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Ami Hassan and Dean Desrochers, owners of Falafel Place in Winnipeg.
Ami Hassan and Dean Desrochers, owners of Falafel Place in Winnipeg.

Case Study

Tenants balk when landlord spikes rent Add to ...

THE CHALLENGE

Ami Hassan could not believe the number his landlord had just quoted. While he could understand a reasonable rent increase, this kick-up would effectively double his occupancy cost, which was more than he and his partner Dean Desrochers were prepared to absorb.

But if they said no, then what?

More related to this story

THE BACKGROUND

On Sept. 5, 1986, Ami Hassan and his father-in-law, Moshe Reuter, opened Falafel Place on Academy Road in Winnipeg. The menu featured middle-eastern cuisine such as hummus, falafel and shwarma. One year into operations Mr. Hassan bought out Mr. Reuter, and continued on as proprietor-in-chief.

Mr. Hassan was quite a character. Diagnosed with attention deficit hyperactivity disorder (ADHD), which made it difficult for him to focus for extended periods, he worked hard to leverage his strengths. Mr. Hassan gregariously welcomed anyone who walked in and he always offered his unconventionally optimistic take on the world to all who would listen.

A few years into the venture, Mr. Hassan decided to relocate to the western end of Corydon Avenue, where it thrived. He also took on a partner, Mr. Desrochers, who joined Mr. Hassan at the end of a three-cups-of-coffee ‘interview’ in 1996. The two restaurateurs worked hard to making Falafel Place Winnipeg’s undisputed go-to spot for falafel.

The restaurant employs about 30 people – 10 full-time and another 20 part-time – as well as the occasional guest celebrity chef, including Larry Thomas ( Seinfeld’s Soup Nazi), who stopped by for a one-day cooking gig.

THE PROBLEM

One day the landlord stopped by to tell Mr. Hassan the rent charges on the next lease. Suffice to say, the number was higher, and significantly enough to wonder what, if anything, the partners could do.

THE SOLUTION

Shortly after meeting with their landlord, Mr. Hassan and Mr. Desrochers decided enough was enough, or more specifically that enough rent was enough: it was time to consider buying. As they started looking at what was available, they came upon the former Belgian Pastry Shop building, which had just gone on the market. Also located on Corydon Avenue, just west of Winnipeg’s Little Italy district, the 1,500-square-foot facility was well-suited to the restaurant’s operation.

Mr. Hassan and Mr. Desrochers relocated not long after, and Winnipeggers were only a few steps behind.

The two entrepreneurs are now exploring expansion options for their new venture, which, incidentally, don’t involve paying rent.

Special to The Globe and Mail

Reg Litz is a professor in the Asper School of Business of the University of Manitoba.

This is one of a regular series of case studies by a rotating group of business professors from across the country. They appear every Friday on the Your Business website.

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