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Restaurants still bleeding despite reopening dining rooms, industry group says

Restaurants emerging from the economic lockdown to reopen their dining rooms are struggling to break even, with increased food and staff costs, but far fewer customers, according to a report from a major industry association.

Restaurants Canada is now projecting that the industry’s revenues will drop by as much half this year, with a “worst-case scenario” of $47.8 billion, down from a pre-pandemic forecast of almost $100 billion. The best-case scenario is $70 billion.

In its latest membership survey, the association found that six out of 10 restaurants are operating at a loss.

Roughly a quarter of all restaurants have returned to sit-down service, either on patios or in dining rooms as some provinces advance into the later stages of their reopening plans, the survey found.

But 47 per cent of independents that have reopened and 39 per cent of owners with multiple locations said reopening made things worse financially.

“You have to invest so much to restock and you have to have the staff start coming in again,” said Restaurants Canada spokesman James Rilett. “If your sales aren’t high enough to pay for the stock and the staff, then you’re losing money.”

Fewer than a third of survey respondents said reopening on-premise dining had a positive impact. The rest said it was too soon to tell. Restaurants Canada surveyed 940 restaurateurs, who operate a total of 14,129 locations, between June 1 and June 7.

“It’s a tough choice that somebody has to make,” Rilett said. “Do I try and stay open, even though I’m losing money, with the hope that more people will come back? Or do I shut the doors again and come back at a time where it’s more advantageous?”

On Thursday, Caribbean Flavas owner Naz Ali was officially reopening the dining room of his Fredericton restaurant, which he has owned with his parents for 16 years. By mid-afternoon, he had three tables booked for dinner. To break even, he estimated he would need to more than triple that.

Ali’s restaurant normally has 10 tables, but it’s now down to four, for a total of eight people, to allow for ample space between customers.

“The margins were thin before when we were filled. But now at eight people, it’s razor thin,” Ali said. “If I turn over three times, I should be okay to cover my costs. If I turn the restaurant over twice, I’m in the red.”

For the reopening, Ali assigned a staff member at the front to screen people for COVID-19 symptoms and take their contact information. He paid for hand sanitizer and signage with instructions for distancing and ordering. He also invested in his website, so customers can look at a menu and place an order virtually, without a server ever having to come near them.

After “limping along” with just takeout since March 10 — he also donated meals to front-line workers through a “buy one, give one” program — Caribbean Flavas once again has the added costs of running a fine dining restaurant, including staff and a dishwasher.

But it’s been difficult to convince employees to come back amid reports of new cases of COVID-19 in New Brunswick. And there’s the added concern of whether the family-run restaurant can keep its charm with all the added safety measures in place.

Asked how he was feeling, a few hours before dinner, Ali said, “Nervous, of course.”

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