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GVPOD is the podcast of the Greater Vancouver Board of Trade. President and CEO Bridgitte Anderson talks to leaders in the business community about the challenges and opportunities they experience, as well as issues impacting our region.
Bridgitte Anderson (00:04):
Welcome back to another episode of GVPOD, Greater Vancouver's business podcast where we delve into the challenges and opportunities facing our region. I'm Bridgitte Anderson, CEO of the Greater Vancouver Board of Trade. You are listening to hosting rights, our ongoing series, discussing Vancouver's role as a world-class destination, and the challenges and opportunities that lie ahead of us to ensure our city also offers a world-class stay. When we travel, food is often at the top of our minds, including mine, alongside the sites and experiences of discovering a new place. That's why it's critical to talk about the role of restaurants and food services in defining the tourist experience. Joining us is Ian Toson, president and CEO of the BC Restaurant and Food Services Association. BC boasts over 15,000 restaurants and food service vendors providing jobs for over 185,000 people across the country, across the province. Rather, however, challenges like pandemic related debt inflation, labor shortages and increasing costs are putting immense pressure on the industry. So in response, the association has launched the Save BC Restaurants campaign to highlight these issues and advocate for support. So today we're going to delve into what makes our local food seem vital to tourism and the specific challenges it faces and the opportunities as well. Welcome, Ian. Nice to see you.
Ian Tostenson (01:31):
Thanks Bridgitte. It is nice to be here.
Bridgitte Anderson (01:33):
So you've been at the association for almost 20 years.
Ian Tostenson (01:38):
Yeah.
Bridgitte Anderson (01:39):
Talk to us about your journey and how you got to where you are.
Ian Tostenson (01:43):
Well, I started this, I didn't realize it was 20 years, but I spent 23 years in the wine industry and with a company called Cascadia Brands. We owned and operated Granville Island Brewing in Sandhill and brewing all and Colonna Wines, and the company was sold in 2006 and I was offered the opportunity to get involved with the restaurant association, and I went like, seriously? What do those guys do? We paid them like 350 bucks a year. I think that was what we were paying 20 years ago, still the same price today and what they really accomplish. I remember just seeing that invoice come across my desk. But anyways, I joined it after a couple of years of taking a couple of years off and just doing some consulting. It's been a fascinating journey and it's been one that often I would say, I got to step out of this.
(02:34):
I don't want to do this. But it really has been the Pandemic Plus that I think has really honed all of our skills, including I'm sure the board of Trade in terms of relevancy and the things that we can do to make a big difference. Because up until then, these association models are very difficult to articulate and it's very difficult to show value. And it used to be 15 years ago if you joined the association, you get a special credit card rate. Well, that doesn't happen anymore. So those things have all gone away. So it really now becomes, I believe, the passion and how you feel about your brand, how you portray your brand, and really trying to show the industry that you're there to make a difference day in and day out. So it's quite fascinating right now.
Bridgitte Anderson (03:21):
Well, I'll have to say kudos to you. You have been such a strong voice for the Restaurant association for a long time, but particularly through the pandemic and post pandemic and all of the issues that you bring to the forefront and in the way that you do it is you are such a leader, and I really think that you have just done yeoman service for the industry itself, and I'm sure that any of the good changes in government policy has been in large part because of what you've been advocating for and in the way that you do it. So my hat is off to you.
Ian Tostenson (03:55):
I appreciate
Bridgitte Anderson (03:56):
Very much thank No, it's true. It's really true. You're a really respected voice and I think it's really important when you're doing this kind of work. Tell us a little bit about some of the issues though that you've seen that have come to bear for restaurants since the pandemic. I know restaurants are one of the hardest hit for sure. Yeah.
Ian Tostenson (04:16):
Just to preface this by saying, I sometimes get embarrassed by, oh, poor, this is not, oh, poor us. This is kind of like the pandemic dealt as a hand of cards. I think that was tougher than most hands of cards and just because of the industry that we're in. So prior to the pandemic, we were doing quite well. The economy was strong. Our biggest issue then was labor. We had a labor shortage before the pandemic. The pandemic happened, and that was a whole nother thing. I mean, we'll say the pandemic. There were sort of two things that came out of that was we realized there is the potential to bring the industry together. And they did come together very quickly and having a single voice in the industry was totally into that. But we also realized that we were so vulnerable. There was no, I remember talking to the premier, there were no direct lines of communication.
