Gateway Newstands — the ubiquitous convenience and news stores found in TTC stations and across Canada — has filed for creditor protection.
After years of declining sales and with foot traffic slow to recover from the pandemic, the company is restructuring, said a spokesperson.
As many as 40 Gateway locations have closed in the last two years. As of April there were 150 Gateway Newstands across Canada, down from 191 at the beginning of 2020, the company said.
Court documents show Gateway owes creditors more than $20 million. Filings note that Gateway locations are owned by an individual franchisee, many located in public transit stations, malls and office buildings.
The pandemic’s impact on the company and its franchisees was “immediate and profound,” the Gateway representative said in an email.
While the company said many franchisees were able to access some government aid, many have been unable to pay rent, filings show.
In a letter to creditors April 19, Gateway CEO Mary Kelly wrote that the company has had to make some difficult decisions to continue operating throughout the pandemic.
“We are emerging with more liabilities than our business can support,” she wrote. “To continue supporting our franchisees and our business into the future, we have made the decision that we need to restructure our debts.”
Gateway Market Canada, Tobmar Investments International Inc. and Tobmar Investments Inc. (leasing companies that are part of the franchising system) each filed a Notice of Intention to Make a Proposal on April 19, 2022.
A Gateway franchise owner told the Star that it’s been a difficult two years for his business. His family of him has owned the Gateway franchise at Toronto’s Dundas subway station for 25 years, and he said he’s had to cut staffing and store hours to the point he’s the only one working the stand.
Yet, overall, Wasim (he did not give his last name), is hopeful. Traffic is returning, he said, and customer habits have changed too. So, he isn’t making any drastic decisions until he has a better idea of what his business’s new normal might be. He calls this “the watching period.”
Retail analyst and author Bruce Winder said the biggest change over the past two years for convenience stores such as Gateway has been foot traffic.
“They rely on a very specific high volume traffic flow in certain areas, whether it’s downtown or in an airport or a train station or a large shopping complex or a large office building,” he said.
Many convenience store operators pay high rents for premium locations, said Winder, and with many major employers still keeping employees at home full- or part-time, these business owners are trying to figure out what their new normal will look like.
“For some people, this new normal is a nightmare,” he said.
Dave Bryans, CEO of the Ontario Convenience Store Association, said the sector has been losing around six stores a week for the last two years. It has gone from more than 9,000 locations pre-pandemic to 8,500 today.
Two-thirds of those are family-run businesses, said Bryans, many in strategic locations like Gateway. Many are now hanging on by a thread.
“We continue to see stores closing at a record pace,” he said.
The pandemic made some of the other issues these business owners face more acute, said Bryans, such as the rising costs of gas, rent and labor, or the margins on lotto products, which the association has been pushing to raise for years.
He expects this pace of business closures to continue for months as businesses adjust, though much depends on the decisions made by landlords and office workers.
Convenience stores are just one kind of small business that has struggled during the pandemic compared to bigger chains, said Winder.
“You’re seeing sort of the grinding down of the small independent retailer, and they’re getting hit from all fronts,” he said. “There’s a theme here.”
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