Dine-in restaurants are at tipping point of closure

The majority of dine-in restaurants cannot survive off take-out, delivery and limited dine-in reception for long.

Most restaurants are small and medium-sized businesses that were already operating with thin profit margins before COVID-19 hit the industry, with close to 40% of Montreal restaurants expected to shut down permanently as a result, according to Restaurants Canada. With significantly reduced revenue coming in for most foodservice businesses that operate at an average of 4% — 6% profit margins for take out, counter service and delivery based businesses and 2-4% profit margins for medium to large dine-in restaurants, many have already depleted their reserve funds, or soon will.

As we transitioned from dining in to take-out and delivery, restaurants with large dining rooms faced additional struggles to survive, while operating with the lowest profit margins in the industry due to additional expenses to provide dine-in services and higher rents required to offer seating in larger spaces.

In an exclusive interview with The Suburban, Martin Turcotte, owner and operator of Restaurant l’Academie in Montreal’s West Island’s explains some of the challenges faced by restaurants that rely primarily on dine-in customers.

With 22 years experience in the restaurant business, Turcotte saw it coming, keeping a close eye on what was happening in Europe and Asia. “When I lost my reservations for the week in March, I knew it was coming sooner than I had expected.”

“I prepared the restaurant for take out and delivery right away, but I took some time off, where we remained closed to analyse the market, change of menu, and prepare for the new style of operating as per the government measures.”

“To survive I need to change the concept.” Turcotte explained.

L’Academie normally operates with 11 waiters on the floor serving 294 seats while several kitchen staff operate the back end. Turcotte can be found managing operations 7 days a week at his restaurant to ensure quality control.

“In my 22 years in the business, I have never faced a challenge like COVID, this is a completely new experience that we are navigating through as business owners.”

Turcotte conducted a survey amongst his customers that revealed to him that the majority do not feel comfortable returning to dine-in until Christmas or later.

L’Academie hosts on average 30 groups weekly, such as baptism parties, communion parties, bar mitzvahs, retirement parties, funerals, birthdays and holiday parties.

The longer dining rooms stay closed or forced to operate at a substantially lower capacity, the less chance they have of survival despite offering take and and delivery services to customers. For many, survival is just not possible given the circumstances. Others are taking the risk. While large dine-in restaurants may be offering take-out and delivery, they cannot survive by operating in that fashion in the long term.

“I love this business, but it may become hard to love in this climate. We are giving it a shot and if it works, it works and if it does not then I will move on to another phase of my life.” Turcotte told The Suburban.

“The resiliency of our industry won’t be enough to keep restaurants from facing financial difficulties over the next few months. As they gradually reopen their dining rooms, there will be a need for continued support,” Restaurants Canada, Vice President, Federal and Quebec, David Lefebvre told The Suburban.

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