Sylvain and I talk about the big news with Empire /Sobeys buying Longo's, the well regarded Ontario regional grocer. How does this change the landscape for consumers, stakeholders and what does it mean for the Canadian grocery industry. Next we talk about Dairy Farmers of Canada statement around transparency behind their review process, and then we get to our great interview with Chef Carl Heinrich, owner of Toronto restaurant Richmond Station and talk about the current and future state of the sit down dining industry, and the economic and social justice imperative behind the Hospitality Included movement.
Welcome to the The Food Professor podcast episode 22 I’m Michael LeBlanc, and I’m Sylvain Charlebois!
The Food Professor is presented by omNovos the digital customer engagement solution for grocery and restaurant marketers, helping you solve your customer’s most daunting questions: what should I eat today? Find out how you can get personal and grow sales with omNovos at www.realcustomerengagement.com
We’re recording this on St. Patrick’s Day, so celebrating the Irish today! Sylvain and I talk about the big news with Empire /Sobeys buying Longo's, the well regarded Ontario regional grocer. How does this change the landscape for consumers, stakeholders and what does it mean for the Canadian grocery industry. Next we talk about Dairy Farmers of Canada statement around transparency behind their review process, and then we get to our great interview with Chef Carl Heinrich, owner of Toronto restaurant Richmond Station and talk about the current and future state of the sit down dining industry, and the economic and social justice imperative behind the Hospitality Included movement.
Last we review the latest Dalhousie Agri-Food Analytics Lab at Dalhousie University, in partnership with Caddle, report about consumer confidence on our food industry, one year after the pandemic began. At the end of February 2021, a total of 10,005 Canadians were surveyed on confidence1 and satisfaction of the food industry. Results, overall, were quite positive for the food industry.
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Thanks again to the folks at omNovos for being our presenting sponsor!
If you liked what you heard you can subscribe on Apple iTunes , Spotify or your favourite podcast platform, please rate and review, and be sure and recommend to a friend or colleague in the grocery, foodservice, or restaurant industry. I’m Michael LeBlanc, producer and host of The Voice of Retail podcast and a bunch of other stuff, and I’m Sylvain Charlebois!
Have a safe week everyone!
Michael LeBlanc
Good morning, welcome to The Food Professor podcast, episode 22. I'm Michael LeBlanc,
Sylvain Charlebois
And I'm Sylvain Charlebois.
Michael LeBlanc
The Food Professor is presented by omNovos, the digital customer engagement solution for grocery and restaurant marketers. Helping you solve your customers most daunting questions, "What should I eat today?" Find out how you can get personal growth sales at omNovos at a realcustomerengagement.com.
Well, Sylvain, it is the 17th of March today, which means only one thing, Happy St. Patrick's Day or we're celebrating St. Patrick's Day.
Sylvain Charlebois
The luck of the Irish. Happy St. Patrick's Day.
Michael LeBlanc
Have you ever done a DNA test? Those DNA 23andMe things.
Sylvain Charlebois
That. are you asking me if I'm Irish? I'm unfortunately not, no. Are you?
Michael LeBlanc
Well, this is the funny thing. So, I my brother did one because I didn't do one, but you know, whatever. I'm pretty sure he's my brother, you know, kind of thing. And you know, with a name like LeBlanc, we expected a lot of France roots, you know, the Acadian, you know, the LeBlancs, were very early to Canada. But it turns out, I'm like 90% Irish. And three or four clicks ago, I had a relative in Dublin and all this stuff. So, it's funny, you know, the impact of the Irish on the world. Because they all roll their eyes when you say hey, "I'm part Irish". They're like, "Yeah, everybody is". So it's just so interesting.
And one of my clients is the Irish Government actually, I do some work for the Irish Government. They have a, they're actually one of the largest VCs in the world, Enterprise Ireland. It's government owned. But they take a stake in the companies they promote. And I bring, I've been to Dublin three, four times in the past, well, not in the before time, I had just bringing, bringing clients over there.
So anyway, we're celebrating St. Patrick's Day today. We got a great episode today. We've got we got an interview with Carl Heinrich, from Richmond station. It's great, you, you know, you and I've been talking about getting a restauranteur on and, you know, we talked about the industry. But we also talk about this interesting idea, and you brought it up in earlier episodes about these, what the industry calls, hospitality included, right. The no tipping social justice thing. So, it's a great conversation with Carl.
And, I want for any of the of the listeners, I guess viewers as well. To call and make sure and listen to my bonus episode, or our bonus episode, last week with Alexandra Gill, the food critic for The Globe and Mail. We had a fun time. Her and I chittin and chatting. as a bonus episode in between our main episodes. Did you have a chance to listen to that episode?
