If gastronomy is currently in a rather fragile phase, the next few months could become even more critical. By December 31, 2023, the federal loan offered during the pandemic must be repaid, raising “concern” in the industry.
• Also read: The owner of Juliette & Chocolat never thought she would have to close everything
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The closure of the 10 Juliette & Chocolat restaurants could be a red flag for many other retailers. Owner Juliette Brun claimed in an interview on Tuesday that she was choking on the loans taken out during the pandemic.
And that situation could be reflected in several others in the coming months, while Association de restauration du Québec vice president Martin Vézina expects “further closures.”
The main reason is this federal loan, the emergency account for Canadian companies, granted to save the industry during the pandemic. Most restaurants must repay between $40,000 and $60,000 within the next five months or interest will be added to the mandatory payments beginning in January.
“The operators say: I can’t make it until the 31st and I can’t start paying in installments every month on top of everything we’ve been paying. Here you can believe in closures and bankruptcies.”
Even if the customers are present in the restaurants, the profit margins are still too small to hope for a repayment of the loan by December 31st, explains Mr. Vézina.
According to him, it takes $1 million in sales to pay back $40,000 because restaurateurs’ profit margins are typically around 4%. An almost impossible mission for some.
The Association de restauration du Québec is asking the federal government to extend the deadline by at least a year “to ensure that another year of operation is guaranteed to generate the required $40,000.”