Starbucks will close 300 restaurants in Canada by March. Other chains will likely follow suit. But have no fear, chains will surely open other stores...just not in city centres.
It’s no secret the COVID-19 pandemic has caused many Canadians to move from cities to the suburbs and even the countryside. According to Statistics Canada, the phenomenon led to a record loss of population in Toronto, Montreal and Vancouver in 2020.
Vacancy rates are skyrocketing in many urban centres across the country. The same phenomenon is happening in most parts of the Western world. Some recent real estate reports suggest that 2021 will be more of the same.
Toronto recorded a record loss of 50,375 people between July 1, 2019, and July 1, 2020. The number for Montreal was around 35,000. The loss in Vancouver was measured at around 15,000.
It’s far from new to see city dwellers leaving cities. But they’re often replaced by new immigrants.
But the pandemic has accelerated the flow of people leaving cities, especially among young people. Almost a third of the increase in outflows of people were between 15 and 29 years old, and 82 per cent were under 45 years old. These people represent younger generations who are slowly and quietly abandoning city life.
Of course, the cost of city dwelling is a cruel barrier. Current interest rates – which are at historically low levels – are making borrowing almost costless. But city real estate is now out of reach for many households with low incomes. CIBC’s latest report on income gaps clearly demonstrates how COVID has made the poor poorer. So leaving cities is more temping than ever.
Telecommuting also offers an opportunity for many to escape from chaotic city traffic. The working-from-home phenomena brought on by the pandemic won’t disappear anytime soon. Several surveys suggest that almost a quarter of employers in Canada plan to let their employees work most of the time from home after the pandemic is over.
While several companies are reviewing their ergonomic and workspace strategies, landlords struggle to find new tenants. Leases are being repurposed and renegotiated to reduce cost and accommodate part-time presence by employees, boutique style.
And COVID’s legacy will be about getting more people to work from home more often.
A domesticated, more sedentary population will also consume food differently. Our culinary ambitions at home have changed since March 2020. With more cooking and gardening, Canadians are becoming food literate.
A smarter, more knowledgeable public when it comes to food systems will shop for food differently. Grocers will need to revise their real estate strategy.
And restaurants aren’t immune to what’s happening.
The Starbucks chain just announced it will close 300 stores across Canada by the end of March. Most of these outlets are in shopping malls and, of course, in city centres. On average, a Starbucks generates approximately $600,000 in revenue annually. That basically means that $150 million to $180 million in business will need to find new homes as that money is spent elsewhere.
Most importantly, the shift also means less money is being spent in urban centres. Out of 98,000 restaurants in Canada, approximately 10,000 have closed since the start of the pandemic, according to Restaurants Canada. Some have closed permanently. Of the 10,000 closures, over 90 per cent are in urban centres with more than 200,000 people.
As with other food service chains, Starbucks will likely go where the money is. And, most importantly, this money is held by younger consumers whose economic influence can only increase over time. As we slowly leave a pandemic-preoccupied era, more food companies will need to adjust how they retail and service a transiting food marketplace.
This mass movement towards rural life in Canada, however, could also present an opportunity for some independent operators who have been working in the shadows of burgeoning downtowns across the country. Unique restaurants and retailers in more remote settings could see more customers, giving these outlets a second wind.
And rural Canada may be getting its mojo back, which is a good thing.
Dr. Sylvain Charlebois is senior director of the agri-food analytics lab and a professor in food distribution and policy at Dalhousie University.
- Last June, Dene Moore came to a similar conclusion: COVID-19 might just save Rural BC.
- Sylvain Charlebois last wrote about the federal carbon tax – a good idea in principle, but in its current construction likely to affect the cost of food.
- It seems like ages ago that rural BC was the focus of furious debate in the Proportional Representation debate. Brian Coxford looked at the conversation, and some of those who felt the strongest.