COVID-19 ravaged the restaurant industry. Here’s how policy-makers can help

In a restaurant, when something needs to be done, it needs to be done now. A pan of hot orecchiette with fresh mozzarella that’s just reached the melting point needs to get on a plate now. A dishwasher who’s just called in sick needs a replacement now. A leaky pipe needs a plumber now. In a business where customers, if not greeted within a minute of entering, may walk out the door, even five minutes is a long time.

So at the start of the pandemic, I understood the frustration of restaurateurs — abandoned by their insurers, threatened by their landlords — looking to the federal government for aid. Elected representatives and public servants, while working at what is considered a lightning pace for government, were moving in what felt like slow motion to restaurant owners and workers who had seen their world destroyed overnight.

The restaurant industry had no shortage of problems before COVID-19. But the pandemic fast-tracked the ongoing issues of exploitation, abuse, wage theft and income disparity, while creating new ones — like how to survive a year with your revenue reduced by 75 per cent, with barely enough savings to pay for the last batch of invoices and payroll.

Some restaurant problems can’t be legislated, like the issue of workers choosing not to go back to their jobs. I’ve heard reporters and economists discussing this as a matter of incentives. They forget there’s also a human factor: what life has been like for workers; how they have been treated by employers and customers.

Over the last year, between writing a book and many news stories about the plight of restaurants and the people who operate them, I’ve spoken to a lot of hospitality professionals about what they want from their governments. Here is what I’ve heard.

Clear timelines and messaging

The rent and wage subsidies introduced in Canada happened relatively fast. But the changes to them were slow and unclear. Each time support was extended, operators found themselves with unanswered questions about how to plan for the coming season, buy product or hire staff, with no idea of what the road ahead would look like.

No government is going to subsidize the hospitality industry indefinitely. All restaurant owners want is some understanding of how to strategize for the future.

Because businesses closed, then opened, then closed again — often, it seemed, due to public or private pressure as much as health concerns — restaurateurs haven’t felt like they can trust municipal or provincial leadership to consider the mechanics of their businesses. For example, when Ontario restaurants were allowed to reopen in March, they restocked and restaffed, only to be closed again within weeks. They’re hoping governments can at least be better communicators.

Regulation of third-party delivery

Pre-pandemic, the seemingly predatory nature of third-party delivery companies (or 3PD) was a conflict coming to a boil. But at the time, few customers were aware of the profit-busting commissions, averaging 30 per cent, that tech companies like Uber Eats and Foodora demand from restaurants that operate on a four to 12 per cent margin. The pandemic, with its shift to takeout and delivery, lifted the lid on this contentious relationship.

With restaurants forced to focus on off-premise sales, the tightening grip of the 3PD companies became a stranglehold overnight. And soon the rallying cry of “order delivery to support your local restaurant” segued into a public conversation about this dynamic. Some U.S. cities — L.A., Denver, New York, San Francisco, Seattle, Chicago — quickly placed temporary limits on 3PD commissions. Toronto dithered for six months.

At the same time, the exploitative nature of the “gig economy” and “independent contractor” language used by 3PD companies to avoid employing and compensating couriers fairly became a regular fixture of the news. Following a ballot initiative in California (where tech companies spent more than $200 million USD to overturn a state law that would require them to treat their workers as employees), the tech consortium has promised similar campaigns everywhere. They’ve already begun.

Similar to the rise of Amazon, Google and Facebook, the 3PD sector has leveraged a number of tools to gain a great deal of control over the hospitality industry in a relatively short amount of time. These strategies include: a lack of understanding from federal legislators; the speed of technological adaptation; and their ability to devote venture-capital-funded war chests to fighting labour laws. Governments everywhere need to wise up and learn from their mistakes in dealing with tech companies in the retail, data and media fields.

Deregulated alcohol sales

Restaurateurs in Ontario were thrilled on March 26, 2020, when they were allowed to sell alcohol via delivery or take-out. The lift on prohibition was supposed to be temporary. But the horse was out of the barn. The ability to generate drink revenue through off-premise sales (particularly at a time when all sales were takeout or delivery) was a game-changer.