Sylvain Charlebois
Absolutely. And I'm sorry I had to miss it, but I thought you did a really good job allowing Alex to showcase her work and, and her art. I mean, she, she is, I think one of the best in the country as far as analyzing and critiquing the restaurant industry overall. And she has this social conscious that, I mean, she actually looks at the industry very critically but constructively as well. I mean, she's, she's done great work. She's out in Vancouver, but her voice, I think she deserves more attention. Her work deserves more attention. Hopefully, that our podcasts will give her more, more of a spotlight.
Michael LeBlanc
More profile. Yeah, yeah. Hopefully,
Sylvain Charlebois
I think your discussion was very, was great. You went from, you know, talking about the future of the industry to the social justice piece of of the industry. Talking about tipping as well and what needs to change. And what's, what the impact of COVID was on the industry overall. So yeah, it was a, it was almost half an hour of talk with the Alex and it was time was spent. Absolutely.
Michael LeBlanc
Yeah. Well, thank you. I had a lot of fun. I'm so curious about the life and the, what I call the tradecraft of being a critic. So it was it was really interesting to me. And,
Sylvain Charlebois
Well, the most interesting comments she made is that when she actually bashes a restaurant, it's good for their business. I had no idea. I thought it was the opposite.
Michael LeBlanc
I know, I think, I think it's a short term lift for the restaurant. I'm not sure if it's the sustainable lift when your not that good.
And, and speaking of which, these, some of these bonus interviews, including the one with Carl today, are coming out of the Restaurants Canada Show. The folks at Restaurants Canada been kind enough to kind of connect us with some of these people.
And actually, I'm going to do another bonus episode. Next week, I interview the CEO of Voodoo Doughnut, this Portland based doughnut shop that, this is the hippest place. And what's interesting, yeah, you know we talk about that the industry, but the essence of the conversation is how do you take a small concept like that, that's very rooted in the culture and, and very rooted in the community and grow it without losing its essence? And that's the basically the essence of the conversation that, that I have with the CEO is, because he came over with a big growth mandate. You know, he grew he was at Starbucks, 17 million restaurants or whatever. But how do you go from five or seven to more without, kind of, losing where, you know, losing that secret sauce or secret, whatever of the brand?
Sylvain Charlebois
Secret doughnut.
Michael LeBlanc
The secret, the secret ingredients and all that stuff.
All right, well, listen, we got lots going on. And, Voilà, Sobeys buys Longo's. So, were you, were you surprised that at that happening? And what are your thoughts on the deal?
Sylvain Charlebois
Well, I suspect that you weren't surprised. I wasn't, I would say when I saw the news about this acquisition, I thought, well, if I, if I had to pick a buyer for Longo's, Empire would be it. Because the buyer is a responsible grocer, it recognizes that there are some issues across the supply chain that really discriminate against independent grocers. And that's why I'm, for the next episode, I'm really pleased to get an independent grocer invited to our podcast because I'm concerned. I suspect that the Longo's family had lengthy discussions about the future of their business before committing to this deal.
When you see Walmart and Loblaws, imposing outrageous fees to manufacturers, people tend to forget that independent grocers can't do that. They can't get more and they're becoming less and less competitive. So I suspect that Longo's really looked at the landscape and said you know, "How do we stay afloat with our growth strategy?", Because Longo's was actually very, very aggressive, over the last little while. This week, we just learned that Walmart was investing half a billion dollars, but they're closing six stores, but they're building a new distribution center. Well, that money, some of that money is coming from suppliers. Independent grocers can't do that to remain competitive. And so I suspect that
Michael LeBlanc
The Indies, the Indies do have buying groups like UGI, Michael, Michael's UGI. So, and I think it's part of UGI as well, right.
Sylvain Charlebois
Used to, after this deal, they won't because of course they'll be using. But I would argue that, that Sobeys', or Empire's, buying power is much more significant than UGI's. UGI is there to serve a collective of independent grocers, and they've done a great job since 1972. However, you can do so much with UGI and I think that was that recognition. Even Mike Longo was on the board of UGI. So they did believe in UGI. But at some point, something's got to give.
For Longo's, I think that's probably why they committed to to the to the acquisition. On the other side, Empire, well they're gaining market share in a very tough market. The GTA, the Greater Toronto Area, is obviously one of the toughest markets in the country. And also, there will be converting 70,000 Grocery Gateway customers, and they'll be bringing them over to Voila at Sobeys, I think, which will also help.
Michael LeBlanc
That'll be interesting. Yeah, yeah, that'll be interesting to see what they do. Now I, as I said before, I'm Longo's shopper. They're close by and actually sponsored my kids soccer team. So I have a little affiliation with them. And I know, I know Anthony and Jenny longo do a fantastic job.
And Joy Bernardo, one of their fantastic buyers, is a good friend of mine. And, and you know, I shopped them all the time and their Grocery Gateway different, services very different than Voila. What I see in Voila, is you can, you know, what I expect to happen in the short term, who knows the long term, is some of their private label product will appear, I suspect in the Voila tap just as Farm Boy product does.
