Should The Restaurant Industry Be Subsidized?
If so, how should it happen?
Photo credit: Michael Browning
Jamie Mah @grahammah
How many times have you heard the phrase “90% of restaurants close in their first year of business?”
Probably a lot I’d like to imagine.
But have you ever stopped to wonder why that is? Do you think it’s because they ran a poor business? Or would you say that several fell victim to some of the ailments all restaurants currently face today — higher rents, brutal taxation, rising food and labour costs. You’re probably thinking it’s a bit of both I’d like to believe. But doesn’t that strike you as being a little odd. Why would an industry have such a high fail rate, yet, have so many operators still in business? Is there anything that can be done to help?
Should the restaurant industry be subsidized?
All of these questions are at the forefront of a long list of issues many operators face. We all see this and know their plight, yet nothing is done. Again have you ever stopped to wonder why so many fail?
In reality, for most restaurant owners it’s a tough slog, and with very little help, many do close. But I’d like you to understand how important the restaurant industry is in Canada. It’s one of the biggest employers of our countries youth and it’s also one of the driving forces for culture and social connectedness. Here take a look at how it stacks up versus other industries. Currently, there are over 1.2 Million people working in the Restaurant Sector as per figures from Restaurants Canada.
1.2 Million!!!
That’s more than the Auto, Dairy, Lumber, Aerospace and Agriculture industries combined. But unlike some industries which can vanish at the drop of a hat, eating and drinking socially isn’t going to be one of them. We all need to eat and we all love to go out and be amongst friends which means the restaurant industry is probably one of the most important sectors for the well being of all Canadians. But then as I state above, why is it so hard to be successful? Could the government do more to help out?
Hold this thought.
Back in 2009 when the world over was in the middle of the worst financial meltdown this side of the Great Depression, many industries looked towards governments to help save their fleet. Here in Canada, our auto sector, received a much-needed handout from our Federal and Ontario governments. At the time, the decision to help was seen by the government and the public at large as the necessary helping hand of a sector on the verge of collapse. With the prospect of thousands losing their jobs looming over them like a rain cloud ready to wash away their future, the two governments bit the subsidy bullet and saved the day — to the tune of a whopping $13.7 Billion dollars.
Now, to understand this further, one needs to realize that this isn’t the first nor has it been the last time governments in Canada have helped our economic sector. For years, Canada has helped prop up the dairy industry with its protectionist supply management system. Designed to aid local dairy and poultry farmers, the system has helped limit imports into Canada while helping local farmers record steady high profits — with higher costs unfortunately for us the consumer.
To comprehend why the Auto and Dairy sectors gained the kinds of help they wanted — and still receive — it’s best to look at how they got there. Labour practice standards and government co-operation have never been a simpatico duo. In the past, it has usually taken one side, that of workers who’ve usually had to strike and protest, to garner any help from government with regards to labour standards and rates of pay. Ask anyone around today what Labour Day means in Canada and few might know the answer. Most see it as the last day of rest at the end of summer, when in fact it symbolizes the struggles and triumphs of those who fought for many of the workers rights Canadians so often take for granted today.
Beginning with The Toronto Typographical Union strike and the Trade Unions Act of 1872, the rights of workers up to this early point in Canada were restricted to long work days (10hrs+) and lengthy work weeks. At the time, union activity was still a criminal act under Canadian law. With a large protest in downtown Toronto, the march towards simple labour rights was started by those who wanted a fair shake.
As the years passed, more labour standards were created.
In 1900 the Federal Department of Labour is created.
The Workman’s Compensation Act of Ontario is established in 1914.
Federal Public Service Staff Relations Act is created in 1967.
Occupational Health Act, Saskatchewan, 1972.
These are some of the acts that have helped shape the state of labour within this country. Now I’m not totally one to sing the highest of praises on unions and their roles within business and the economy. Despite what unions have done for the workingman, they have helped to foster some seriously counterproductive outcomes, as they more often than not breed laziness and sometimes corruption within their ranks.
But they do serve a purpose — to help get shit done.
An example of this would be Unifor, which currently is the largest private sector union in Canada. Created in 2013 as a merger of the Canadian Auto Workers and Communications, Energy and Paperworkers unions. Unifor consists of 310,000 workers and associate members in industries ranging from manufacturing and media to forestry and fishing. As I illustrated above, the power they wield for their members is staggering, as Mark Milke of the Globe and Mail reported on this past March, Unifor “posits a nightmare scenario where if the Detroit Three left Canada, the result would be billions in lost tax revenues and 150,000 jobs lost.”
Again I ask: With only a 150,000 jobs, Unifor can scare our governments into giving them the subsidies they desire, yet, with over 1.2 million, the restaurant industry can’t even get a discount on buying alcohol?
With raids such as the one that was done to Fets Whisky Kitchen last year here in Vancouver, understanding that there is little support on any level shows the lack of empathy and understanding our provincial and federal governments continue to give to a struggling restaurant sector. So what if the owners of Fets purchased a few bottles of whisky from outside the BCL or Canada. Who cares? If the BCL here in British Columbia, or say the LCBO in Ontario offered better selection and service with discounts, issues like these would never arise. If restaurant owners in this example can garner a better deal from the government, those savings will be passed on to consumers who invariably will be happier to pay lower prices, thus creating more demand, which in turn will generate MORE TAXES!
The whole of my argument here is the need for the restaurant sector to band together so as to fight for better rights, subsidy or not. Complaining about how things currently are gets us nowhere. The Fets raid caused a stir amongst many restaurant owners here in Vancouver, and that event forced them into action as many have started to band together to form proposals for change to BC’s provincial liquor laws. Hearing this, I believe we’re on the right tract. But more needs to be done. As associations such as the Canadian Association of Professional Bartenders and the Canadian Association of Professional Sommeliers find more prominence within our communities, their reach has the potential to invigorate real debate and change for a massive amount of workers.
Again we’re talking about 1.2 million people, many of whom are young and dying to be apart of this industry for life, yet, the drawbacks of low income and viability hamper plenty, thus as we’ve seen for decades the mass exodus’ for many into more stable and profitable careers. This isn’t good. The restaurant sector shouldn’t be a stepping stone industry for those looking for something better — like becoming a plumber it should be seen as a practical lifelong career choice. Currently for a good deal of restaurant workers, it isn’t. If you don’t believe me, just ask a chef.
As I’ve argued for many of the challenges of the restaurant industry before, here, here and here, my main goal has always been for this simple phrase: it shouldn’t be this hard. Opening and running a business that serves food and drink shouldn’t be this painful or expensive. The rewards are meager and the stress is constant. It shouldn’t be this hard, yet, it is. We need help.
Our governments bailed out our Auto Sector because someone made them believe that it was in the country’s best interest to save thousands of jobs of great working Canadians. I’m glad they did. It may not have been the best choice ultimately, but at least they made one for a good reason. The restaurant Industry has plenty of good reasons that can be shared with our governments. We have 1.2 million people who depend on this industry for survival. I believe that’s a strong enough reason for a little subsidy.
Don’t you?