The other piece of this puzzle is wholesale pricing. Restaurants carve out profit through purchasing in bulk — by the case, flat or skid. The lower unit price for higher volume is essential to keeping down food and beverage costs. In most jurisdictions, this kind of wholesale pricing applies to wine, beer and spirits. But in Ontario (and some other provinces), restaurants pay the same retail prices that customers do at the LCBO. That’s why a bottle of wine costs so much in a restaurant.

That’s never really made sense. It would be like telling law firms that they cannot get a discount on printers or office chairs. Wholesale pricing for alcohol would enable restaurateurs to make money on a cocktail without having to charge $18.

Department of Hospitality

Restaurateurs want a seat at the table. Some are calling for a government department or ministry. Why not? We have departments, agencies and Crown corporations for fishing, film production, heritage and so on (we once had a Metric Commission). It seems reasonable to have an office in Ottawa overseeing an industry that employs 1.3 million Canadians and that, pre-pandemic, generated $90 billion a year — five per cent of our GDP.

Consider the rollout of the rent subsidy. When it was announced in April 2020, it was initially tied to support from landlords, and the government was surprised at the low uptake given how few building owners were willing to file the paperwork. It wasn’t until November that the program was changed to allow restaurateurs to apply directly. Would that type of misunderstanding happen in an industry taken seriously at a federal level?

Labour law enforcement

This past year, furloughed workers have been voicing their objections to many of the systemic, cultural problems in restaurants. They have been holding employers’ feet to the fire by challenging and outing abusive, sexist, racist and exploitative behaviour from chefs, managers and owners. While the government is unlikely to take the lead in that conversation, robust enforcement of established labour laws would lift some of the burden off workers’ shoulders.

For example, wage theft is rampant in the restaurant industry. In Ontario, the Ministry of Labour only investigates employers based on complaints. To adequately protect workers, the ministry needs to conduct regular, unannounced inspections.

This is how Public Health works. Inspectors show up three times a year. They look behind the stove, under the shelves in the walk-in fridge, measure temperatures in the fridges and so on. Imagine if this only happened after someone got sick.

Workers deserve this level of oversight: someone who shows up to examine employee schedules, to ensure people are paid overtime and that their tips are not skimmed.

HR/mental health support

Everyone deserves as much access to mental health resources as medical resources. For workers in the hospitality industry, this past year has been one of repeating trauma. Their jobs were already stressful. Then they were told to stay home, thankfully with the aid of financial support. Then some were told to come back — sometimes to thoughtfully reimagined workplaces, sometimes to hazardous situations. Servers working patios became frontline communicators and enforcers of public health guidelines. A vocal minority of customers made this very unpleasant, by refusing to wear masks while using the bathroom, as well as other threatening behaviour.

It’s no surprise that many have left the industry: a recent study cited in The Washington Post found that a quarter of respondents have quit for good. This is a field that already had the highest rate of addiction before the pandemic, and where all manner of abuse is common.

It’s rare for a restaurant with less than 1,000 employees to have anything resembling a human resources department. Workers need access to mental health therapy, which includes talk therapy. This is not a problem limited to hospitality workers: mental health needs to be part of our public health infrastructure. Everyone needs and deserves this.

If restaurateurs were the CEOs of airlines or car manufacturers, they would already have the government’s ear. In tightly concentrated sectors, where a handful of companies dominate the industry, market share demands a seat at the table. Canada has tens of thousands of restaurant owners, making it difficult for their interests to be heard. Industry groups like Restaurants Canada do a good job of lobbying for the interests of chain and franchise restaurant owners, like campaigning against raises to the minimum wage. But that leaves independent restaurateurs without a voice.

The pandemic has prompted solidarity amongst independents, who have formed their own lobbying front in the form of SaveHospitality.ca. Any movement to raise the status and standards of the industry has to include listening to these small- and medium-sized business owners to hear what they are asking for. The list I’ve shared here is not exhaustive. But it’s a start.