(05:13):
We didn't have every single restaurant signed up as a member, but we had one intention that was survival and so did the government so that in no one's space that we were in caused all of us to act in our best interest and government, which was really what we'll talk about in a few minutes about this campaign. But if government acted singularly focused, when we could phone and talk to the premier or a minister on the weekends and the evenings, if we had an idea, an idea might be wholesale liquor pricing or it might be, boy, we should be able to deliver alcohol with food delivery as opposed to stay at home, get your food, but then drive out and get your alcohol. But government was great at that kind of stuff. And so I think that really was the genesis of what, and I say Bridgitte, that my research indicates that British Columbia had the least number of days closed during the pandemic than anywhere else in North America. And I think it was a real tribute to the industry. So when we came out of it, we realized that there's this internal strength within the industry that we need now to nurture and manifest itself.
Bridgitte Anderson (06:21):
And here we are post pandemic and the pandemic really in the rear view mirror, but restaurants are still struggling so many restaurants. So you launched this campaign. Talk to me about, first of all, what are some of the issues that are still really, that are challenging for the restaurant industry? I mean, you mentioned labor. I would imagine costs have got to be a big problem as well.
Ian Tostenson (06:47):
So interesting labor. We didn't think that labor is an issue when we came out of the pandemic and then suddenly realized it is an issue. So we're about, of the 185, 200,000 people in the industry, we're still a short 20 to 25,000 people mainly in kitchens, and we just don't have people wanting to become chefs and cooks. That just doesn't seem to be where people want to be these days and cost pressure everything else in everybody's kitchens and homes, our costs went through the roof. So from occupancy costs and energy costs, input costs, food costs, but not only that, but there's some stress on the supply chain as well too. So as costs are going up, there's some things we couldn't get. So that just became just an incredible force because most businesses in the restaurant industry are small businesses trying to figure this stuff out as we go through this and have the shortage of labor increase in costs.
(07:45):
The genesis of this project really was, and now we have government going back to acting like it was prior to the pandemic with just unabated policy and red tape and regulation from every which way. So we would look at one day it'd be some issues in labor, then there'd be some issues in the finance ministry, then some issues in the Ministry of Health, and we were chasing stuff and then we were chasing stuff at the regional district level and the city of Vancouver and trying to open up patios. And then we end up bringing in the single use plastic reduction program, as I said to the premier in the middle of December. Seriously, who thinks of that kind of stuff that we would take and say to Starbucks, would you kind of change your operations right in one of your busiest months and change your procedures?
(08:34):
So I just got to a point and said, it's out of control. We can write all the memos we want, we can have all the minister meetings we want. But what I felt we had to do is put this into one form in fashion, and hats off to my friend be Brenda Ti, because she put together the idea of a menu. And I initially thought it might be kind of silly, but it turned out really well. There's different sections to it. So the un appetizer menu and there's the unhappy menu, happy hour menu, but interesting in the back there's the takeaway menu, and that's where we felt we could put some emphasis and spotlight on the things that we need and show government at all levels. So we had a Zoom call for a couple hundred business leaders in media and industry and government invited everybody in.
(09:23):
We did a hard copy and we mailed the menu out to every single politician in the province, municipal, provincial, everywhere, with a cover letter that said, look, simply there is an opportunity here to work like we did before during the pandemic, which was very effective. And I know that you found that the same way, Bridgitte, is that I took this whole thing, I sat with the premier and he kind of gave me a wink. He said, there's some things on this takeaway menu I think we can order up here, because we became very focused on the needs of industry. So yeah, 60% of the industry is not making any money. Bankruptcies are up about 110%. It's just a mess. It's all over the place. But the fact I think in this category, the difference is that it's entrepreneurial. People seem to get into this industry and make little money and really enjoy what they're doing in it.
(10:13):
So there's not this lust to have to make huge returns, especially for small restaurants. They're doing it for other reasons, but I think that we apply the right focus and the right point of view with government, with industry, and of course with our guests or our consumers. I know we can get this out of the muck that it's in right now, but it's going to take a collective effort, but it can't be having this unorchestrated pot of policy that comes out from every single place, whether it's trying to reduce natural gas in the province to our patios aren't open yet, and we have red tape and regulations around that.
(10:57):
I've been a wage went up, but that's all right. We can understand that. But so I said to the premier, we just got to have it single focus. So we did call one of the prescriptions of medications that we wanted to do was ask for a single focus within government. Is there one person that we could have that's the quote, minister of hospitality or restaurants? Because the sector, as you pointed out, is so large, is 18 billion is a couple hundred thousand people or it's 18 billion in sales. And it's very, very significant to the economy, both from a first time job, the things that we buy locally, the circular economy, but obviously also to tourism. I mean, imagine coming on a cruise ship and nowhere to go.
