Donna Dooher is president and CEO of Restaurants Canada.
René Descartes walks into a bar. The bartender says, "Can I get you a drink?" Descartes says, "I think not," and disappears.
"A guy walks into a bar" is one of the most popular ways to start a joke, but the reality of provincial liquor policies in Canada is no laughing matter. Archaic laws and restrictive regulations are pushing Canada's restaurateurs and bar owners to the limit.
Every day, these policies restrict product selection, hinder good service and force small business owners to buy alcohol from a monopoly that is often their competition.
In every other industry, including food sales and manufacturing, companies that buy in volume are entitled to discounts, relative to customers who buy small quantities. But in the convoluted world of liquor regulations, business owners are charged the same as consumers when they buy alcohol in seven provinces, regardless of the amount they buy. And in one province – Ontario – bar and restaurant owners are charged more than consumers. A customer buying a case of Labatt Blue in Ontario pays about $30; a bar or restaurant owner would pay $45 for the same case.
It's time to change this. Bar and restaurant owners have to pass their costs along to customers, so a markup on the liquor they buy is eventually paid by the people who eat and drink in their establishments. Inflated prices ultimately drive those customers away. That outcome hurts the public, hurts restaurant and bar owners and even hurts the government, since a profitable food and beverage industry is an important part of a vibrant economy.
It's also an important part of a vibrant community. Restaurants and bars have long been gathering places for people of all ages, stages for local musicians and destinations for tourists. And yet, many of these gathering spots are disappearing. Over the past 11 years, total revenue at bars and pubs have dropped 20 per cent, representing a loss of $548-million. Profit margins in the bar category are almost non-existent at just 3.2 per cent and are not much better for restaurants at 4.1 per cent. High costs and bureaucratic red tape are a big part of the equation.
Liquor laws across Canada are a patchwork quilt of outdated policies. Small businesses are left grappling with regulations that make no sense now, if they ever did. Some of these include a prohibition in New Brunswick against restaurant customers standing while they consume alcohol, and a Prince Edward Island law that forbids swearing in a licensed establishment. It's a part of the greater supply management issue that exists in this country, and that keeps Canadian businesses from competing at their full potential.
This spring, Restaurants Canada conducted a survey of licensees who represent 3,712 bar and restaurant businesses. We asked them what they thought about the models they were operating under, and their answers came through loud and clear:
- 82 per cent said their customers complain about the high cost of alcohol;
- 72 per cent said the cost of beer, wine and spirits has a negative impact on their business;
- 97 per cent want to see wholesale pricing in their province.
We've released the results of this study in a new report, Raise the Bar, that grades the provinces on the bar- and restaurant-friendliness of their policies. Do they offer a wholesale rate to businesses that buy in bulk? Do they provide a wide range of products? Do they allow liquor to be purchased through a variety of outlets, rather than a single monopoly?
The results are striking. Alberta leads the way with a B+ average, thanks to that province's broad selection of alcohol products and wholesale pricing. Newfoundland brings up the rear with an F, because of a provincial monopoly that offers poor product variety, prohibits wholesale prices, stalls on issuing licences to new businesses and conducts routine liquor inspections with inspectors wearing flak jackets. The other provinces fall somewhere in between.
We aren't asking for special privileges. We're asking for the same kind of volume discounts that other business people receive on a standard basis, so we can pass them along to our customers. We're asking for a wider and more interesting selection of alcohol products across the country. We're asking for an easing of the archaic laws that smother business owners in red tape.
Because, in the end, does the current system treat small business owners reasonably and does it allow us to offer the best possible experience to our customers? I think not.