Category Archives: leadership

Restaurants at the Brink – COVID-19 Response

A sector analysis series #1

Creative Commons Licence CC BY-SA (i.e. use in any way you want with attribution of source: “Inga Petri, Strategic Moves, May 17, 2020”)

Public health officials in Canada ordered dine-in restaurants closed everywhere during March 2020. Now in mid-May, they are musing about reopening restaurants with new obligations, centred on 2 metre distancing, disinfecting surfaces and perhaps more.

That potential “permission” to “open” cannot result in thinking restaurants and their owners wouldn’t require continued financial support.

The reality check

2018 financial data from Statistics Canada available at http://www.ic.gc.ca/eic/site/pp-pp.nsf/eng/home shows that for the 35,514 full-service restaurants with sales between $30,000 to $5 million (data for those earning above $5 million is suppressed):

  • 35% did not generate any profit at all, i.e. they were operating at a loss.  
  • The other 65% turned a profit of 7.6% on average, representing $24,400 for the year.

That means a profitable restaurant in Canada makes money only 4 weeks out of 52 on average. It also means a restaurant owner’s average annual profit is less than minimum wage. And no, many sole proprietors do not pay themselves a regular wage; instead keeping everything working in their business.  Anyone can see the high risk restaurateurs take and how tenuous their existence is.

In the Yukon, where I live, the numbers are a little better: only 22% do not report any profit and of the 78% that do, the average profit is 9.3% representing $66,000 on average in 2018. Nonetheless these figures show how little slack there is and how all the money for the years comes from the now cancelled summer tourist season.

This data makes clear:  the average restaurant, closed down already for two months due to the public health orders, is already bankrupt. Re-opening obligations are shaping up to be costly and won’t result in lower staffing complements despite serving far fewer customers due to new labour intensive cleaning regimes. There is simply no economic case to reopen for the great majority of dine-in restaurants.

Significant direct contributions to Canadians

Through the risk borne by them, restaurateurs have been contributing far-reaching benefits to Canada’s economy: according to Government of Canada data, the average dine-in restaurant had $765,600 in sales. Of that $250,300 went to labour costs and wages.  Purchases and materials that are part of the cost of goods sold totalled $273,900. Rent accounted for $65,300 and so on.

And there are many more indirect, restaurant owners have been building communities, contributed to quality of life, played a large part in attracting and retaining a skilled workforce, growing tourism through the culinary arts and memorable dining experiences, supporting charities, paying staff, helping put young people through school, feeding people, all while breaking their backs and bank accounts.

In short, the direct and related economic activity generated by the restaurant sector is worth billions to Canadians and the Canadian economy.

A broken model – Restaurateurs need help

COVID-19 is showing for the world to see what has been true for some time: The business model independent full-service restaurants have been forced into, largely by price competition from other food sector players, is broken and the owners are broke.

The numbers also make clear why restaurants can fall into GST and Payroll remittance tax debt, when basic break-even is so difficult to achieve. Non-remittance incurs extraordinary penalties and interest charges that can take up any monthly surplus and more. And then they are exposed to the CRA’s relentless collections and being treated as less than valuable community builders and hard-working, creative, innovative business leaders.

They need a chance at a life beyond COVID-19 and beyond a broken business model.

How can Canada help restaurants and their owners now?

A few ideas that could pull restaurants and restaurateurs back from the brink:

  1. Consumers have to learn to pay much more for the pleasures of eating out, especially when they don’t wish to tip 20% for servers and rather see living wages for restaurant workers, rather than below minimum wage as is the case in some jurisdictions. In the Yukon where I live it appears as though most, if not all, workers in the restaurant industry earn well above minimum wage plus tips.
  2. Landlords should permanently slash rents to restaurant tenants to enable restaurant owners earning a living wage and being able to invest in innovations in their business or business model.
  3. In addition to short-term COVID-19 Transition Grants to pay for additional public health mandated expenses and staff training, Government has to consider providing meaningful tax debt relief to allow a fresh start or at least some peace for owners.
  4. Sole proprietors must be considered as a special group requiring assistance. If sole proprietors are considered as “making a profit” when they barely break even before paying themselves anything, their work translates into not being able to cover their personal expenses and falling into debt.
  5. Local governments should revisit their zoning requirements to enable new, innovative ways of providing food services to the public. They can range from quickly enabling sidewalk patios and taking over unused parking spaces (no tourists means ample parking spaces are unused); a new breed of home-based businesses offering nano-scale/single-table/prepared-food eating experiences without the massively expensive requirements for home-based commercial kitchens; significantly reducing restaurant and liquor licensing costs.
  6. Canada’s provincial and territorial government-owned and run Liquor Control Boards should look at offering higher discounts or find a way to return most of their profits to their customers, i.e. bars and restaurants that must purchase alcohol at government controlled prices; allowing off-sales within every restaurant liquor license during the COVID shutdown period and 3 months beyond.