Bridgitte Anderson (11:40):
Exactly. So the premier heard some of your messages on this menu. What has the reaction been across other ministries? Are you getting some traction here?
Ian Tostenson (11:50):
Well, thanks to us. I hear, and you and us, the premier gave us kudos on the employer health tax.
Bridgitte Anderson (12:00):
That was a big win for a lot of small and medium businesses.
Ian Tostenson (12:03):
It really was. And I know he acknowledged you and acknowledged us, and that felt great. And the one thing I will say, but this government, this premier responds very positively to positive stuff and to solutions. We don't lobby. We try to provide solutions.
Bridgitte Anderson (12:21):
Probably good for us both to say that we didn't get everything that we asked for on increasing the threshold. We got about halfway there. So there's room for improvement, government just
Ian Tostenson (12:31):
Got to keep the encouragement. I found out last week someone sent me a copy of what was going on with estimates, and then Minister Popham la Popham, who's a huge fan of the industry, mentioned that she was, now, I haven't talked to her directly about this. I kind of knew this was going to happen, but she is the point of contact for us now within government. She's put together across ministry group to deal with the issues on the menu, and I am their contact and conduit. So we're going to feed into, Lana is going to feed into them. And I actually think in my conversations that I had with the premier, that they intend to come up with some stuff now. We asked for some very non-financial specific things that I felt the premier and the government could get at and just show good faith. I said to him, you remember when Obama was running for president? And he said that hope is on its way. I said to the premier, give our economy some hope. Give the small business people some hope that you're standing beside us. And that I said, it's not always about money and handouts, it's just about a pathway.
Bridgitte Anderson (13:47):
Ian, do you think part of the issue is that the business model of restaurants has fundamentally changed? It seems to me that's where I started. I started working in restaurants when I was a teenager and I continued on until I was in my twenties. And I think that labor piece is part of it where it's not really, the industry isn't attracting as many young people, but I think about the costs which are astronomical at a time where everybody's struggling with affordability and you go into a restaurant and the cost of the meal is a lot more. So then you're getting your bill and then tipping is a lot more. And then the cost for the restaurants are a lot more, whether it's their food costs or where they're leasing their space from. I just wonder if really the business model has fundamentally changed and the industry has to catch up to it.
Ian Tostenson (14:36):
So restaurants Canada publish an interesting number. They said that cost went up 20% last year and menu prices went up 7%. So there's a 13% gap in margin. So then we have to go after costs and efficiencies and stuff. The restaurant of the future, and I think one of the things we talked about on the questions were what has the pandemic done? The pandemic done is created a restaurant that goes sort of in three parts now, whereas you have your in-store dining, you have your takeout and delivery. So you have a whole area dedicated to that with your delivery drivers coming and going and you have elaborate patios and those patios staying open a lot longer than four or five months, but permanent patios and investment patios. So you get this three legged stool where that's the consumers driving that. The pandemic drove that, and Dr. Henry drove that by get outside, do those sort of things. So we're seeing the industry now trying to recapitalize and use their physical premises to deal with that kind of stuff. Before the pandemic food delivery was about 12 or 13% of our business. Today it's over 30% and it's not going away. So
Bridgitte Anderson (15:52):
It's more of a multi-channel approach, I guess it's
Ian Tostenson (15:55):
Very multi-channel approach
Bridgitte Anderson (15:56):
Outside of the industry, right across all kinds of sectors. That is a multi-channel approach for customers, which brings to mind some of the other policies and regulations that have hampered restaurants. It's been in the news in the last recent weeks, whether it's about the liquor laws and whether you can dance in a restaurant, God forbid, you actually can dance in a restaurant in Vancouver, those kinds of things. It feels to me like there needs to be a modernization that people are looking for social experiences, dining experiences, a hospitality experience, and that's what tourists are going to be looking for when they come to our city.
Ian Tostenson (16:33):
There continues to be this, I'm not going to say anti alcohol, but a very cautious approach to alcohol. Now if you look at Ontario, you get a liquor license in Ontario. So Bridgitte would be licensed to go out and open up a place, and it wouldn't matter whether it's a bar or whether it's a restaurant, it's a liquor license here, it has to be tied to a premise. And so Bridgitte has to go get a piece of property, get a lease, go to the government, say, I have a valid lease, and by the time you get your liquor license, it could take six or seven months, so that's six or seven months of holding costs. So those sorts of things we're saying let's blur the distinction between a bar and a restaurant. It is hospitality, like you said, it's a place to go out and really the onus has to come down to the owner in terms of how they want to conduct themselves.
