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What you need to know about COVID-19: September 21, 2020
Stores in the Eaton Centre shopping mall welcome shoppers back, as the provincial phase 2 of reopening from the coronavirus disease (COVID-19) restrictions began in Toronto in late June.
A pedestrian wearing a mask walks past a store on Toronto’s Dundas Street West stating CEBA Won’t Help Us during the COVID-19 pandemic in June.
Pia Bouman’s monthly revenue as a longtime ballet teacher in Toronto’s west end has not changed very much in the past few weeks even though the local economy is progressively moving into the deeper stages of reopening.
Physical distancing rules means that in-person attendance at her non-profit Pia Bouman School of Ballet and Creative Movement has to be limited to a maximum of three or four students per class, a third of the class size she used to have in pre-pandemic times.
After each class, a thorough cleaning and sanitizing process begins. Despite the precautions, demand for in-person classes has remained low, with just five classes per week.
“The landlord has not given us leave yet,” said Bouman, who has not paid rent since her revenue dried up in late March. “But if we lose this school because of rent arrears, the ramifications would be huge for this community: there are hardly any dance spaces in the west end of Toronto.”
Bouman’s dance school is one of many small businesses that are continuing to struggle despite nationwide rules that now allow for most indoor activities to resume and for gathering in relatively large groups (albeit at a distance).
The problems vary according to business
and are complex in nature, but include potential landlord troubles, customer comfort levels and a looming Canadian winter that will shut down patio sales.
Bouman’s landlord, for example, has not yet chosen to apply to the Canada Emergency Commercial Rent Assistance (CECRA) program, the federal subsidy for landlords, meaning she could be served an eviction notice at any point.
On top of that, adhering to physical distancing rules means that she can’t take in as many students at a time, even if they didn’t still have trepidation about sweating it out in an indoor space.
At the height of the pandemic in early April, just 21 per cent of small businesses were open, according to data from the Canadian Federation of Independent Businesses. That number has tripled as of Aug. 5, but approximately 75 per cent of small businesses also report that they are making less revenue than they would have at this time of the year, and 26 per cent said they are making less than half what they used to.
“There are people out and about, in parks, walking, biking, cycling, but not many are actually coming in and purchasing things, especially if it requires being in an indoor space for a long time,” said a sales manager at a downtown Toronto branch of clothing store Zara Inc. “Usually, we’d be packed for end-of-summer sales.”
A few units away from Bouman, the owner of Mosaic Yoga, Morgan Cowie, is facing a similar problem: her yoga studio is open for classes, but business has been bad.
“Revenue is dismal right now. I am working solo, seven days a week, and I’m just trying to somehow keep things ticking along, but it’s really grim right now,” Cowie said.
Things are not much different since the Financial Post talked to Cowie back in March. Mosaic Yoga, at that point, had just refunded most of its membership fees, and introduced Zoom classes.
“One of the problems for us is that people are just not comfortable wearing masks or shields indoors yet, and I think that behavioural modification is hard for people,” she said. “I’m also worried as to what will happen when CERB (Canada Emergency Response Benefit) runs out, but, look, August has always been a slow month so maybe September will be better as people get back to the routine of school.”
Many of the federal government’s income support measures have provided a lifeline for small businesses to this point, but there’s a degree of trepidation among some owners as to what will happen when the programs are modified, or stopped altogether.
For example, Cowie has been personally surviving on CERB. Her business was not eligible for the government’s wage subsidy program so she had to let all her staff go and does not plan to hire most of them back until business picks up.
Almost 40 per cent of business owners with up to four employees have used CERB, according to CFIB data, and that program is scheduled to end on Oct. 3.
The self-employed who have been paying into employment insurance will be able to access some benefits, but the payout rate will depend on their employment history and the extent of their contributions.
In Edmonton, Justine Barber, the owner of Poppy Barley, a clothes, shoes and accessories store, said she is extremely concerned about the end of government benefits.
“We have really been supported by the government, especially by the wage subsidy,” she said. “The revised wage subsidy, which will go on until the end of the year, will give us much less than what we’re getting now.”
The federal government’s modified wage subsidy program is designed to give out a smaller subsidy to companies whose revenues are improving. Those that need the help most, however, could get a wage subsidy as high as 85 per cent, up from the 75 per cent that can be currently claimed.
On most measures, Poppy Barley is doing okay . July 2020 revenue, according to Barber, was 90 per cent of that in July 2019, but its in-store sales at two mall locations in Edmonton and Calgary are 50 per cent of what they normally are.
“It’ll be a down year overall, we’re projecting about 80 per cent of revenue compared to last year,” she said.
Margins are so thin for independent retailers such as Poppy Barley that even the slightest increase in costs can push them into uncertain territory.
“We’re still waiting on our landlord to receive CECRA, we are really banking on that,” Barber said.
Both the retail and food sectors have somewhat recovered since provincial economies began reopening. The latest employment data from Statistics Canada showed that food service jobs rose by 100,500 in July, although that number was still 300,000 fewer than what it was in February.
But the recovery could be short-lived since many restaurants are relying on patio sales.
Charles Khabouth, chief executive of Ink Entertainment, one of the country’s largest restaurant and bar owners, said 90 per cent of his company’s current revenue is coming from outdoor dining.
Back in April, Khabouth had shut down all 18 of his bars and restaurants in Toronto and Montreal, leaving only one coffee shop open for takeout. But he said business has been roaring since patios were allowed to open in late June.
“Traffic outdoors has been overwhelming, sales are skyrocketing, people are so happy to be out,” he said. “We have under 100 cases a day in Ontario, you’d be a very unlucky person to catch this virus.”
Cabana Pool Bar, Ink’s flagship day club in downtown Toronto, has now been converted into a restaurant — one that Khabouth said is seating about 1,000 people per day.
His plan is to scoop up as much revenue as possible in the summer months, while continuing to rely on the government’s wage subsidy program to offset costs for as long as the program continues.
Meanwhile, Khabouth is hopeful that infection rates will stay low as more people get used to wearing masks.
“Look, I see this (outdoor dining) as a runway for people getting comfortable being around other people,” he said. “We certainly won’t be able to do the volume that we can by having people on a patio, but I’m hopeful that once it gets cold, people will still remain comfortable coming to restaurants and bars.”
Copyright Postmedia Network Inc., 2020