Toronto’s downtown core hit hardest by Omicron restrictions with spending down by 44%

In-person spending in the city centre plunged below 2019 levels as workers continued to telecommute during Omicron, Toronto Region Board of Trade data shows.

Thestar.com
Feb. 16, 2022
Rosa Saba

Omicron restrictions in late 2021 significantly impacted foot traffic, consumer spending and employment in Toronto’s downtown core just as businesses were on their way to recovery. Small businesses and workers in certain sectors were hit harder than others, new data shows.

The Toronto Region Board of Trade published new data Wednesday showing that in-person spending declined after November 2021, especially in the metropolitan centre, where spending was 44 per cent below 2019 levels as workers continued to telecommute instead of returning to the office.

This decline in spending was driven by the entertainment, food and other similar sectors, data shows. Retailers in other areas, such as office parks or districts with big-box stores (what the board of trade calls the services and mixed-use district), were more resilient to the effects of Omicron than those downtown, meaning larger retailers weathered the storm more easily than small independent businesses, said Marcy Burchfield, vice-president of the Economic Blueprint Institute, an initiative launched by the Toronto Region Board of Trade.

Burchfield said the numbers show just how deeply Omicron stunted Toronto’s recovery after the initial waves of COVID.

“It’s hurt the economy and it hurt businesses,” she said, especially consumer-facing businesses like restaurants and gyms that had more restrictions.

Employment took a hit after Omicron restrictions were introduced, especially in the food, accommodation, culture and recreation sectors. Employment in all sectors dropped by 11,000 jobs across Oshawa, Toronto, Hamilton, Guelph and Kitchener-Cambridge-Waterloo, according to the board of trade.

Employment in the Toronto Census Metropolitan Area, which includes Mississauga and Brampton, dropped by three per cent in January 2022, according to Statistics Canada, compared to 1.9 per cent across the province in the same period, and one per cent nationally.

Though much of the data isn’t surprising, Burchfield said she was taken aback by the sheer drop in jobs across Toronto and the surrounding area, which was concentrated among the hardest-hit businesses in sectors like food service and entertainment.

Toronto’s businesses had been recovering throughout 2021, data shows, as more visitors and workers returned to the downtown core -- though businesses were still grappling with rising levels of debt despite eased restrictions.

However, during Omicron, workers and visitors stayed home in larger numbers, the data shows.

Julie Kwiecinski, Ontario director of provincial affairs for the Canadian Federation of Independent Business (CFIB), said even when restrictions like capacity limits lift, the question of whether or not consumer habits have permanently changed remains. Many of the independent businesses in downtown districts across the country rely on worker and visitor traffic, she said.

“Where you have employees in the financial district that were ordered to work from home, that would automatically translate into less foot traffic,” she said.

James Rilett, vice-president for Central Canada for industry group Restaurants Canada, said the food service industry saw the effects of Omicron almost immediately, with sales dropping at the beginning of December and again a week later. That translates directly into employment numbers, he said.

Restaurants had a lot riding on the holiday season, and had their hopes for a little extra cash flow dashed, said Rilett.

Businesses in the financial district are doing particularly poorly, Rilett added, as they wait for office workers to return. Many have already permanently closed, sensing that at least some of these workers will not be returning, with remote work likely partially here to stay.

But restaurants have reason to be optimistic heading into spring and summer, said Rilett -- a strong patio season has the potential to help kick-start their road back to profitability.

Lifting restrictions is just the first step toward recovery as businesses have accumulated debt, said Kwiecinski. Some CFIB members anticipate it could take two years or more to recover, she said.

As the latest reopening plan looms, with gathering limits to expand Thursday and vaccine mandates on the way out, Burchfield said businesses need assurance that this time, they will stay open.

“We’re in a different place now,” she said. “I think that there’s more confidence that we have the tools in place ... for businesses to stay open.”