Restaurant Resilience: Navigating COVID-19 Challenges
The COVID-19 pandemic turned the restaurant industry upside down, challenging owners to rethink survival in a world of lockdowns and tight margins.
But from adversity comes innovation!
Discover how Canadian restaurants are pivoting with ghost kitchens, meal kits, and retail-ready products, fueled by government support and bold new revenue streams, as they carve a path to resilience and recovery.
Adapting to Lockdowns: Curbside and Delivery
The option of curbside pick-ups started trending when the lockdowns began. For many restaurants, this was an easy pivot, but for others, major operational changes and added costs were required to offer this service. Delivery services like Uber Eats and Skip the Dishes dominated, and their large percentage of the bill has been widely discussed during the lockdown.
For many restaurants, these delivery fees resulted in break-even sales, but restaurateurs carried on, believing the shutdowns would be short term. Since March 2020, 800,000 foodservice workers across the nation were laid off or had their hours cut to zero when the pandemic hit its peak. Very few have been called back, with many still out of work (1).
Rethinking Restaurant Models
One outcome of the prolonged closures and restrictions has been restaurants rethinking their models altogether. New personal protective equipment, safety training for staff, extra sanitization procedures, and extended patios have brought unexpected costs. These measures ensure a safe and enjoyable experience for customers.
Rise of Ghost Kitchens
A significant new model to emerge is the pivot to ghost or cloud kitchens. These are commercial kitchens developed solely for preparing take-out only meals. They’re also known as delivery-only restaurants, virtual kitchens, shadow kitchens, or dark kitchens. Many have emerged within the Greater Toronto Area in 2020.
Government Support for Restaurants
The Government of Canada has developed relief programs to help businesses stay afloat, and the restaurant industry can take advantage of these. One program, “Canada’s COVID-19 Economic Response Plan – Support to Businesses,” prevents layoffs by providing a 75% wage subsidy. It also offers business credit and extended timelines for paying income tax.
Another program, the “Business Credit Availability Program (BCAP),” allows Export Development Canada and the Business Development Bank of Canada to provide over $65 billion in direct lending to Canadian businesses. Additionally, the “Work-Sharing Temporary Special Measures” program provides EI benefits to employees who agree to shorten their work hours by sharing them with others, helping employers keep more staff on payroll. The government recently provided an additional $600 million to support small and medium-sized businesses.
Provincial and Local Initiatives
Provincial governments are also assisting local restaurants. Many offer financial assistance programs and respite from fixed costs like rent, utilities, and property tax. Restaurants have been given temporary liquor sale licenses to sell alcohol with take-out and delivery. The Ontario government’s “Main Street Recovery Plan” allows permanent 24/7 delivery, supports local food distribution, and urges people to support their local restaurants.
New Opportunities in the Food Industry
It’s not all bad news for the food service industry. Meal kit home delivery services have seen growth (2). Take-out windows have appeared as restaurants shift from walk-in service. Many eateries have also opened pop-up grocery shops to sell fresh ingredients and restaurant-branded condiments and sauces.
Innovative Revenue Streams
Local governments and economic development offices are supporting restaurants in finding new revenue streams. These efforts include food tourism, promoting local products, and pivoting to consumer packaged goods (CPG). They also support sustainability and circularity in food post-COVID.
For years, entrepreneur incubation programs run by municipal governments across Canada have helped new business owners turn ideas into realities. In 2020, a niche incubation program for restaurant owners emerged. Offered by Food Venture Program, it pivoted in March to help restaurants turn recipes into retail-ready food products. The program will run again in February 2021 and be offered through various Ontario municipalities starting January 2021.
Looking Ahead: Recovery and Innovation
Now that a COVID-19 vaccine is being disseminated, an end is in sight. However, restaurants will continue to need support and innovation to run profitably. Municipal and provincial governments, along with the food service industry, encourage the public to order take-out directly from restaurants. Soon, we may see favorite restaurant recipes and products on local grocery store shelves.