Opening Up: The Restaurant Industry’s Road to Recovery

Ian McGrenaghan, the co‑owner behind some of Toronto’s most popular eateries (Grand Electric and Tacos Rico, for starters), gets personal about the state of Canada’s restaurant industry, how we got here and how the pandemic may offer a chance to start over.

Let me share a secret with you. Restaurants were doomed before Covid-19 hit us.

We know that the Canadian restaurant industry is in crisis. Restaurants, however, have barely been treading water for some time – the pandemic just pushed us over the edge. My business partner, Colin Tooke, and I, are trying to find ways to adapt because of Covid-19: Our new project on Ossington that was supposed to open in May has been put on hold and Tacos Rico (our newest outpost across from Trinity Bellwoods Park) is in limbo because it relies heavily on summer tourism. But the hard truth is that we were struggling to survive long before any of this happened. And that this moment could be an opportunity to fix what is broken with the restaurant industry and rethink how we do business.

“Just put me out of my misery,” I joked to Colin, my partner in five businesses over the past eight years. It was March 14, 2020, and there was a nervous energy humming below the surface of every conversation, news story and daily routine. A new virus called Covid-19 was approaching like a dust storm, looming large on the horizon and creeping toward Toronto with a terrifying persistence.

As news of lockdowns in Asia and Europe rolled in, it was inevitable that the same would soon come to Canada. Sales were down 25 percent from the previous year at Grand Electric, our first restaurant, and Tacos Rico was flatlining on account of an already cold spring. When the announcement was made on March 16 that all restaurants had to close, waves of deep sadness, and then relief, washed over me.

June 26, 2020
A photograph of houses alongside Trinity Bellwoods park in Toronto.
Trinity Bellwoods Park.   Photo: Saeed Zeinali (Unsplash)

Let me explain. Covid-19 has brought many mixed emotions out of the woodwork for me, and this pause has given me time to reflect. As I scroll through social media, every restaurant owner seems to have something insightful to say or do in response to this pandemic – the most existential threat our industry has ever faced. And all I can think is: “Maybe I deserve this.”

Running a restaurant is an exhausting, often thankless, rarely profitable, unbelievably amazing pain in the ass that is also beautiful and incredibly rewarding. Being forced to close and take a break from the cash flow battering felt good. Having to let my staff know they had no job – many of whom I have worked with for over five years – felt really, really bad. And telling them I didn’t know when or if there would be a job to return to, was a feeling I wish on no one.

Conversations were had, thoughtful e-mails were sent, and I woke up three days later with a terrifying amount of supplier and tax debt, a final payroll owed to my employees and a sense of shame that I had no game plan. Then there was the brooding guilt that I was secretly relieved to have a break after eight years of this insanity.

Because between a tipping culture that relies on outright tax evasion and unequal compensation, unrealistic work hours for kitchen staff, a complete lack of job security, mental health issues, as well as discrimination and harassment, diners and restaurant owners need to come to terms with the underlying challenge Covid-19 poses: that the prevailing business model of the restaurant industry was antiquated, morally questionable and completely unsustainable.

Many of us rely on a dance of denial between overextended supplier terms, unreported tip income, hoping our staff don’t ask for their vacation pay all at once and using tax accounts as an emergency fund to get by. Restaurateurs rarely share this with the public, in fact we boast on social media how busy and amazing we are, what collaborations and specials we have on offer, all the while operating in razor-thin cash flow margins.

The owners of Grand Electric in Toronto.
Grand Electric in the glory days.   Photo: John Cullen

It has always been difficult to make money in this industry, but there was an assumption that those at the top of their game were exceptions to this rule. Let me tell you something I am not proud to admit. I know for a fact that many of the top restaurants in this country are facing the same issues as the mom-and-pop shops before this crisis hit. They were struggling to keep up with payments and their business model was already broken. (Just ask restaurant suppliers who owe them the most money.)

The $40k in government relief for small businesses that Colin and I received was, as many fellow restaurant owners also experienced, completely used up before we even got it. We had to clear a $16k final payroll, pay out accumulated vacation pay, ensure we could sort out rent for April and May, and throw some money to our suppliers so we would have something approaching an amicable business relationship when this was behind us and needed to place an order again.

There were other things that didn’t sit well with me. Our kitchen staff could no longer afford to live near our restaurant while our servers walked out the door with hundreds of dollars in income per shift. I was disgusted with myself after laying off our entire staff of 20 and then privately feeling thankful none of them were married or had children. (My businesses – as with most restaurants – can’t afford to hire parents because that adds additional scheduling and compensation variables to an already maxed-out operation.)

It was easy to push aside these thoughts amid the very real grind of just making sure the bills are paid, and your online reviews keep coming in positive. I know I certainly did, but I’m out of excuses now. My restaurants are shuttered, some possibly forever, and I have nothing but time to give some real thought as to why the hell I’m doing this in the first place.

Before this industry starts gearing up for whatever the post-Covid-19 world looks like, we need to channel some of the energy we put into our Instagram profiles and high-tech ordering apps into self-reflection and much-needed change.

I need to take a hard look at this crisis and the issues it raised: Access to health care, a living wage, and the importance of social safety nets. I have to determine what kind of business model will allow my staff to work 40-hour weeks with a living wage so they can afford to rent a place within a 30-minute drive. I need to figure out how I went from running scrappy, fun but still profitable restaurants to hoping I could pay myself and my partner a salary at the end of the year while competing against multinational corporations and investment fund-backed restaurant groups on Uber Eats and Instagram.

I share all this from a place of honesty and a desire to make my restaurants better places to work, dine and operate. While upending countless lives, this pandemic has – perversely – also given us a fresh start.

There are many long days and nights ahead once my restaurants are allowed to open, but until then, I honestly can’t push aside the nagging feeling that I could be a better employer, owner, host and neighbour. I don’t have all the answers, but I know that I need to spend time grounding myself in a sense of purpose that reaches beyond just making sure I pay my bills on time and keep my labour costs down.

The bar at Grand Electric in Toronto.
The menu at Grand Electric in Toronto.
Grand Electric's Parkdale location.

Between my employees, suppliers and customers, the most valuable asset I have isn’t money, it is people. As the lights turn back on, I want to move toward a model that leaves everyone feeling rewarded. What gives me hope is the creativity, passion and work ethic of my fellow restaurateurs. We’re used to rolling up our sleeves and stubbornly marching forward despite a mountain of evidence that we should give up. If we can harness our wild and often irrational passion and temper it with the mindfulness the pandemic has gifted to us, we might stand a chance at not just surviving this, but also coming out more grounded and wiser. I owe it to my staff, my customers, my business partners and my community to hold on to this moment of clarity as the world slowly reopens and restaurants wade into uncharted post-pandemic waters.

After the hell we’ve all been through, they deserve nothing less.

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