Week of Nov. 9, 2009



CRA Charges Restaurants Hid $40M in Taxable Sales
The Canada Revenue Agency (CRA) reports that the first phase of a two-year, nationwide investigation into hidden cash sales in Canadian restaurants has uncovered more than $40 million of unreported income, on which no taxes were paid (The fraud applies to cash sales only; credit and debit cards create easily traceable audit tracks.). The national probe follows a Quebec government 2007-2008 study that found the use of “zapper” and “phantom-ware” illegal cash-income-suppression software had cost the provincial treasury an estimated $425 million. The government subsequently passed legislation prohibiting the design, manufacture, installation and use of such programs. Since 1997, the use of zappers has been suspected in more than 230 investigations by Revenu Québec. In 713 searches of merchants up to 2008, Revenu Québec found 31 zapper programs working on 13 different POS systems. Some 196 postings on the Revenu Québec website deal with zapper incidents.
• Initiated in 2008, the federal program runs through March 2010. It soon demonstrated that the practice was not restricted to Quebec. “Preliminary work indicates that the practice is prevalent across Canada,” said the CRA’s Caitlin Workman. “These are ongoing investigations. The CRA has identified additional businesses using electronic sales suppression.” It is a federal criminal offence to alter books and records to avoid taxes. Penalties can run up to five years in prison and fines up to twice the evaded sums.

Canadian Duo Raising €500-Million Hotel Buy-Out Fund
Canadians David Mongeau, 53, and Piers Talalla, 45, are predicting the bottoming out of the European luxury hotel market. The duo has launched a new €500-million hotel buy-out fund, called Avingstone, aimed at acquiring big hotel properties in Europe. Mongeau and Talalla are, respectively, chairman and CEO of the hospitality-investment bank Avington Financial. The company was established in the upscale Mayfair district of West London, England, after they left CIBC earlier that year. After two weeks they have confirmed €310 million of the targeted funding. Their lead investors include English brothers Ian and Richard Livingstone, whose London & Regional Properties has a €9-billion portfolio that includes more than 50 upscale hotels. According to Mongeau, Avingstone has also attracted the interest of a southeast Asia-based sovereign wealth fund and “a couple of dynastic European families.”

Five-Minute “Dip Stick” Test for Toxins, E. coli in Food, Developed in Canada
Detecting potentially deadly bacteria such as E. coli, listeria or salmonella in food products may be done in minutes, instead of the hours or days currently required for the appropriate identification. The test strips produce results in less than five minutes. A team led by Hamilton, Ont.-based McMaster University researcher John Brennan has developed a 10-centimetre-long “dip stick” or “paper strip” test to identify small amounts of five types of toxins that may exist in food and beverages and could be adapted to identify bacteria. The study was published in the Nov. 1 issue of the American Chemical Society’s Analytical Chemistry journal. The first use of the strips could be on food arriving from countries that still use pesticides banned in Canada. Brennan said, “If you import from places like India and China and there may be residue on the food; you could test for that.” Brennan suggested that since you don’t need professional training to measure the results, they could be used in food-manufacturing facilities to curb the spread of outbreaks. Brennan cited the E. coli contamination of groundwater in Walkerton, Ont., in 2000, and the Maple Leaf Foods listeria outbreak in 2008 as examples of where the paper strip tests could have caught bacteria before it entered the food chain.

Burlington, Ont., Restaurateur Takes Medical Marijuana HR Case to Court
Facing an Ontario human rights (HR) complaint about ordering a patron to not smoke marijuana inside or immediately near his restaurant, Ted Kindos, owner of Gator Ted’s Tap and Grill in Burlington, Ont., has gone to Federal Court to seek a ruling that people with a permit to smoke medicinal marijuana cannot do so in a public place or any licensed establishment. His action was immediately challenged by federal government lawyers. Kindos argues that he could lose his liquor license if he allows the patron, Steve Gibson, to smoke or hold the controlled substance in or out front of his restaurant. Gibson contends in his human rights complaint that he’s being discriminated against because he has a disability. The Kindros case is one of three human rights cases dealing with medical marijuana now in the Ontario human rights process.

