Why are Toronto's top restaurants shutting up shop?

Several popular restaurants closed in the city last year. We investigate to find out if it's the usual combination of rising rents, food and labour costs – or something more complicated.

Evelyn Wu and Wayne Morris still get up every morning at 7 a.m., to take their son to preschool. But they’re no longer awake until 2 a.m. each night, working service in their restaurant Boralia.

When the business was still open, Wu would pick up their three-year-old from school and take him to the restaurant. In the kitchen, Morris would prep and play with the boy while Wu met with the front of house staff. They worked every Saturday and Sunday. These days, they enjoy weekends together, and dinner as a family. And as far as silver linings for restaurant closures go, that’s it.

In 2014, Wu and Morris opened Boralia on Ossington Avenue, to rave reviews. With their five-year lease coming up for renewal, the landlord wanted to raise the rent, from $45 a square foot, to $80. They might have afforded this, by changing everything about their business to streamline profit. But they didn’t open a culinarily ambitious restaurant just so they could turn it into a burger shop to appease a landlord.

Also, when their first child was born, the entrepreneurs were able to juggle staff and hours to make the situation work for everyone. But with another baby on the way, and how hard it’s gotten to find good cooks, the quest didn’t feel worth the hassle a second time, only to make it to the end of their lease in mid-2019. So they’ve packed up early and closed Boralia.

“We always knew rent was going to increase after five years,” says Wu. “But the landlord went crazy with it. They just raised it too much. We just couldn’t stomach writing a cheque like that every month, for another five years.”

"Their landlord wanted to raise the rent from $45 to $80 per sq ft."

From Charles Grodin’s accountant in Midnight Run, explaining to Robert DeNiro’s bounty hunter the riskiness of opening a café, to Kristen Wiig in Bridesmaids, struggling with the failure of her bakery, to every scene in Big Night and Chef, the idea that restaurants, like marriages, do not have the odds of success in their favour, is as much a pop culture trope as angry police chiefs and co-workers trapped together in elevators.

Asking a restaurant owner to tell you their troubles is a bit like asking the dictionary if it’s got any words. As someone who speaks regularly to restaurateurs, I’m always hearing about the soaring costs for food, fuel, rent and labour. To say nothing of the less tangible, but no less dire, impact of a cooking labour shortage (brought on by low wages and harsh working conditions) and the fickleness of consumers constantly chasing the latest shiny thing. Added to all that is the potential lethal impact of city-building; the collateral damage from well-intentioned projects like the King Street Transit Pilot (eliminating street parking to prioritize commuting) and road construction (sidewalk expansion, rapid transit lines, gas and water maintenance) that can span seasons or even years, with no compensation for affected businesses. Remember in 2017 when Toronto tried to raise fees for patio licenses by as much as 1,000 per cent?

It's always been challenging to operate a successful restaurant. But in recent years, these conversations have shifted in tone, from the way we complain about the weather to the way my grandmother complained about her breathing, just before she died. In 2018, Boralia joined other high-profile Toronto restaurant casualties the Ceili Cottage, Peoples Eatery, North 44, Parts & Labour, Fring’s, Luckee and Los Colibris.

Boralia’s sea snail dish was central to the restaurant’s image.

The majority of these restaurateurs identify the usual list of problems, but dismiss the idea that any one factor kills restaurants. Yes, the cost of food keeps going up, with customers demanding ethically sourced products but unwilling to pay for them. But there are ways to manage food costs through menu planning. Yes, wages keep going up, but that puts more money in the pockets of employees. And while labour costs may cut into the bottom line, no one’s ever described it to me as the difference between profit and loss.

However, many circle back to the same insurmountable obstacles; uncompromising landlords overeager for their share of Toronto’s mushrooming real estate value, and increased competition from businesses offering customers food in other ways.

“People are made aware of the newest thing three times a day,” says Jay Carter, chef-owner of Dandylion. “You have to constantly advertise yourself.”

His 30-seat restaurant has no significant social media presence. Carter believes that the hard work of his staff should be enough.

“Needing to be constantly creative and unique is exhausting.”

Many restaurateurs echo this sentiment, that there is too much competition, an oversupply in the market. And they’re right. According to data from Toronto Public Health, in the last five years the number of restaurants and food takeout services have continued to increase at a steady pace, from 8,916 in 2014, to 10,203 in 2018. That’s an average of 3.6 per cent more places to eat per year, compared to Toronto’s average annual population growth – less than 1 per cent.

So attracting and maintaining clientele is increasingly a negative-sum game.

“There are so many layers,” says Rob Wilder. “But if every seat was filled all the time, you’d be fine.”

