Members of Industry associations, representing hundreds of thousands of businesses across Canada, are urging extension of the Canada Emergency Business Account (CEBA) repayment deadline.
According to Trade Association Restaurants Canada, “Bankruptcy filings in foodservice have increased 116 per cent since 2022 and Trade Association Restaurants Canada is expecting more restaurants to close their doors as a result of the federal government’s failure to take action.”
“We are nearing our sector’s summer high season. However, with half of all foodservice companies currently operating at a loss or just breaking even and 80 per cent making less profit today compared to pre-pandemic (2019), many of our members are weighing their options to either remain open and continue incurring further debt, or close their businesses and file for bankruptcy;”
As I visit communities like Whitney, Barry’s Bay, Eganville, Renfrew and Calabogie that rely on tourism, I get the same message, “People can’t afford to travel.”
The majority of Canada’s foodservice sector is still struggling to recover from the financial shocks caused by the lockdowns. The situation has been made worse by a punishing interest rate policy due to excessive government spending, and inflation-fuelling carbon taxes.
The Parliamentary Budget Officer confirmed that 40 percent of borrowed spending had nothing to do with the pandemic.
As the December 31st, 2023 repayment deadline approaches, a Restaurants Canada survey has revealed that nearly 20 per cent of the restaurants that have yet to reimburse CEBA will not be able to repay it in part or at all given the state of Canadian foodservice, findings that are unsurprising given:
- Canada’s foodservice industry has hit the 100-billion-dollar mark, yet when adjusted for inflation, in comparison to all other Canadian business sectors, restaurants have experienced a 12 per cent drop in economic activity (GDP) from 2019 to 2022, second last to the arts, entertainment and recreation industry which is down by 19 per cent; and
- nearly every operational cost is on the rise due to inflation; utilities have increased by 6 per cent, proteins have increased by 9 per cent (beef), 11 per cent (seafood), 13 per cent (chicken), and cooking oil (up 40 per cent), as well as rising labour costs, and restaurateurs have been forced to absorb as much as they can to avoid impacting consumer traffic.
For many small and medium sized businesses, the December 31st, 2023, repayment deadline is simply impossible to meet – which reflects the poor fiscal record of the federal government. Post-pandemic operational challenges like inflation, labour shortages and supply chain hurdles are further diminishing the profitability of businesses and lengthening the recovery process entirely.
It is time to throw our entrepreneurs a lifeline.
Only a Conservative Government will axe the carbon tax, which is what is really needed to tame inflation and lower interest rates