(17:22):
Boy, there's so much liability in serving liquor that that's more of a governing factor than a government penalty. One of the things the government does right now is they run around, not only can we not dance in restaurants, but if you happen to make a mistake, and in most cases it is, and serve a minor, a drink, they have a call a minor's as agents program where they'll walk in and they'll spy on you and they'll send an underage drinker and if they're served, you get a $7,000 fine on the spot. And I said to the premier, really, can you not have three strikes? You're route? Can we not work together? So we got to clean those things up because those things are just become a them and us, and this has to become an US world. So the policy stuff on that, one of the ones that we've been working on, again, it's just a red tape and regulation thing, which is important to us, is the access to skilled foreign workers in our kitchens. And we've brought in two or 3000 workers through our own immigration program we have, but it takes almost double the time in BC to process it as it does in Alberta. And there is no reason for that, except for it's on a pile and we'll get to it. And that's not acceptable when you have a business owner that's waiting 5, 6, 7 months to fill their kitchens. And so
Bridgitte Anderson (18:39):
Yeah, you lose your competitive edge then.
Ian Tostenson (18:41):
Totally do. Yeah. And we do our losing people in that case that are looking for permanent residency to go back to Alberta because they can become a Canadian pastor.
Bridgitte Anderson (18:51):
I think about all of these major events that are coming to Vancouver, whether it's Gray Cup or Taylor Swift's concerts or FIFA or Invictus Games, and I know that I've missed a few, so many. What does this mean for the restaurant industry? We talk about, oh, are we going to have enough hotels for these people? And I think that's a legitimate concern. I don't really know that we do. But what about that dining experience, which is a really big part that goes along with major events. Would you say the industry's ready to really leverage the opportunity ahead?
Ian Tostenson (19:25):
Yeah, I think we are. I think where the leverage needs to be better is more coordinated. So I found out by accident reading, I dunno where I was reading that the first cruise ship came in yesterday and I'm going like, duh, we should know that
Bridgitte Anderson (19:40):
And we should. I didn't know about it until I was driving to the office.
Ian Tostenson (19:43):
I know, but like, Hey, we say the restaurant industry, it's coming in a week. So we got to coordinate ourselves better that way. But definitely that and one big one that we left out is the Vancouver connection because they're completely on fire. That just gets people out and it gets 'em to spend and it gets 'em to take some money out. They're spending differently. The consumer trend now is towards more happy hours, more smaller plate meals, but they're still going out. And as long as we have these events around, and especially in the big centers, Victoria, Vancouver, cruise ships, that's going to save our industry from, we always say we can create customers in our restaurants, then eventually we can make money. And so we're not in a situation nor have we been, except the pandemic of course, where we had a lack of customers. We have got lots of people still out, which is great. If we had this situation and a waning consumer interest in restaurants or consumer spending in general, that'd be a bit of a problem. But I do believe that we have this still unfulfilled desire to socialize based on our experience through the pandemic. I truly believe people when they have a chance to go out, they will, but they're spending a little bit differently.
Bridgitte Anderson (21:02):
So when you look ahead at what's coming then when you think about lots of other industries are in the midst of huge innovation, whether it's technology or whatever it is that is really causing them to rethink their business and to transform and to be resilient, what are some of the trends that you're watching for the restaurant industry?
Ian Tostenson (21:23):
Well, I think efficiency. Are you looking at trends in food? So you're going to see menu engineering to the point that trying to bring on to the menus things that are not so inflationary impacted. Secondary cuts of meat, for example, are still enjoyable, but they cost cost all of us less technology. You can go to Robson Street now and have your latte made on a robotic latte. I've seen
Bridgitte Anderson (21:49):
That. Yeah, that's great.
Ian Tostenson (21:52):
And so that'll take place in some of the more specialized ethnic restaurants. Again, that's more of a labor efficiency thing. And I think you're going to see predictably the cooling off of the increases in rent and leases. You're going to see the cooling off of food prices a little bit. Labor is what it is. It's a very important component of ours, but it only went up 3.9 only, but it's better than it was last year at 6.9. I think all these things are working in our favor, tourism coming, events coming. That's the type of environment that if you can't make it, then you probably should just hang up your shingle because everything is kind of going away right now providing that we get this piece a coordinated piece with government. We just can't have them coming in with expensive environmental programs or delays in opening patios and stuff. We need a crisp reaction like we had during the pandemic.
