Restaurant operating expenses--rent and property tax

Sgtalpowell wrote: ↑ A restaurant owner (a friend of mine) just told me he pays $19,000 a month on rent and $11,000 a month on property tax for this restaurant.

His food cost is comparatively low to these two figures. Is that normal in Canada?

"Normal" is relative... downtown Toronto, it's a steal. Outside of the GTA and it's a ripoff. Size of restaurant also matters greatly.

11,000 a month for property tax?

carmaster wrote: ↑ 11,000 a month for property tax?

‘Don’t tax the heart out of Toronto:’ Independent businesses struggle to survive as taxes skyrocket
BY TINA YAZDANIPOSTED DEC 13, 2019 12:46 PM ESTLAST UPDATED DEC 16, 2019 AT 9:50 AM EST

Already burdened by the rising costs of rent, wages and inventory in Toronto, small and independent businesses are struggling to survive after years under a tax system they are calling unfair and perverse.

“It’s killing the heart of Toronto,” said Frédéric Geisweiller, owner of Le Sélect, a French bistro on Wellington Street West.

Geisweiller has seen his property taxes spike enormously. In 2006, the owner of the popular restaurant was paying $31,000 annually. That number has since jumped to $204,000.

This guy pays even more.

Sgtalpowell wrote: ↑ ‘Don’t tax the heart out of Toronto:’ Independent businesses struggle to survive as taxes skyrocket
BY TINA YAZDANIPOSTED DEC 13, 2019 12:46 PM ESTLAST UPDATED DEC 16, 2019 AT 9:50 AM EST

Already burdened by the rising costs of rent, wages and inventory in Toronto, small and independent businesses are struggling to survive after years under a tax system they are calling unfair and perverse.

“It’s killing the heart of Toronto,” said Frédéric Geisweiller, owner of Le Sélect, a French bistro on Wellington Street West.

Geisweiller has seen his property taxes spike enormously. In 2006, the owner of the popular restaurant was paying $31,000 annually. That number has since jumped to $204,000.

This guy pays even more.

How do you think election promises/general government inefficiency/etc are paid for?

Running a business is really hard but most people especially those on the public payroll have no idea. There aren't a lot of restaurants like Le Select that have been around that long.

if you rent a place for a restaurant, the owner of the property should be on the hook for property taxes, not the tenants. something does not add up right, rite?

Sgtalpowell wrote: ↑ A restaurant owner (a friend of mine) just told me he pays $19,000 a month on rent and $11,000 a month on property tax for this restaurant.

His food cost is comparatively low to these two figures. Is that normal in Canada?

Big city phenomenon I think. But that may be also where all the big spenders are. Knew a restaurateur (chef-proprietor actually) who told me that his rent in the Yaletown district of Vancouver was ~$16k a month (not sure if this was inclusive of property tax) over 10 years ago. Can't imagine clearing that much just to pay rent let alone every thing else.

It didn't help his case as he started in the area when it was seedy and very few people went there but then it became hip and his rent went up (in tandem or tridem(?) with property values and property taxes). Same thing is happening to businesses all over the Vancouver area as most landlords raise their rents to reflect market value (hey, that's capitalism). Business rent increases are not regulated in B.C.

The thrift shop that is run by Vancouver General Hospital's health authority had to move from its relatively-central premise at Broadway/Main to the far reaches of Hastings as its rent was being raised to $11k monthly (a lot for a non-profit thrift shop to come up with). I seem to recall that was an increase from $7k monthly.

The Richmond Hospital auxiliary bought its premises when faced with a potential rent increase. It was going up to $10k a month so the society bought it with a mortgage with payments running $11k a month. The society would probably have to pay more in rent today.
https://richmondsentinel.ca/article-det ... -community

I heard something about this on the radio today about Toronto and how they price the property taxes. Apparently taxes are based on a "best case" scenario not what the building is actually being used for so if you have a small restaurant but the land could be used also zoned for a condo you are going to pay property taxes based on the best case "scenario" for the city which would be a condo and see your property taxes skyrocket.