COVID-19 relief has been fast and effective at saving the financial lives of millions of Canadians. It is time to save the lives of those Canadians who have been living under the unyielding pressures of low price competition while the market demands quality food and high quality, unique dining experiences.

DigitalArtsNation.ca launched!

Today, we’ve launched digitalartsnation.ca, the website for Making Tomorrow Better: Taking Digital Action in the Performing Arts. This initiative received significant funding from the Canada Council for the Arts’ Digital Strategy Fund in spring of 2019. The nation-wide partnership led by the Atlantic Presenters Association includes the Manitoba Arts Network, BC Touring Council, Island Mountain Arts/Northern Exposure, Yukon Arts Centre / N3 and the Yellowknife Arts & Cultural Centre.

logo Making Tomorrow Better Taking Digital  Action in the Performing Arts

Of note: most of the participants in the face-to-face workshops live on the edges of the country. therefore we tailor content to suit the realities, including slower internet connectivity,  of rural and remote communities across Canada. Because what works there, will work in urban centres, too.

This national initiative brings practical digital know-how to participants across Canada, through custom workshops, online how-to tutorials and information-sharing

These workshops are designed to help participants speak digital with confidence – that is, we will demystify and discuss the digital realm in plain English – and quickly become competent participants in arts sector conversations about leading digital tools, emerging digital innovations, and new digital business models.

Workshops are led by Inga Petri, Strategic Moves, or Tammy Lee, Culture Creates.

Watch our upcoming workshops page and see where we are headed next!

Digital Strategy Fund: Funded Projects 2017 – 2019

Canada Council for the Arts announced its unique Digital Strategy Fund (DSF) in March 2017 with a sense of urgency: “The fund is part of a catch-up movement for the vast majority of the arts sector, which is at risk of being less and less visible and less supported by citizens (…)” As a strategic fund, it is time-limited and was to operate from 2017 to 2021. The Digital Strategy Fund is worth $88.5 million.

UPDATE August 12, 2019

Canada Council for the Arts’ Strategy and Public Affairs supplied to me new tables on August 9, 2019. My initial analysis was based on Canada Council’s grants database information. That public information does not include the amounts committed by Council to multi-phase projects as those funds will be released based on interim project report. The different between the Grants data base as of August 9, 2019 and the actual allocated pending reports is just over $7 million, i.e. $36 million as opposed to close to 29 million. Another difference was in the year to which projects were allocated, i.e. many of the projects marked 2019 actually belong to the 2018-2019 fiscal year and are now marked 2018.The basic point of the analysis remains: less than half the available fund have been allocated so far leaving significant opportunity space for new applications to the fund.

Tables below are updated using the new data supplied by Council.   

I hope it will illuminate where funding has gone and help see where the digital opportunities spaces might lie for the upcoming September 18, 2019 deadline for the next full round of funding.

Canada Council for the Arts Digital Strategy Fund 2017 to 2019

Table1 Digital Strategy Fund 2017 to 2019

In total, the DSF has spent $36 million for 352 projects for an average of $102,961 per project. (*IMPORTANT NOTE: The total number of projects funded is 352 over this period, however, multi-year projects are counted in each of the fiscal years in which funding is awarded.) 2018 saw nearly seven times as many projects funded, resulting in a quadrupling of funding allocated. The average funding in 2018 is substantially lower because it includes a round of funding for core funding recipients that maxed out at $50,000.

$36 million represents only 40% of the total ear-marked funding.  It is clear: there is tremendous opportunity to obtain funds for bold digital experimentation in and a great deal of learning about the digital realm  with the remaining $52 million over the next two years.

Canada Council for the Arts Digital Strategy Fund - Four Funding Streams

Table 2 DSF Funding Funding Streams

During these first two years, Digital Literacy projects have 25% of all funding allocated.  Public Access and Citizen Engagement stream received 29% of funds – representing 16% of projects, while the Transformation of Organizational Models received about 26% of all funding for close to 10% of all projects.  This assumes all multi-phase projects will proceed beyond their initial phases and the allocated funds will be disbursed. The Special digital projects for core grant recipients makes up about one fifth of the funds spent, but half of the projects. The multi-phase projects while few in number represent a very significant investment of the life of the projects in particular when they meet their go/no go metrics positively.

