Like most restaurateurs, John Sinopoli felt helpless as the tsunami of COVID-19 smashed into Canada. Almost overnight, this force of destruction shuttered a sector that employs 1.2 million Canadians.
On March 15, Sinopoli and his partners in Ascari Hospitality Group closed down their Toronto restaurants. The next day, they laid off their 97 employees.
“In the midst of my misery and the tears, we went through that day,” he recalls. “And, feeling helpless, staring down the evaporation of the industry as a whole, I said, ‘Let’s get to work.’”
That’s how Sinopoli, along with a few friends and colleagues, formed Save Hospitality, a coalition of independent restaurateurs who are using their collective voice to help communicate what restaurants need from government to survive this.
“The consequence of not reopening is unfathomable if you think about the numbers,” says Sinopoli. “If half the restaurants don’t reopen, that’s a minimum of 500,000 people out of work. Don’t you want to get those people back to work? Don’t you want to collect all that income tax? The HST on their sales?”
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This isn’t just about restaurants. Yes, gathering places needed to close to limit the spread of this virus. But we have to account for the consequences of knocking out a load-bearing pillar of our economy. If restaurants are unable to reopen, their landlords, suppliers, and employees will all be out future revenue. They won’t be buying anything; they won’t be paying sales tax, income tax, or property tax. What happens to the value of commercial real estate, and of the surrounding community’s residential real estate, if it sits empty? What’s the fallout for cities as our property-tax base dries up?
“The economic disruption doesn’t end there,” Sinopoli says. “My suppliers have called me and said, ‘If more than 30 per cent of you go bankrupt, we’re done. You guys owe us too much money. We can’t write that off.’”
Most restaurants spent the first half of March ordering and prepping food. After they closed, it was given away to staff or to charity. But they still have to pay for it. Sinopoli estimates that his restaurants were left with about $20,000 in product. How can any supplier get by without those bills paid? Disclosure: My brother is a restaurant-produce wholesaler. Though business has evaporated, he is currently putting his life on the line providing food for retirement homes.
Sinopoli began talking to friends and colleagues, and a lobbyist told him that Ottawa sees the problem but doesn’t know what to do and is looking for suggestions from people in the industry. It’ll be a dark future if those ideas come only from Restaurants Canada, the advocacy group that represents chains and franchises and lobbies against things like raising the minimum wage.
“We need one voice for independents,” Sinopoli says. “We’re not chains or corporate entities with shareholders. We are uniquely positioned to fall through the cracks here. And we need to get our voice out there.”
He came up with a list of solutions and began circulating them to others in the business, who signed on to what became a collective. On the Save Hospitality website, you can see every signatory and how many employees each one has.
The proposals include a variety of strategies — suspending taxes and fees, relaxing liquor-sales rules, getting insurance companies to honour interruption-insurance claims, issuing forgivable loans conditional on rehiring staff, paying suppliers and taxes — aimed at enabling restaurants to reopen and helping businesses and workers to start earning money once this crisis has passed.
“The current response from the city has been encouraging,” Sinopoli says. “[Toronto mayor] John Tory called me directly to discuss it. He buys into our action plan and is pushing it up the chain with Chrystia Freeland and Bill Morneau’s office.”
But, while conversations with provincial and federal leaders have so far elicited a lot of sympathy, Sinopoli says, there’s been little action: “Our first need is a freeze on commercial-lease obligations, which they have failed to do.”
Ontario has suspended evictions for residential tenants, but not for commercial one. And there is no real legislation in place for rent postponements.
I’ve spoken to a restaurateur who’s offering takeout. She’s earning about 20 per cent of her usual revenue, operating at a loss just to keep some people employed and the business alive. Now that most restaurateurs have laid off their entire staff, and there’s no revenue coming in, proposed wage subsidies won’t help. Nor will loans, which will add only unpayable debt to a thin-margin industry.
But the ticking time bomb is rent.
“I’m not blaming the bureaucrats,” says Sinopoli. When he talks to ministers’ staff or lobbyists, they assure him that the government is moving at lighting speed. For government.
“Their lighting speed equals snail’s pace in our business,” he says. “Whatever lightning speed means for them will ensure the failure of a $93 billion industry. They’re figuring it out in other countries. If New York City can institute a 90-day ban on all evictions and rent obligations, why can’t the province of Ontario?”
Today is April 2. Rent came due yesterday.
“We are currently … in legal violation of our lease at four locations,” Sinopoli says. “Tens of thousands of restaurants and retail stores are in legal violation of their leases. They could sue us. Or they could evict us. And that’s not going to help getting everyone back to work and for them to get their rent.”
Two of Sinopoli’s four landlords are co-operating. But he says that restaurants can’t simply rely on landlords being reasonable.
“Landlords: please be as flexible as you can,” a spokesperson for the Ontario government told the Toronto Star. “We are encouraging landlords and tenants to work together during this difficult time to establish fair arrangements to preserve tenancies.”
We’ve seen in the past week that asking people not to congregate in parks is ineffective. You have to lock the gates. You need law enforcement.
“We’re not interested in screwing over the landlords. We just can’t afford to pay them right now,” Sinopoli says. “It’s up to Doug Ford to say customer-facing commercial leases are on a pause. Just give everyone time to figure out what to do. That’s all we’re asking for.”