'Handed a death sentence': Canadian restaurants decry pending end to federal subsidies that have kept them afloat

At Lazy Daisy’s Café in Toronto's Little India neighbourhood, the cappuccino machine is still whirring and the biscuits are being buttered—but 20 months into the pandemic, it hasn’t been easy to keep the kitchen running.

“We’ve been treading water,” owner Dawn Chapman said Friday. “I’ve been trying to keep my staff paid, I’ve been trying to make sure all our suppliers are paid, and just trying to push through to get through to the other side.”

The federal emergency wage and rent subsidies have been the restaurant’s saving grace, said Chapman, and even with the financial assistance they’ve barely been able to break even.

“I spoke to my accountant the other day and I said ‘where would I be if we didn’t have the subsidies?’ and she said, ‘you’re in the red.’ So I said ‘well, what will I do when the subsidies end?’”

Chapman will face that reality this weekend, when the Canada Emergency Wage and Rent subsidy programs expire. Restaurants will be able to apply for financial assistance from the incoming Tourism and Hospitality Recovery Program, but to qualify will need to demonstrate an average monthly revenue loss of at least 40 per cent for the first 13 qualifying periods of the Canada Emergency Wage Subsidy (CEWS) and a revenue loss of the same amount in the current month.

Lazy Daisy’s losses have been been just below that 40-per-cent threshold, said Chapman, meaning they won’t qualify for the new support program.

“Many restaurants are operating at 20-, 30-, 35-, 39-per-cent reductions in revenue,” Todd Barclay, president of Restaurants Canada said Friday. “Because of the thresholds, they’ll no longer be able to receive any type of subsidy.”

According to the association, seven in 10 restaurants are still relying on the wage and rent subsidies to stay alive, and 50 per cent of them will no longer qualify for the new support program due to the revised criteria.

“Many restaurants across the country, based on the announcement yesterday, have been handed a death sentence,” said Barclay.

The options for many: raise prices, or cut staff wages or hours—an alternative that could have a ripple effect through the industry, according to Bea Bruske, president of the Canadian Labour Congress.

“When employers are able to offer only part-time or very fluctuating hours of work, that also means those workers need to make a decision on whether they can take that job or hold out for something that’s more permanent, and more consistent in terms of their paycheque,” Bruske said.

At the east-end New Town Family Restaurant, owner Prasanna Hettiarachchi has been working solo seven days a week since the start of the pandemic because even with the existing subsidies, couldn’t afford to pay any staff.

The pandemic wage and rent programs have kept his business alive, he said—barely—and losing them may mean he’ll have to shutter his doors for good.

“How am I going to pay if I don’t have anything?” he told CTV News Toronto, “How am I going to pay, the rent, hydro, gas?”