In a sector that by and large is lagging in the adoption of contemporary and leading digital tools and methods, these figures paint an encouraging picture: Not only are arts organizations embarking on becoming well versed in the use of digital tools but a considerable number are working toward producing, marketing and distributing participatory and receptive arts experiences by experimenting with and leveraging the tools and methods of the digital realm; and 34 projects representing $9.5 million ($5.7 ,million of funds have been released pending multi-phase project go decisions for later phases) are looking at what digital transformation might look like for their organizations and sectors.

These projects are predicated on partnerships and generating significant benefit for more than the lead applicant. As such seeing a segment of the arts and culture sector embracing this opportunity to obtain risk capital for strategic organizational model and business model experimentation in the digital world is encouraging.

Canada has become highly urbanized, with about 17 million Canadians living in the six largest urban centres, and more than 80% living in urban and sub-urban areas of Canada. This begged the question about the geographic distribution of funds so far.

Canada Council for the Arts Digital Strategy Fund Cities vs the Rest of Canada

Digital Strategy Fund Cities vs the Rest of Canada 2017 – 2019

The six largest urban centres across Canada have received 68% of all funding even though their general population comprises about about 47%. This suggests that there is a greater concentration of organizations and activities in the digital realm in the largest cities. Nonetheless, $11.5 million have gone to cities under 1 million as well as smaller jurisdictions including a few in rural and remote places. The average level of funding per project is on par when we exclude the special projects at about $103,000. Still, one of the promises (opportunities, challenges) of the digital realm is that it might create a more level playing field for geographically disadvantaged and systematically excluded places and people. There is a need to explore how smaller communities can build the capacity needed to access more of this funding. 

Canada Council for the Arts Digital Strategy Fund 2017-2019, Regions

Digital Strategy Fund 2017-2019, Regions

Further analysis shows that every region in the country has benefited from the Digital Strategy Fund; and it matches quite well to the size of population, with only the three Prairie provinces under-performing significantly by the measure of general population.

Canada Council for the Arts Digital Strategy Fund 2017 to 2019, Provinces and Territories

Table5 Digital Strategy Fund 2017 to 2019, Provinces and Territories

Perhaps not surprising given their population base or remoteness, the Northern Territories and PEI  have received funding for only 1 to 2 projects each so far. While on a population basis this would be deemed adequate, it does not reflect the depth and breadth of the arts and cultural communities.

In my  work with arts and cultural organizations in every province and territory in Canada over this decade, I have seen exceptional arts communities in unlikely places and without exception they have an interest in staking a claim in the digital realm. I expect and hope to see more winning proposals from strong local arts and culture sectors in Nunavut and Yukon as well as Vancouver and Gulf Islands, BC Interior, NWT, Newfoundland, rural Maritimes  as well as cottage country in Ontario.

Bottom line: with 60% of the ear-marked funding envelope not yet spent, the time is ripe for a plethora of proposals for the September 18, 2019 deadline. Plus there is money available for Digital Literacy projects under $50,000 to succeed any time you need them – indeed, you can apply as often as you need under this component!

Let’s get on it! Let’s talk!

Notes: I collated this spreadsheet DSF_2017to2020_Aug2019 from the data points on Canada Council for the Arts’ proactive disclosure website. It represents 337 projects and is based on a data pull on August 2, 2019.

The funding database for DSF does not specify the artistic disciplines or whether it belongs to an equity-seeking group

The three funding streams allocate either up $250,000 for single phase or $500,000 for multi-phase projects, and up to 85% of total eligible costs for a new project or 50% to refine or optimize an existing one. By any measure this is a significant and unique investment in the arts and culture sector in Canada. New in 2018 was that Digital Literacy projects of up to $50,000 can be submitted any time to be approved internally at Canada Council within a few weeks, ie without convening an expert jury. Also new was that the expectations around having a partnership lead these projects has been loosened to specify that it must benefit a wider group.

Three rounds of funding have taken place: the first closed in fall 2017 with funded projects announced in April 2018, the second one closed in fall 2018 with projects announced in April 2019, and the third one targeting organizations that receive core funding from Council was published in summer 2019.

 

CBC Interview: Digitizing the Performing Arts

Here is my interview from today with CBC North.