White Spot to Add Four More Triple O’s in Asia in 2010
The move by Vancouver-based White Spot Limited to franchise its Triple O’s restaurants in
Hong Kong six years ago is paying off. Sales growth at the Hong Kong units is 4.5 per cent versus 2.5 per cent for the balance of the company. White Spot now operates six Triple O’s in Hong Kong, two in South Korea and one in Thailand, and the company is planning four more Triple O’s outlets in Asia next year. In keeping with its roots as a “British Columbia legend,” the company initially resisted a move to Hong Kong when it was approached by the Suen family, a real estate developer in Canada and Hong Kong. White Spot president Warren Erhart eventually realized the Suen family had substantial knowledge of Hong Kong real estate, and he was also conscious of the fact that more than 300,000 ex-patriots from Canada live in Hong Kong, most of then from the West Coast. White Spot, a Foodservice and Hospitality magazine Pinnacle Award winner in 2008, will have sales of some $200 million in the current fiscal year ended March 2010.
• White Spot receives a royalty of six per cent of sales from the franchised units and keeps two full-time employees in Asia to support the stores. To supply its Asia locations and keep them consistent with the rest of the chain, White Spot ships relish and pickles from Vancouver and works with local bakeries for bread and buns in each country. The Hong Kong stores get beef and chicken shipped from Australia, while in Thailand and South Korea local sources for these products are used. Menus are similar to Canadian Triple O’s with some changes, such as salmon, which isn’t popular in Hong Kong.

OLLA Charges Dropped Against 11 ClubLink Officers and Directors
Ontario Liquor Licence Act (OLLA) charges against 11 ClubLink Corporation officers and directors were dropped last week in Bracebridge, Ont. However, charges of permitting drunkenness on the premises and supplying liquor to an apparently intoxicated person remain against ClubLink and three people employed at the time of the incident who aren’t officers or directors. A trial date of April 6 has been set for Ian Colterjohn, James Flegg and Walter Moon. The charges were laid after the death of three young people last July who were eating and drinking at the Water’s Edge restaurant at the Lake Joseph Club in Port Carling, Ont., which is operated by ClubLink. The car had four passengers when it crashed into the Joseph River, one survived. Last week the crown prosecutor told a court there was no reasonable prospect of a conviction. The 11 persons who had the charges dismissed are: Bruce Simmonds, Paul Campbell, Jack Winberg, Patrick Brigham, Donald Turple, Kuldip Sahi, Neil Osborne, Robert Visentin, Egidio Caravaggio, Scott Davidson and Charles Lorimer.

OTEC Announces New Board – Chair Alister Mathieson
Alister Mathieson, dean, School of Hospitality, Recreation and Tourism at Humber College
Institute of Technology & Advanced Learning, is the new chair of OTEC, based in Toronto.
President and CEO Vicki Behune Lymburner also announced OTEC’s other new officers and directors. Officers include: past chair, Beatrice Schmied (president, Schmied Communications); vice-chair, Anthony Hopkins (president, Anthony Hopkins & Associates); treasurer, Paul Dinner (formerly of the Royal Bank of Canada); Industry Liason, Anne Marshall (Elmhirst’s Resort). New directors on the OTEC Board include: Robin Garrett (president and CEO of Ontario Tourism Marketing Partnership Corporation); Tony Elenis (president and CEO, Ontario Restaurant Hotel Motel Association); Dr. David Martin (director, Ted Rogers School of Hospitality and Tourism Management, Ryerson University); Kerry Painter (president and general manager, Niagara Convention & Civic Center); and Victor Cheng (president and CEO, iLogic Inc.).

