The future of B.C.’s popular fried chicken restaurant chain is uncertain as a federal loan comes due.
Chicken World co-owner Adeel Jahangir took advantage of a Canada Emergency Business Account (CEBA) loan during the COVID-19 pandemic, when public health restrictions limited access to restaurants. He is one of the hundreds of thousands of small business owners who have done so.
He will have access to the maximum possible amount of $60,000, and if he repays $40,000 by Jan. 18, Ottawa will waive the remaining $20,000. However, if you fail to meet the deadline, you will have until December 31, 2026 to pay the principal and interest.
“The worst-case scenario is to go out of business. Whatever you have, just try to pay it back and find a job,” Jahangir said Wednesday.
“Chicken World has grown, or rather expanded, to five locations over the years, and it’s been a dream come true for me. But now the devil is back. Masu.”
Jahangir, a former KFC employee, launched Chicken World with his brother in 2019. Since then, its popularity has exploded, thanks in part to a special blend of South Asian spices and a menu inspired by characters from the 1975 Bolwood movie. Sholai.
The Vancouver-born chain currently has two stores in the city, two in Surrey and one in Victoria. He added that while franchise margins are thin, costs for everything including food, labor and rent continue to rise.
“The pressure is crazy. I have sleepless nights, I think about it for a long time and I can’t enjoy my family at all because I know it’s coming,” Jahangir said.
His bank offered him a loan to pay off his CEBA loan, but the restaurateur said the aid is of limited use because it comes with interest. Jahangir wants to continue his business, but he said it was difficult to chart a path forward.
“I have the passion, I have the strength, I have the drive. But my hands are tied to do more because I’m scared,” he said.
He is not suffering in isolation. Last month, the Canadian Restaurant Association released a report that found half of food service companies are operating at a loss or just barely breaking even.
Sales have improved in the wake of the pandemic, but profits have declined due to “higher operating costs” and low foot traffic that hasn’t recovered from pre-pandemic levels, Canadian Restaurant Association reveals in Foodservice Facts 2023 report. did. Currently, only 12 percent of restaurateurs have double-digit profit margins.
According to the B.C. government, approximately 122,890 businesses in the province took advantage of more than $6.6 billion worth of CEBA loans.
To date, only about 15 per cent of those loans have been repaid, said Emily Boston, a policy analyst with the Canadian Federation of Independent Business.
“As you can imagine, many people are either scrambling to meet this deadline so they can still take advantage of the forgiven portion, or come to terms with the fact that they will have to pay off their entire $60,000 loan. “You’re either trying to do that,” plus 5 percent interest,” Boston said.
“The mood is not good. Small businesses are very unsure about the coming months and next year.”
The Canadian Restaurant Association previously announced that bankruptcy filings in the restaurant industry have increased by 116 per cent since 2022, and it expects more restaurants to close in the coming months.
The advocacy group also called on Ottawa to extend CEBA repayments for struggling small businesses by three years using a “reduced model” of the forgivable portion.
The federal government has extended the CEBA deadline twice, first from December 31, 2022 to December 31, 2023, and then from the end of this year to January 18, 2024.
According to the federal government, $20,000 of the $60,000 loan will be forgiven and no interest will be charged, as long as the $40,000 is repaid by January 18th. Similarly, a $40,000 loan will have $10,000 forgiven if $30,000 is repaid on time. Other forgiveness scenarios are outlined on the website.
Finance Minister Spokesperson Chrystia Freeland said in an email statement Wednesday that the “bottom line” is that companies must repay CEBA in full over three years.
“The additional flexibility we have announced will be a huge help to small and medium-sized businesses still struggling to make ends meet,” wrote Catherine Cuplinksas.
Meanwhile, the City of Boston says Ottawa’s extension isn’t enough, calling it “a bit of a slap in the face to small businesses” who are “crying” for help but only received an 18-day extension of interest-free repayments from Dec. 31. .
“We are calling on the federal government to extend the forgiveness portion by another year to give small businesses a chance to repay their debts, as many small businesses are unable to repay at this time. Because it’s clear: They’re going to be in an even worse position than they were when they first took out this loan during the pandemic,” she told Global News.
According to the City of Boston, the average debt for small businesses in British Columbia is about $100,000.
“Asking them to try more is definitely not going to help them at this point.”
Jahangir agreed.
He said his current situation was “worse than the pandemic.” “Yes, I think this is the bottom.”
