Sitting in his King Street West restaurant with a cluster of other local business owners, Milton Nunes is plotting a protest against the city of Toronto's King Street pilot project. The group is debating taking to the street to block the streetcar, a bold and illegal step they think is necessary to show the city how worried they are by a dramatic drop in customers.

It's been only three weeks since the project launched, giving priority to transit, forcing vehicles to turn off the street after one block and reducing parking between Bathurst and Jarvis streets. There have been rave reviews from transit users, with streetcars moving 25-per-cent faster along the notoriously congested downtown route, but restaurant and nightclub owners in the Entertainment District say the sudden change to the streetscape has been an economic hit.

"This business, I don't know how much longer I can keep it if things stay the way they are," said Mr. Nunes, owner of Portland Variety. His restaurant is usually packed but had many empty tables on a visit during the lunch rush, and he estimates business is down 40 per cent on weekdays and 20 per cent on weekends.

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"If spring comes around and things don't drastically change I will definitely have to consider closing … It's frustrating and disheartening … we've cut off traffic to a main street, it makes absolutely no sense."

The city has heard the business owners' concerns, which are echoed by Business Improvement Areas along the route, but it argues the economic disruption is temporary. Barbara Gray, general manager of the city's Transportation Services department, points to one of the city's most recent pilot projects, the Bloor Street bike lanes, as an example of how business can return to normal after the initial shock of changes.

"Very often when you change the street in front of a business, there's changes to how people access that business," Ms. Gray said.

"We're only two weeks into this project … but based on our recent pilot on Bloor Street, there was a bit of a dip and things got back to normal again."

With new traffic rules in place preventing vehicles from travelling across, or parking on King Street between Bathurst and Jarvis streets, some business are saying they’ve seen a noticeable drop in business. Fred Lum/The Globe and Mail

Pedestrian and public-use spaces that have been set up throughout the pilot area are also expected to bring in more pedestrian traffic after the winter. Right now, the spaces are empty lots of road, but the city plans to make the space available for patios and other pedestrian-friendly features in the spring.

But spring is too far away to appease Mr. Nunes, who fears his business is one of many that could be forced to shut down if the situation doesn't improve sooner than that. He also questions how the added public spaces will be useful in Toronto's long winters.

"There are people saying, 'This is like Europe, where people get to walk around,' but the difference is we don't have the population density, we don't have the tourism and we don't have the climate, so we will never be like Europe," Mr. Nunes said.

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The pilot comes at a time that small businesses are being stressed on multiple fronts, says Joshua Hendin, a local resident and owner of a catering business. He's one of the driving forces in the community trying to find a way to make people understand how the project is affecting the restaurant industry. Last weekend he organized an initial meeting with 12 restaurant owners, who all raised concerns about the coming minimum-wage hike and rising rent costs.

"The whole reason I live here is because I'm attracted to the energy and all the sorts of people that come to this area," said Mr. Hendin, adding that he feels the vibrancy of the neighbourhood has been missing in the past couple of weeks.

"I'm definitely for the modernization of downtown traffic flows, but this is too extreme of a measure and looks like it will come at the cost of the neighbourhood."

The owners of Maison Mercer, Blowfish and Liberty Entertainment Group, which owns three restaurants on the street, have echoed Mr. Nunes's and Mr. Hendin's complaints of plummeting sales numbers and empty streets. Margins in the service industry are slim and many can't wait a few months for normal activity to resume, said Mr. Hendin, who added that he's heard of businesses that could close within weeks because of the project.

The group of businesses is considering a number of options in how they'll protest, and blocking the King streetcars is one of them. But first they're hoping to get more businesses on board with the idea of a protest so they can send a message that represents the entire community. Two city councillors, including Giorgio Mammoliti, have also been involved after the restaurants reached out to them for advice on how to organize.

Milton Nunes says since the new streetcar traffic rules came into place, business at his restaurant, Portland Variety, has dropped off noticeably and says people driving in are confused by the new rules. Fred Lum/The Globe and Mail

"I have a feeling that this is going to escalate to an incredible amount of businesses that may or may not be here next year," said Mr. Mammoliti, who has been outspoken about his opposition to the transit project and called it a "disaster."

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But Mark Ferguson, a senior research associate with the McMaster Institute for Transportation and Logistics, says it's entirely too early to judge whether the King Street transit pilot is working, or whether its impact on business will be permanent.

"The way I think about it is that it's going to take a bit of time for the behaviours to adjust and for a new equilibrium to be reached," said Dr. Ferguson, who added that it's possible transit users could also make up for the drop in business from people travelling by car.

"Over time, it could very well cause some pickup in demand where people are attracted to the rapid travel times."

The introduction of time-based transfers on the TTC could also encourage users to get on and off the streetcar during trips through the King Street area – although the new feature won't be implemented until August, 2018.

In the meantime, Ms. Gray says the city is all ears for any complaints, and is already trying to address concerns brought up by some of the businesses in the area. An initial report on the pilot project's progress is set to be released early in December.

"I'm very sympathetic to small businesses and the impact of any change, but in the true spirit of a pilot, we're going to do what we can to help manage the impacts on businesses," said Ms. Gray.