Mike Babineau owns several restaurants in Fredericton, including the Happy Baker, Cora's Breakfast and Lunch and the Diplomat. He said he's laying off 100 employees as New Brunswick's lockdown rules came into effect today, mandating all restaurants move to takeout only.

"It's a very sombre day … to come to the realization … you've got to sit down with 100 employees, and you've got to sit down with … some of these immigrants that have come to Canada expecting to work," he told Information Morning Fredericton Friday. 

"Now I've got to send them home or for who knows how long."

Shawna Foster, the co-owner of MoCo in downtown Fredericton, said she's in the same boat. She said she will keep her permanent staff, but cut their hours in order to pay the bills.

"It's just, it's awful," she told Information Morning Fredericton. "We knew it was coming. It's just hard when it's staring at you in the face."

New Brunswick moved to Level 3 of the COVID-19 winter plan, the most restrictive level, for 16 days. The move came at midnight Friday.

The province is struggling to cope with a strained hospital system. More than 100 people are hospitalized due to COVID-19 and more are expected.

Shawna Foster says she tried to keep most staff on despite a decline in business through the holidays, but she will have have to lay off staff now. (Stephanie Sirois/CBC)

Babineau and Foster said they knew restrictions were coming because they could see a similar pattern in Quebec and Ontario. They also have been struggling with reduced businesses since Omicron came to the fore in November.

"We kept all our employees working through Christmas, even though the business levels weren't there, and tried to do our best to keep them working, " Babineau said.

Premier Blaine Higgs said he's confident 16 days will be enough to get the case numbers and hospitalizations under control, but the restaurant owners are not as confident.

Babineau said he's planning for the lockdown to continue for at least six weeks.

"We're not going to reopen and the clouds are going to part and we're going to have sunny days right away," he said. "We're still going to be in the 50 per cent occupancy [range] and we're still going to have these restrictions on us.… We're in for a really long haul here."

10:50Restaurants at Level 3

Now, restaurant operators are adjusting to a new requirement: enforcing a proof-of-vaccination mandate.

Introduced in New Brunswick on Sept. 22 as cases surged to an all-time high, the proof-of-vaccination mandate is aimed at limiting spread among unvaccinated people and providing an incentive to get vaccinated.  

But some New Brunswick restaurateurs say it's also limiting their ability to do business.

"We've been beat up since day one with the Covid restrictions," said Mike Babineau, co-owner of four restaurants in Fredericton, including Rustico and The Happy Baker. 

Mike Babineau, co-owner of four restaurants in Fredericton, says he's seen business decline by 30 per cent since the implementation of the vaccine passport. (Jon Collicott/CBC)

He said business has dropped by 30 per cent at his establishments in comparison to other years around this time, and worries the industry can't handle any more losses.

"We had a pretty good summer," he said. "But, recently in the last month or so, it's really gone down with the Covid restrictions and the passports."

Nearly half of Canadian restaurants operating at a loss: survey

Across the country, restaurant operators are reporting similar crunches.

A survey conducted by Restaurants Canada this month found that 60 per cent of restaurant owners reported either slight or significant revenue loss due to vaccine mandates across the country. 

Forty-six per cent said they were operating at a loss. 

"The vaccine passport, while it's a great alternative to being closed and further restrictions, it really has created challenges for operators," said Luc Erjavec, vice-president of the Atlantic Canada division of Restaurants Canada. 

Luc Erjavec, Restaurant Canada’s vice-president for the Atlantic region, says restaurants need financial support from governments to say afloat. (Luc Erjavec)

In addition to losing customers, Erjavec said restaurants are having to police government policy, leading to confusion about where the mandate is coming from.

"We'd like to have some really strong messaging that this is a government policy." he said. 

CBC News reached out to the provincial government for clarity on the number of cases that were coming from restaurants prior to the mandate taking effect, but no numbers were provided. 

Department of Health spokesperson Bruce Macfarlane said the vaccine mandate would be in place for the "foreseeable future."

Proof-of-vaccination mandate not the only hurdle

The proof-of-vaccination mandate may be the latest challenge restaurant operators are facing, but it isn't the only one.

The hospitality industry in Canada and the U.S. has been suffering a labour shortage for months, with many workers choosing to pursue different jobs after losing their employment during shutdowns. 

Babineau said restrictions are making it harder to offer employees stable work. 

"I realize a lot of people are leaving the industry and I don't blame them now," he said. 

Jennifer Somers, owner of Cheers Moncton, said the constant changes to operating rules have been a challenge.

Thanks to circuit-breaker restrictions, her restaurant saw more customers than usual over Thanksgiving weekend, but it has been a 'ghost town' at other times, she said.

"Every week, something changes and you're constantly adapting to the new rules," said Somers.