stronger than ever before, feasting on pent up demand in the marketplace. Those who help keep the industry alive during this crisis will see their efforts pay off in spades.
3 thoughts on “Why we need to save our restaurants”