In any restaurant, the bar is the most porous department, the one with the fewest controls. A dishonest bartender can bring in his own bottle, sell off that and pocket the money (one of the reasons no Canoe staff members are allowed to bring gym bags to work). He can over-pour his regulars to get bigger tips, and ensure it doesn't show up during inventory by short-pouring the floor. Canoe's Paul Martin, the junior manager responsible for the bar (who hopes to be a senior manager soon), says, "I don't want to see anybody pouring anything without a shot glass." But even in honest restaurants, the bar causes a problem: When servers pour wines by the glass at the table, the standard six-ounce pour can easily become a seven-ounce pour. That's a free glass of wine every bottle and a half. Canoe managers chart their loss every month when they calculate "Wine A vs. T" (actual versus theoretical). Sommelier Ruben Elmer's monthly inventory records the actual usage in numbers of bottles, which is measured against theoretical usage as recorded by sales. From that, they know Canoe loses between $1,000 and $3,000 worth of wine every month.
VERTICAL: DECEMBER, 2004-JUNE, 2005 After they'd lined up their investors, secured their capital and bought what they wanted from Boland, Gary and Joe went to the landlord to negotiate a lease. They wanted favourable terms. After all, they were bringing new energy and investment to the location, and they wanted Olympia & York to help them out. It's not unheard of for a downtown restaurant; when OB opened Canoe in 1995, TD Bank and Cadillac Fairview ponied up $750,000 to build the place and then loaned the company another $200,000 to complete the work without restrictions on how the money was spent. But Joe and Gary didn't have Peter Oliver's negotiating power.
Over five months, they managed to negotiate a 10-year lease with a five-year renewal, featuring a square- footage rate escalating from $20 to $26 over the life of the lease, and a percentage rent flip that kicks in when they start turning a nice profit: Instead of paying the square-foot rate, they'll pay a percentage of their revenues. Joe and Gary weren't handed any freebies, but they were satisfied with the deal. The problems were in the non-financial matters-i.e., everything else.
Take the patio. For Gary and Joe, use of the second-floor terrace, overlooking a pretty treed parkette, was a major attraction of the First Canadian Place location; it doubled the size of their restaurant in the summer months and, as per usual for restaurant leases, it was included at no extra charge. However, Olympia & York, which planned to refurbish the patio with nice new stone, wanted Gary and Joe to agree to a list of undesirable activities-drug dealing and drunken behaviour being the most obvious-that would get Vertical bumped off the patio. "There's probably five pages in our lease of things that can happen," says Gary. And if any of them do, their patio could be taken away, along with much of their profit. "We have no rights there," he admits.
Even more frustrating was the landlord's aesthetic interference. Everyone Gary and Joe encountered seemed to have an opinion, and sign-off authority on top of it. First it was Olympia & York's chief commercial leasing representative-a "self-professed restaurant expert," according to Gary-then it was the general managers of the building, the first employed by O&Y, the second by Brookfield Properties when it bought the building. Each one of these women insisted she had to approve every design element-lamps, fabrics, chairs, wall coverings-to "make sure the image of the building was protected." You should hear Gary's voice ripple with irony when he says that. After all, he and Joe were replacing a restaurant that for maybe 20 years featured a log-cabin look. "Right there," says Gary, "that's why we were going crazy."
While negotiations on the financial aspects of the lease were going on, they had to submit their concept (high-end southern Italian, featuring lots of fish), their menu and their price points for approval. They had to attach sample menus to the lease, so the landlord would have legal recourse were they ever to start serving, say, pad thai. It was infuriating. "We don't really want a landlord telling us what they think our concept should be," says Gary. "Because, you know what? This is kind of our thing." But by the end of May, 2005, they'd reached an agreement, and the doors closed on The Tasting Rooms. Chris Boland had the month of June to take whatever he was taking. And as of July 1, it became Joe and Gary's place. They had three months, rent-free, to build their restaurant.Report Typo/Error
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