Capacity limits and intermittent lockdowns have transformed the dream of entrepreneurship into a thankless grind for countless small business owners, many of whom have been propelled this far by Herculean resolve. But with the Omicron surge as well as currency inflation, the situation has become downright tenuous for many.

“I haven’t seen the price jump in big brands for sodas, which are a lot of what I use, but I have seen an increase in price for beer,” Alberto Richards, owner of Nothing Fancy, a bar in Toronto’s popular Dundas and Ossington neighbourhood, told STOREYS. “So much so that I have dropped certain brands because I can’t or won’t pay for that product. One cider provider went from $3 a can to $5, which means for me now that cider has to be sold at a minimum of $9. My clientele won’t stand for that and I can’t justify buying that.”

Last week, the provincial government announced a $10,000 grant for small businesses affected by the latest lockdown, tentatively slated to expire January 26, and that they will be charged the off-peak electricity rate of 8.2 cents per kilowatt-hour for three weeks beginning January 18. Nothing Fancy made $12,000 in revenue last month, down from $35,000 in August. While Richards welcomes the government grant—and even though staff hours are down—his overhead has actually increased because expenses like hydro and the building's hot water rental tank have gone up.

“My number for January will be much worse,” said Richard, whose purchase of the bar, previously known as Red Light, began before the pandemic and closed in May 2020. “I basically get electricity back and a portion of my property tax back but it’s nowhere near close to where my revenues would normally be. When I bought the bar, the smart call was to pivot into live events because we were such a new bar and I wanted to build the audience quickly, so we doubled down and became a comedy club. But I lost 50% of the month in December, and that was just from the Premier’s announcement in the middle of the month when we were already closing at 11. We also do private events, which cancelled on us, and the comedy shows that week were cancelled, so we closed from December 20 until January 2, came back for two shifts [to sell takeout beer] and then closed.”

Grant Can't Make Up for Missed Holiday Season Profits

Christian Petronio, Director of Hospitality for CHI Real Estate Group, a Toronto-based hospitality-oriented real estate team, is cognizant that the government can only dole out so much money through subsidy programs, and while he muses aloud that the provincial government gets points for creativity, proffering a $10,000 grant and reduced electricity outlays hardly moves the needle.

“If your lights are off and you’re not running a business, I’m trying to understand where the benefit can be,” Petronio said of the 21-day reduced electricity rate. “You don’t want to be ungrateful for support being given out, but do I see that as a lifesaver? Absolutely not.”

He added that, for restaurateurs, the latest lockdown is a particularly bitter pill to swallow because the holiday period is their most profitable time of the year and sees them through nadirs in January and February.

“The most detrimental thing was not being able to serve the masses during the holidays. I have a client with a club on King St. that isn’t big at all but he lost about $350,000 worth of revenue in the last two weeks of December,” Petronio said. “Now they don’t have any sales and they were really counting on that to throw some money into their bank accounts. Being shut down for the holiday season was the most critical thing to happen to the restaurant industry.”

Food Price Inflation is a Double Whammy for Restauranteurs

Although it might seem that food delivery services have kept restaurants afloat, their rates are hardly buoying. The businesses that use them have long complained the fees are too high and Petronio suggests that they will either increase their prices online to recover lost margins or cease delivering food through those companies. Unlike McDonald’s and Burger King, which are doing just fine, Petronio says, because they’re cheap fast food options for people in the lowest income brackets, most restaurants in Toronto are struggling right now.

As if their straits weren’t already dire, restaurants are now encumbered by inflationary prices for goods and ingredients. For instance, restaurants typically purchased five-litre boxes of canola oil for $18, but now it’s hovering around $50. Petronio concedes that’s a particularly acute example, but the combination of revenue diminution, expenses rising across the board and, in many cases, restaurant owners having to work kitchen shifts because they’re short staffed, is taking a heavy toll.

“Now they have to jump in as an operating staff member and then they have to run their business, do the accounting and paperwork, learn about new subsidy programs and navigate the systems in place,” Petronio said. “Sometimes they call on family members for help.”

Nearly 20% of Small Businesses Considering Bankruptcy

While money is being granted to small businesses that qualify this time, the Canadian Federation of Independent Business (CFIB) released a statement calling on the government to reintroduce grant programs for all businesses affected by the lockdown, noting that the provincial government has hitherto extended each lockdown beyond the promised reopening date.

Additionally, 408 days of indoor dining have been lost to lockdowns and only 35% of small businesses in Ontario have maintained normal revenues, according to the CFIB, adding that the average COVID-19 debt has reached $190,000 for small businesses, 18.5% of which “are actively considering bankruptcy.”

“That’s a significant amount of money,” said Petronio, who previously owned a café and ran restaurants. “As a past operator, that industry has such thin margins and adding concurrent pressures like the increased minimum wage and rising cost of goods makes it much harder. Fewer businesses were going under because of the subsidies, but this year will be a reckoning because that amount of help won’t be there, and another year and a half of collecting debt won’t put you in a great spot.”

Indeed, business owners' resolves are waning. Echoing the CFIB statistic, Petronio says a growing cohort of restaurateurs are fed and up and considering closing shop. While that should probably worry denizens of a culturally vibrant city like Toronto, perhaps they will be comforted to know others, like Richards, intend to ride out the pandemic to greener pastures.

“I think I’ll stick around,” the 28-year-old said. “For one, when it has been open, it’s been a lot of fun and I work with a really great group that seem to keep wanting to do this if we can. I don’t know that this [pandemic] will last forever; even now, it already seems more hopeful. Something I noticed about my bar-owner peers is I’m by far the youngest of the group. Maybe I just have the energy of a young man to stick it out.”