Red tape is killing restaurants

The system seems designed to keep out first-time restaurateurs

By Liza Agrba

| September 21, 2022

Anyone with the will and the means to cover start-up costs and rent can open a restaurant. In pre-pandemic 2019, the City of Toronto issued 7,988 licences for dine-in establishments. But getting through various government agencies and reams of red tape requires more than passion and a healthy bank account: the system seems designed to keep out first-time small-business owners while the big chain restaurants of the world multiply.

Solution 1: “Subsidize educational programs for first-time restaurateurs”

Mikey Kim, chef and co-owner, Milou

“The reality is that most people are not able to operate a profit-generating restaurant. Anyone can open a restaurant if they have access to initial funds—never mind education or experience. This means first-time restaurateurs have to learn about all the bylaws—enforcement of which is paid for using taxpayers’ money—through trial and error. There are all these antiquated capacity regulations, which keep getting stricter. How would a first-time restaurant owner without experience or resources know something arcane like that their stairs are too steep to open for business? Education is crucial for the industry to be sustainable in a growing city with an ever-changing work landscape. Perhaps some of the money currently allocated to surprise bylaw enforcements can instead be used to subsidize educational programs for hopeful first-time restaurant owners.”

Solution 2: “We need a restaurant liaison”

Aoi Yoshida, chef and co-owner, Musoshin Ramen

“I would like to see the government institute a restaurant liaison. This would be a department or person to contact regarding permitting, licensing, targeted loans, changes to bylaws, and access to programs and funding. It would function as a one-stop shop, so owners wouldn’t have to search for bits of information from various agencies—public health, the building department, fire, licensing and alcohol. Right now, one mistake can set your start date back several months, so this would be especially useful during the early stages of setting up a business. And, in an environment where the rules are constantly changing—like during a pandemic—a liaison could answer questions as they come up.”

Solution 3: “Start a not-for-profit to get small businesses off the ground”

Stuart Sakai, owner, Sakai Bar

“I was able to start Sakai Bar because I inherited some money, but many people with talent and passion don’t open restaurants because they can’t afford to. If I could find an angel investor, I would put together a not-for-profit that would fund owner-operated restaurants. It would consist of a small committee of industry experts whose job would be to select a proposal from a pool of applicants and offer two things: a low- to no-interest loan on a flexible timeline and consulting help with the logistics of opening a restaurant. When the loan is paid back, the money would be rolled back into the fund and the process repeated.”

Solution 4: “We need the city’s support”

Monte Wan, owner, Khao San Road, Nana and Bang Sue Bar; co-owner, Favorites Thai BBQ and Bangkok Buri

“If someone wants to open or make changes to a restaurant, all it takes to ruin plans is for a couple of people in the neighbourhood to vote against them. At Favorites, we were denied an alleyway entrance and a patio. City councillors need to support small businesses instead of bending to the few people who raise their voices to complain. Councillors should ask people in a community what they want their neighbourhood to look like. If the vast majority say, ‘We want great bars and restaurants,’ or ‘We don’t want any of that,’ the city can zone accordingly and stick to the plan without deviating—even if there are complaints down the road.”

Rental Block

We did some shopping around for commercial real estate. The prices below are how much the spaces we found cost per square foot, per year—not including taxes, maintenance or insurance.