'I haven't slept:' N.B. restaurant owners lay off workers during COVID-19 downturn

In a city known to punch above its weight with its eateries and bars, the closure of more and more well-loved restaurants is going to take a toll.

It begins with some of the owners, who say they're losing sleep after telling their employees that there is no work for them and it's far from clear when they'll work again.

"We have staff who are single moms and people who are one-income families," said Lisa Hovey, co-owner of The Zesty Lemon. "I've been losing sleep over them."

Hovey said she'd been agonizing over how to manage operations in a COVID-19 world, with 13 employees depending on her some living paycheque to paycheque.

Monday, Public Health ordered the closure of all restaurant buffets and "asked" restaurant owners to limit the number of customers to 50 per cent of their dining room capacity.

Hovey reached the conclusion that she had to lay off all her staff.

She said now it's just herself and her business partners, Bill and Cindy Gray, who are making meals for the gift shop at the Saint John Regional Hospital. They're also doing takeout, which, as of Tuesday, was still allowed by the province.

Hoveysaid it's the only way she can hope to survive the downturn and open another day.

"I've been in touch with people in similar businesses and they will not reopen because it's going to be catastrophic," she said.

"They will not be able to recover. It's very, very sad."

The bills keep coming

George Georgoudis said everyone at Vito's, his family-operated business, is shocked by how fast the situation changed.

"We had an emergency meeting on Saturday to talk to staff about cleaning and sanitizing the restaurant," he said.

He had been hoping to get another two or three weeks of normal business.

WATCH: Saint John restaurant owner describes how tough it has been to reduce operations and lay off workers during pandemic.

Many Saint John restaurants forced to reduce operations, lay off workers

5 years ago

Duration 1:21

Saint John restaurant owner George Georgoudis said laying off workers amid COVID-19 crisis has been really tough.

Then on Monday, prime minister Justin Trudeau told everybody to stay home.

"It's come down so fast. It's unbelievable," said Georgoudis, who has closed all three dining rooms in the Saint John area, impacting 100 staff.

"All three stores are takeout only and we're using [three or four] of our employees to do delivery only."

It's an unprecedented blow for a business that was started on Russell Street in Saint John in 1972 by three Greek immigrant brothers.

The company is a major sponsor of the Saint John Major Midget Vito's hockey team and a community booster, hosting an annual music festival in the Kennebecasis Valley that draws hundreds of people and raises money for hospital equipment.

In February, the Greater Saint John Community Foundation granted the Georgoudis family with its Community Service Award and $10,000 for the charity of their choice. They sent the money to Mindcare.

Now they find themselves looking for some help.

"Hopefully, the government steps in," said Georgoudis. "The bills are coming previous invoices from last month, mortgage payments, utility bills. And you look at your cash flow and you're thinking how am I going to do this."

Narrow margins

New Brunswick has 1700 eating establishments, employing 22,000 people, said Luc Erjavec, the Atlantic regional spokesperson for Restaurants Canada.

"We have a restaurant, bar or pub in every single community so every community will be touched," he said.

Erjavec said the average profit margin for a restaurant or lounge in New Brunswick is in the range of four to five percent, or about $30,000 to $40,000 per year.

"It's not much of a cushion," he said. "So, when your sales decline this amount, you just can't hang on. I've spoken to a number of operators who are, quite frankly, scared."

"They say they only have enough to keep going for a few days or a week or a couple of weeks. Everybody has to be aware of that governments, landlords, suppliers. We're essential to the economic and social fabric of New Brunswick"

The hospitality industry has been identified by the Canadian Federation of Independent Businesses as one of the sectors that will be hardest hit during the COVID-19 downturn.

Ottawa said it's still rolling out measures that will help small businesses and their employees, and recently announced the one-week waiting period to apply for employment insurance has been waived for those who can't work due to the pandemic.

However, wait staff would only receive a percentage of their declared wages and many servers depend heavily on cash tips.

"It's based on your hourly wage, not your income," said Erjavec. "It's not a lot in some cases."

"I've heard from restaurants that want to stay open just for their staff but they just can't make it work."