Saskatchewan Union Challenges Opening of Private Wine Stores
A debate is brewing in Saskatchewan where the province’s second private wine store, Willow Park Wines & Spirits Regina, opened last week. This follows the opening of Cava Secreta in Saskatoon early last summer. The new location sells 1,000 varieties and claims that the majority of stock cannot be found anywhere else in the province. The selection may vary from government-run liquor stores, but the private entrepreneur is still a franchisee regulated and supplied by the government. The Saskatchewan move parallels the practice in Manitoba and British Columbia, providing specialty wine outlets while maintaining government stores for liquor sales. The concern remains with the union representing Saskatchewan liquor store employees. Bob Bymoen, president of the Saskatchewan Government and General Employees’s Union, talked to CBC News, suggesting that the province could suffer from more alcohol-related social problems as independent liquor store owners drive sales. “If a private business doesn’t sell enough alcohol, if that’s what their retail is, then they’re not going to stay in business,” Bymoen said.

New York Fries Opens 200th Store, Second in Hong Kong
On Nov. 6, Toronto-based New York Fries opened its 200th store in Hong Kong, its second unit in that market. “We’re thrilled to be able to celebrate our 200th store milestone with our franchisees in Hong Kong,” said company president Jay Gould. “Our first Hong Kong location has broken numerous sales records, confirming that this market responds well to our concept. We are excited for the continued development in this market. ”New York Fries signed a master license agreement in 2008 with Hong Kong-based Next Step Limited to open multiple units in Hong Kong and Macao. Next Step plans 10 more units over the next five years in Hong Kong. A move into mainland China remains a long-term goal.

GTA Canyon Creek Units Feature Local Products
Canyon Creek Chophouse restaurants in the Greater Toronto Area (GTA) have introduced a new menu featuring locally inspired ingredients and flavours. The eight locations offer a “harvest-themed” menu using fresh products from some of the province’s many farms. Running until
Nov. 25, the promotion also features wines from Henry of Pelham in Niagara in addition to more than 15 Ontario-based products such as Pingue prosciutto, Purdy Fisheries pickerel and Yukon gold potatoes from Cohn Produce. “We are always looking for new and inventive ways to raise the bar at our restaurants,” said Corey Dalton, SIR Corp. president. “I am pleased to say we’ve had a positive impact on sustaining Ontario’s growing industry by supporting so many local farms this fall.” Locally inspired dishes include honey garlic Angus beef short ribs with Cohn Produce, Yukon gold mash and roasted Carron Farms heirloom carrots, Wellington County dry aged striploin served with a Cohn Produce Yukon gold fully loaded baked potato, and harvest pumpkin cheesecake, topped with Iroquois cranberry compote and sugared walnuts.

Construction Started on 101-Room MainStay Suites Winnipeg Airport
Groundbreaking for the first MainStay Suites hotel in Manitoba, the 101-room extended-stay MainStay Suites Winnipeg Airport, took place on Oct. 29. Construction is expected to be completed in September 2010. Attending the sod-turning was John Owens, president of King
Edwards Extended Stay Group Ltd., owners and operators of the hotel; Kevin Lewis, president of upscale and extended-stay brands for Choice Hotels; and Scott Richer, director of Franchise Sales and Development in Canada for Choice. The property is part of an extensive new local
development surrounding the expansion of the Winnipeg International Airport, and it will feature a fitness facility with sauna and whirlpool, more than 1,000 square feet of meeting space, on-site laundry, free wireless high-speed Internet access and free grab-and-go breakfast.

CRFA Directors Lobby Prime Minister Harper
Directors of the Canadian Restaurant and Foodservices Association (CRFA) met with Prime Minister Stephen Harper in Ottawa on Oct. 22 during the association’s fall board meeting to discuss the state of the foodservice industry. During the meeting, which included key CRFA staff members, new association president and CEO Garth Whyte said, “Restaurants make an important economic and social contribution to Canada. We are at the heart of every community.” He added: “The business leaders in this room alone represent a combined $14 billion in sales and 300,000 employees. We’re not here to ask for money. We’re asking for recognition that the restaurant and foodservice industry is a valued industry in Canada.” Led by CRFA chairman Brenda O’Reilly of St. John’s and first vice-chairman Gerard Curran of Calgary, the PM was presented with a personalized chef ’s jacket.