Bridgitte Anderson (22:51):
Thinking about government policy, I did want to ask you about what a lot of restaurant owners and operators are talking about natural gas. That is a real, the changes in the policy around natural gas, I know you're rubbing your face because cooking with natural gas is just so much better and easier and more efficient, and it is what chefs rely on. Yet we're going to be really hampered in this area if policy does change.
Ian Tostenson (23:17):
So kind of breaking news, I'll tell you this, we've been sitting on this for three months. It's not breaking news really, but we did a study and we took a restaurant and we converted it to electricity. It was a fairly new restaurant and it was a gas restaurant like most restaurants are. We did a conversion, we hired an engineering firm. They went through all the permitting process, all the consultants that they needed, and they came back to us five weeks later. It was going to cost a fairly new restaurant that operates the way it should, $450,000 to convert to electricity, and then it was going to be another $250,000 to close the restaurant as you did the renovations. And then you end up with a restaurant that doesn't work. If you talk to some of the higher end places in downtown Vancouver and say, what would your restaurant be like s for example, Pinot will say, if I don't have gas, I'm out of business.
(24:17):
He said, there's no way I can handle six burners with electricity. So it doesn't work. And the sad part of this for me is that we're looking towards renewable natural gas, and no one seems to want to talk about that. And I understand that people are saying fossil fuels and stuff, but we're headed in a completely different direction. I believe we need a balance on energy between electricity and gas. And we just had a situation with a restaurant that wants to maybe locate in the new hospital, and we heard that and they said, yeah, yeah, we can license you to do that or give you the permits, but by 2040 you have to be prepared to go electric. And that to us is a huge warning shot. So if that's the last thing I do is to make sure that we keep the balance with gas in our industry, you're going to see most ethnic restaurants go to business overnight if that happens. So it's a critical issue, and I know it's a bigger issue as you've talked about for the general economy in British Columbia and the fact that we don't have enough electricity anyways in bc, so we got to get to an honest conversation here, and we're really trying to be the genesis to have that honest conversation. I think once people see the common sense in it, I think they're going to be alright with it. But it's a bit polarized right now,
Bridgitte Anderson (25:41):
And it really is around a common sense approach. As you say, it's problematic for so many reasons, and not just for the restaurant industry, but for lots of other businesses and for homeowners. And as you say, we don't have enough electricity right now, so we really should be taking a long hard look at this. Again, if I was to wrap up the conversation now and have you look into your crystal ball and thinking about the next three years ahead or so with all of the major events, and then looking even a little bit beyond that and thinking about what is required for the industry to really thrive greater, Vancouver has got an amazing restaurant scene and one of the best really around the globe and recognized for that. So what would you think? What are the conditions? What are the things, what's top of your list that would be needed to ensure that the industry continues to thrive?
Ian Tostenson (26:34):
I think we need to, first of all, the business owner to have about 30% more time to manage your business and not manage the government process, be it WorkSafe or liquor applications or whatever. So we've got to clean that up. We talked about the world that's emerging. I think Vancouver's always going to be a place for events and we do it well. So that's going to be really the added gel, if you will, from our domestic population to help us. And you're going to see restaurants that shouldn't be in the industry, frankly. I mean, there's a lot of restaurants that just aren't set up to be the determined, this is a business of determination and knowledge. It's not a business of, Hey, I got a great recipe. You're going to go broke within before you know it. So that'll be cleaned up, I think. And it's starting to happen right now.
(27:22):
And you're starting to see the resurgence of smaller places, more specialty places, ethnic places, really interesting places. But if you notice, they're all a bit smaller and they have a smaller footprint and a smaller cost and hands, smaller labor costs. So you're going to see that dotting the horizon and you're going to see the cactus and the kegs and those guys will continue. But you're not going to see, in my opinion, any big restaurant groups coming in to dominate. That's over. The ones we have are going to be there and we'll enjoy them, but it's going to be a lot of specialty ones that are really well run and really focused on the guest, really focused on the economics. And it'll give us lots of opportunity and diversity to go out and dine. So I'm pretty excited about it.
Bridgitte Anderson (28:11):
Well, the Board of Trade is right here with you, Ian. The industry is so important to our economy and for so many reasons, and this series is really focused on leveraging the opportunities ahead with the major events that are coming. So we're here with you fighting the fight, and just again, kudos to you for the work that you've done over the last few years particularly, and I look forward to hearing more. Thank you.