Good evening, committee.
My business, Morton Food Service, just celebrated its 100th year in 2019. We employ over 110 individuals throughout southwestern Ontario. As some background, we started as a small retail shop on Ouellette Avenue in Windsor, and we have progressed to become a broad-line food service distributor to independent restaurants in all of southwestern Ontario, including the Niagara Peninsula and the first nations reserves on the Grand River.
Over 75% of our 1,200 customers have closed their doors as a result of the Government of Canada's mandate to the restaurant industry. They were simply not equipped to convert their operations from sit-down to takeout, and they're also very concerned about the safety of their employees. They've come to realize that their fixed expenses—such as rents, mortgage payments, equipment leases, taxes, insurance, etc.—are still accumulating and that they will eventually be responsible for paying them.
The Canada emergency wage subsidy is not very helpful to our accounts, nor to my company. Subsidies do not create revenue, which is what we require. The CEWS will be helpful when my accounts are allowed to reopen and we begin to build up some revenue, but only if it's extended well beyond June 6. Can you imagine trying to cover your fixed expenses and pay employees when your business is only doing 25% of its normal volume?
As for Morton Food Service, we have a number of specific hurdles that have yet to be addressed. We have around a million cubic feet of fully temperature-controlled warehouse space to ensure the safety and integrity of the 6,500 food products we regularly have in stock. The expenses we incur to maintain this space are substantial, including rent, hydro, insurance and distribution equipment, to name a few. We also have a fully refrigerated fleet of delivery vehicles, 20 vehicles on full-service leases that cost us approximately $70,000 per month. Other items include equipment leases, insurance, hydro to keep our building fully temperature-controlled, and the lease of a sophisticated computer system to fully track all food products from farm to table, etc. We incurred all of these expenses in order to properly and safely service our customers.
The Government of Canada has legislated our customers to close their doors, causing an 80% decline in our overall business, yet we are still responsible for maintaining these fixed expenses with next to no revenue and a very poor cash flow. It hardly seems fair.
To make matters worse, our competition consists primarily of two multinational companies, Sysco food services and Gordon Food Service, both based out of the United States. They would love to see businesses like mine be forced to close, as they would simply control even more of the Canadian food distribution landscape.
We have partnered with many local southwestern Ontario farming businesses to provide us with products that our multinational competition doesn't carry in its inventory. This provides the small local farmer with an avenue to distribute products, and it provides us with some unique items that our competition does not carry. It is clearly a homegrown win-win. As our business suffers, so do the small local suppliers.
I'm obviously very passionate about my business, my customers, my suppliers and my employees. If we are unable to continue, our market will be fully controlled by the two U.S. mega-distributers I already mentioned.
Federal assistance in the following areas is desperately needed to keep afloat not only my company but also my small local suppliers and my customers. One area is the continuance of the wage subsidy for many months after the restaurants are allowed to reopen. It is of very little help right now.
Two, we need subsidies to cover the fixed expenses I mentioned earlier. These expenses were incurred in good faith in order for my company to be in business and service the independent restaurant trade in southwestern Ontario. We have no way to fund them while our business is down 75% to 80%. This will cause us to permanently close our doors if it is not addressed in the very near future.
Three, we need subsidies to cover mortgage payments for those businesses that choose to purchase rather than rent their premises. Many of my customers are in this situation. They didn't want to simply rent their premises and build up no equity, so they purchased their building with a large mortgage. Covering rent will not help them. Loans will also not help. How would they ever be repaid?
I'd like to close with one final item that hasn't been discussed yet. It has to do with severance pay. The present Employment Standards Act requires that an employee is considered to be severed after being on EI for 13 consecutive weeks.
The financial burden that severance pay would have on my business and my customers' businesses would cause us to close our doors. It would be impossible for us to sustain these costs and continue operating our businesses. Clearly, we cannot get back to anything that resembles normal for quite some time. As a result, many employees will reach their 13-week threshold—