Niagara College Opens Wine Visitor + Education Centre
Niagara College has officially opened its new $3.6-million Wine Visitor + Education Centre at the Niagara-on-the-Lake Campus, highlighted by a historic visit by The Prince of Wales. The unique state-of-the-art industry centre set in the College’s teaching vineyards will showcase and promote the Ontario and Canadian wine industry, provide wine tourism information services and feature academic and wine industry programming. The new centre is part of a $90-million campus re-development plan that includes major projects at Niagara College’s Welland and Niagara-on-the-Lake campuses. Dan Patterson, president, Niagara College, commented, “The new facility…is a wonderful showcase for the Ontario and Canadian wine industry. It also showcases our students, our College and the important work all Canadian colleges do in preparing skilled, job-ready graduates who drive our key industries.”

Beef Industry Backs McDonald’s Canada
After a recent email hoax circulating on the Internet challenged the beef sourcing practices of
McDonald’s Canada, the national Beef Information Centre (BIC) has re-affirmed the fast-food company’s commitment to using beef from Canadian producers. “McDonald’s Canada has made a commitment to Canadian beef, which today translates into the company using 100 per cent Canadian beef for all its burger offerings,” said John Gillespie, BIC’s chairman and a producer based in Ayr, Ont. The first email on the subject, which originally appeared in the U.S., surfaced in Canada later this year. Every day 2.5 million customers are served at McDonald’s outlets across the country.

New Regional Sales Managers at ASSA ABLOY Hospitality
Dallas-based ASSA ABLOY Hospitality, Inc., has announced new regional sales managers and directors. Robert Contardi has been appointed Ontario regional manager for national accounts, hospitality groups and distributors. A 20-year industry veteran, Contardi previously served for nine years as the Canadian sales manager for Marietta Corporation. Robert Attard is now the regional sales manager for eastern Canada, based in Montreal. He most recently worked for 13 years at Sysco, Guest Supply Canada. A 15-year industry veteran, Dominic Locascio is the new director of key accounts for North America. Locascio commented, “Having spent the last four years working with RFID on the restaurant side of the industry, I am ready to dive back into the hotel marketplace.” These were part of eight new appointments announced by the producer of guest-room security for electronic locks and safes with brands VingCard, Elsafe and TimeLox.

SIAL Montreal Re-branded as SIAL Canada
SIAL Montreal has been renamed SIAL Canada, reflecting the participation of exhibitors and attendees from across Canada and to strengthen the show’s image abroad as a North American venue. The 2010 show, which takes place in Montreal April 21 to 23 at the Palais des Congrès de Montréal, will boast more than 530 exhibitors from 32 countries and some 12,500 visitors. The show will occupy 200,000 square feet of floor space. A new feature in 2010 will be SIAL Cuisine, with leading chefs preparing their latest recipes using food and equipment from exhibitors. It will also include the third annual Trends & Innovations Showcase, highlighting new products and the fourth annual Olive d’Or contest, the leading international extra virgin olive oil contest in North America. SIAL Canada will continue to be co-located with SET Canada, a food equipment show now being expanded to serve the retail and foodservice industries. In 2009, SIAL attracted more than 12,000 visitors, including: 51 per cent from major grocery chains and independent retail stores; 23 per cent from hotels, restaurants, cafes and bars; 11 per cent from government, associations and institutions; and six per cent from consultants and other services.

Sysco’s Q1 Sales Down 8.1 per cent, Earnings Up 17.8 per cent
Sysco Corporation, based in Houston, reported that first quarter 2010 sales, period ended
Sept. 26, were down 8.1 per cent to US$9.1 billion and operating income decreased 1.5 per cent to US$497 million. Its net earnings rose 17.8 per cent to US$326 million. Sysco’s CEO Bill DeLaney commented, “In the midst of what continues to be an extremely challenging business environment, our operating companies managed expenses extraordinarily well. Looking forward, we are encouraged by the stabilization of our volume trends in recent weeks and we remain committed to supporting our customers through this most difficult period in our industry’s history.” In addition to managed expenses, the results were favourably impacted by a one-time tax benefit related to the company’s IRS settlement. The tax gain combined with non-taxable COLI gains favourably impacted the effective tax rate for the first quarter.


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