The report is available here:

Digitizing the Performing Arts: An Assessment of Opportunities, Issues and Challenges.  http://capacoa.ca/en/services/research-and-development/digitizing-performing-arts  La numérisation des arts du spectacle : Évaluation des possibilités, des enjeux et des défis. http://capacoa.ca/fr/services/recherche/numerisation-spectacle

Published! Digitizing the Performing Arts: An Assessment of Opportunities, Issues and Challenges

The thrill of release! Yes, we published today our latest national report – already billed as landmark 😉 – titled  Digitizing the Performing Arts: An Assessment of Opportunities, Issues and Challenges. It is also available in French:  La numérisation des arts du spectacle : Évaluation des possibilités, des enjeux et des défis.

I hope that this assessment provides a springboard for new conversations and digital capacity in the presenting field.

The question at the core of this work is who will be the digital intermediaries for the performing arts; and whether the presenting field can carve out a digital space that supports and benefits the entire performing arts eco-system. Doing so, I think, would require both a transfer and an expansion of the arts presenting expertise we see on the theatre platform to new digital platforms.

Presenters historically have been the dominant platform where performing arts and audiences connect. The theatre, stage or the festival site literally act as a platform. With that, this report seeks to begin to answer – or at least inform – big questions:

  • Can live arts presenters re-invent distribution of performing arts at digital scale?
  • How will Canadian artistic talent be nurtured and supported to grow viable careers and earn fair compensation in the digital realm?
  • How can we, and should we, as a free, vibrant society assure a broad diversity of voices that reflect all of Canada is heard in digital spaces as well as live performance spaces?
  • What is the future of live Canadian theatre, dance, music and other performing arts as digital technologies and capacities of data networks continue to advance?

This report by CAPACOA and Strategic Moves is the culmination of several years of conversations that emanated from our study on The Value of Presenting: A Study of Performing Arts Presentation in Canada. We are grateful for an initial round of financial support from Canadian Heritage to undertake this assessment.

On a personal note, I so appreciate and enjoy working with my colleague-client, Frédéric Julien, Director of Research and Development at CAPACOA. He is a tireless advocate in the arts; and equal parts smart, rigorous in his thinking and affable. Thank you, Frédéric, for your work and your collaboration!

Digital Innovation in Performing Arts Presentation

On Monday March 13, CAPACOA and Strategic Moves will facilitate an interactive web conversation on Digital Innovation in Performing Arts Presentation. Everyone is welcome to participate (10 am Pacific/1 pm Eastern).

My colleague, Frederic Julien at CAPACOA just  published a post with very high level summaries of recent events and reports from the perspective of the performing arts: http://capacoa.ca/en/news/field/1517-digital-conversation-intensifies.
You can also watch this video to get a good idea about some of the context that drives this conversation in the performing arts today. https://vimeo.com/channels/capacoa/119598467
Or simply flip through the Powerpoint version here: http://www.strategicmoves.ca/wp-content/uploads/2014/10/Breaking-the-Fifth-Wall_Final.pptx

New study on the arts in rural communities examines three regions in Canada

“The specific characteristics of the performing arts eco-system matter to whether they can fuel vibrant rural communities.” With this hypothesis in mind, I have been investigating whether there are common criteria or success indicators for building a sustainable, rural arts community. This exploratory research draws on existing literature about arts in rural communities as well as my work with organizations in rural communities from coast to coast to coast. In this initial phase of the study I focus on three communities: Haliburton County, Ontario; Temiskaming Shores, Ontario; and Wells, BC.

I will present findings from this new study for the first time at the SPARC Symposium taking place in Haliburton from October 27 to 30, 2016.

My work with SPARC goes back to 2014: I presented a keynote at the first SPARC Symposium in April 2014 on “Co-creating a Culture of Place in Rural Communities.” Then SPARC invited me to co-facilitate the SPARC Network Summit in November 2014. In my ongoing consulting practice I also work with small, rural and remote communities to help strengthen local capacities and capabilities.

A key goal of the SPARC 2016 Symposium (a project of the SPARC Network) is to create an environment where people can network: exchange ideas, find opportunities for collaboration, discuss solutions to tricky problems and identify big ideas. Attendees will have an opportunity to meet people engaged in the performing arts from rural communities throughout the province and across the country.

Whether your goals are professional development, learning strategies to attract new audiences, innovative approaches to sustainability, opportunities for information exchange, or developing creative methods for marketing campaigns or mentoring programs, it is SPARC’s belief that this year’s program will facilitate them: http://www.sparcperformingarts.com/sparc-symposium-2016/

See you in Haliburton next month!