The guy trying to launch a campaign against this and bring attention to it likened it to having income taxes based on what you could be making if you went to university for 5 years and applied yourself, not what you are actually making.

I do think the way the city is charging property taxes will make it increasingly almost impossible for restaurants to stay in business. How do they go from charging $31,000 per yr to $204,000? In just a few yrs. That's pretty absurd

Thats insane, I’d never run a business with such huge costs. Its surprise that many still exist

GoodFellaz wrote: ↑ if you rent a place for a restaurant, the owner of the property should be on the hook for property taxes, not the tenants. something does not add up right, rite?

https://www.investopedia.com/terms/t/tr ... se-nnn.asp

HP_John wrote: ↑ I do think the way the city is charging property taxes will make it increasingly almost impossible for restaurants to stay in business. How do they go from charging $31,000 per yr to $204,000? In just a few yrs. That's pretty absurd

Maybe big city downtown is not meant for small businesses? The land value is too high for a 2 story building, so they need to move into a bay of a high rise, perhaps the direction Toronto is going is to have high rise everywhere.

GoodFellaz wrote: ↑ if you rent a place for a restaurant, the owner of the property should be on the hook for property taxes, not the tenants. something does not add up right, rite?

Commercial leases are a little different from residential leases. They are pretty much free for all and you can put almost anything you want in the lease. There is currently no commercial equivalent to the Residential Tenancy Act of BC, hence tenants get much less protection (in my opinion). Almost all of the commercial leases I'm seeing now are triple net. As a commercial property owner myself, I am relieved that it's become the norm for tenants to pay the property tax. It's not that I don't feel bad for them, I really do, but our government is crazy and can pretty much triple my property tax overnight by giving me some BS reason or no reason at all.

HP_John wrote: ↑ I do think the way the city is charging property taxes will make it increasingly almost impossible for restaurants to stay in business. How do they go from charging $31,000 per yr to $204,000? In just a few yrs. That's pretty absurd

Yep, expand that to other small businesses and we have a nation that will not have many store fronts that are not run by larger corporations. Though large corporations will have less of an issue shutting down a location with poor performance. With more sales coming from online verses retail, it is already very hard for small stores to be competitive. If they are also on the hook for some crazy property tax amount, good luck. The potential impact to retail/food workers is massive as it is already pretty hard to live on those wages, nevermind talking about what is a livable wage. But our governments either don't care or have no idea.

Taxes, rents, red tape and crazy special interest groups and even city councillors are killing businesses.

Take a read about this one...owner did everything right, spent all kinds of money renovating, got minor variances approved etc. They never even opened 1 day. There are other coffee shops, a bakery across the street and restaurants in the area already.

https://trnto.com/211-coffee-house-face ... nts-group/

gr8dlr wrote: ↑ Taxes, rents, red tape and crazy special interest groups and even city councillors are killing businesses.

Take a read about this one...owner did everything right, spent all kinds of money renovating, got minor variances approved etc. They never even opened 1 day. There are other coffee shops, a bakery across the street and restaurants in the area already.

https://trnto.com/211-coffee-house-face ... nts-group/

I think more people will get the message that Canada is not a place to do business. Most of us already been investing most of our money in foreign assets. Pension funds are doing the same, everyone knows to invest elsewhere.

divx wrote: ↑ I think more people will get the message that Canada is not a place to do business. Most of us already been investing most of our money in foreign assets. Pension funds are doing the same, everyone knows to invest elsewhere.

Crazy bureaucracy, special interest groups...I gotta really feel sorry for that coffee shop owner. They likely invested all of their savings and took loans only to be f'ed over. Why does it take so long for a hearing - the special interest group appeals on Dec 9th and there's no ruling until April 1 - FIVE MONTHS. The owner pays rent, taxes etc for nothing. I can only wonder from this thread, what the rent and taxes are for the five months. They should have let them open first and see if they abided by the conditions of the variance...if they were then they go to shut them down.

It's no wonder they need tips to subsidize their employee's wages.
Without tips, most restaurants would probably not be able to operate for very long.