Wilder who, in partnership with Anthony Rose, owns a half dozen restaurants (including Fat Pasha, Schmaltz, and Big Crow), is sympathetic to the various problems that all restaurateurs face. But he believes they are all manageable if the revenue is strong.

“It’s not about landlords. It’s not about rents going up. I don’t think customers are getting more fickle.”

The real issue is what he calls a contract between the consumer and the restaurant, a willingness to eat what that restaurant is serving, to return three to five times a year, and for the space to be a part of their lives and their community.

"The real issue is a contract between customer and restaurant."

“If the bums aren’t in the seats, that’s when you fail. Unless you have that contract with the customer, and they continue to keep coming back, that restaurant will not survive.”

Elia Herrera, who had three packed and profitable restaurants in one location on King Street – Los Colibris, El Caballito and El Patio – is angry at the city for eliminating parking in front of the Mexican eateries.

“We pay taxes. We work hard. The city cannot be doing that,” says the chef-owner. “We have to feed our families, pay our mortgage.”

But while Herrera estimates that lack of parking hit her with an almost 40 per cent drop in revenue last January to March (with a strong rebound in the summer), the death blow came from the landlord. When she approached the building’s owner for a break on the $52,000 a month rent, for what was no longer prime real estate, he countered by asking for a 30 per cent increase.

“I think it’s short sighted,” restaurateur and designer Brenda Bent says of greedy landlords. “Because once your place sits empty for six months, how much revenue have you lost?”

Elia Herrera was forced to close her King Street restaurants – Los Colibris, El Caballito and El Patio – after the city eliminated parking in front of the Mexican eateries.

In the past three years, Bent and her husband and business partner Susur Lee have closed Bent, Fring’s and Luckee. Bent and Lee were never partners at Luckee. The rent at Fring’s was favourable. The family owns the building where Bent was located. So the closures of Bent and Fring’s, operated by their sons Kai and Levi, were not about real estate, but lessons, painful for Lee, that their children didn’t want to follow in their parents’ footsteps.

“It was the saddest day of Susur’s life,” recalls Bent, “when he realized they didn’t want to be in the restaurant business.”

The end of this saga underlines a harsher reality of restaurant real estate in this city. After closing Bent, the couple decided to rent out the building to a new tenant because it made more profit and sense to be a landlord than a restaurateur.

For Patrick McMurray, the problem with his landlord was not the price, but the terms. Starting with an eight-year lease at the Ceili Cottage on Queen East, McMurray developed the former auto repair shop, eventually installing a Mongolian yurt on the patio. This increased his capacity by 30 seats in the winter, using space that was previously wasted nine months of the year. Customers loved it and the landlord approved, until after three seasons, he suddenly objected. McMurray offered to pay double the rent. But the landlord wouldn’t have it, and began renewing the lease on one-year terms. This stopped McMurray from making necessary fixes and renovations on the property because the short lease wouldn’t allow him to amortize any investments over a long-term.

"The closures of Bent and Fring’s were Not about real estate but lessons."

“I said, it’s too hard pushing a rock up a hill right now,” McMurray describes his recent decision. “So I’m gonna have to close.”

McMurray believes that unreasonable landlords, unafraid to lose a tenant, are worsening the problems of restaurants, and along with them, our city’s culture.

“You travel along Queen East in the Beaches. There’s paper up and for-lease signs everywhere,” he says. “And the only businesses that can afford the increase in rent are the larger Starbucks and the like.”

Until July 2018, Toronto landlords with vacant commercial or industrial real estate actually got a property tax rebate, motivating them to leave spaces empty. And yet I’ve never heard any restaurateur, who are by career choice free-market capitalists, come out in support of rent control for commercial real estate. The premise of more government intervention is anathema to their belief system.

But while taste may be cyclical, property value is not. One year we may all want to dine on tasting menus in big, glitzy cathedrals, and the next year intimate 30-seaters and shared plates could be back in fashion. But the cost of real estate only moves in one direction. And as it climbs into the stratosphere, available only to corporate bidders with the deepest pockets (the chains currently dominating downtown Toronto), it cuts off the potential for actual entrepreneurs to succeed in the restaurant industry.

In the meantime, diners have a say in the future of their city’s food culture. If we insist on only eating at every new hot spot, planning our weekends around “just opened” lists, buying every flashy morsel of insta-bait, living our lives for the likes, then that is what will proliferate around us. If we instead support real restaurants, returning repeatedly to places that resonate with us by delivering consistent, accessible, familiar, positive experiences – if we choose quality over newness – then the good restaurants that we love will stick around.