Sylvain Charlebois
Oh, absolutely.
The thing about Sobeys, the priority is not necessarily about the private label, it's more about the experience. And, and of course Longo's is a premium grocer. And so I don't think they'll play around with that. If it would have been Loblaws, for example, it would have been it would have been completely different. The President's Choice agenda will, would have driven the entire acquisition process, I think. Or the, or how they would actually mix together. With with Sobeys, I think they'll be similar to Farm Boy, I mean, Farm Boy was acquired by Sobeys in 2017. And most, most shoppers at Farm Boy probably didn't notice any difference.
Michael LeBlanc
They wouldn't know
Sylvain Charlebois
They wouldn't know. And I think that's probably going to happen with, with Longo's.
Michael LeBlanc
Yeah, yeah, the connection felt right. And even Michael, you know, from Sobeys from Empire, Michael Medline said, you know, basically he almost parroted the same words, when he was speaking to the public about Farm Boy of Longo's. You know, we're not going to mess it up. We're not going to mess with the formula. We're going to keep the formula as it is. And I'm sure I'm sure the, the, the family, the Longo's family considered that in terms of you know, who knows, maybe it had multiple offers.
You know, now when we look at the grocery landscape, landscape from coast to coast, you know, on the west coast you've got Jim Pattison's group with Save-On-Foods, is fantastic grocer. You've got Federated Co-op in Saskatchewan. And you've got Calgary Co-op, which is actually one of the biggest co-op, food co-ops in North America. And we're fortunate slash lucky, so to speak and timing, to have Ken Keeler the CEO as our next guest. That's been booked for months. But it's just, some nice, you know, we'll be able to chat with him about the landscape, certainly in Calgary. So you know, as we go coast to coast. So that means, I don't think it's swizzles the table in terms of the top five, right. So the top five groceries in this country would be, in no order, but maybe kind of an order, Loblaws. Empire, Costco,
Sylvain Charlebois
Metro, Metro is number three
Michael LeBlanc
Metro is number three.
Sylvain Charlebois
I think at 18 billion. Yeah, and then after that, there's a bit of a war between Walmart and Costco. But all of them, all five of them are selling more than 80% of all retail food in Canada right now. That's, that's a, that's a lot of power. And so I'm concerned about diversity. Because, when you go to Longo's, and you are a customer at Longo's, I'm sure you find products that you would never find elsewhere.
And something you didn't know about me, Michael, is that once when I was in Guelph, I actually taught an MBA course, an intensive one week course, at Longo's. At their headquarters in Vaughan, because they sponsored, they supported a case study. We did a live case study on Grocery Gateway. And they wanted us to teach the class at their facility. And, so for a week, we spent a week there, it was the best week of my, of my career at Guelph. It was such a fun thing. And Gus, the uncle, Anthony's uncle, was always in the classroom, all week. And, Anthony came in, the CFO came in, Liz Volk, the Vice President of HR came in, to because we had questions about certain things. Everything was confidential, of course, but it was such a great experience. And I got to learn a lot about the company. And the culture at Longo's was was amazing. So, I'm a little bit sad to see Longo's being sold. But at the same time, like I said, If I had to pick one buyer, it would have to be Empire. So, I was happy that, that Sobeys was able to become the caretaker of that culture.
Michael LeBlanc
You know, I'm a little more sanguine about the diversity, than I think you may, or may not be, because when you look at the history over the past 20 years, you know, there was a milestone where Loblaws bought Fortinos and, and really, you know, generally admit they messed it up. Because they tried to kind of, you know, it got subsumed in the Loblaws' organization.
And at the other end of the scale, you look at T & T and, and similar to Farm Boy. So, T & T is across eastern and western Canada, Chinese focused, ethnic grocer. You wouldn't know it's owned by Loblaws. There's not a lot of right, you know, there's not a lot of President's Choice. So, I think, I think the model is kind of set. And you know, you've got everything from FreshCo., Metros got ethnic grocers. Like they seem to have learned the lesson, though.
Sylvain Charlebois
Oh yeah, no,
Michael LeBlanc
Keeping the secret sauce. The secret sauce is the secret to the success.
Sylvain Charlebois
Absolutely. So, Loblaws didn't learn and I mean, their, let's face it, Loblaws is very good at what what it does. And they've learned from their mistakes. Same, same with Empire.
I mean, when you look at, the yesterday, I was actually comparing the stock price of Metro, Sobeys and Loblaws over the last five years. They've all performed well. I mean, the grocery business, yes, it is an oligopoly. But these companies are well managed by talented people.
And so, and they are, you're right, Michael, they are learning from their mistakes and, and they're there. At the beginning, I think about 10 years ago, there was this fascination of becoming someone else. Like Loblaw, was fascinated by Walmart and wanted to become Walmart. With Amazon being a threat right now, I'm not sure I see that again. Like I see grocers trying to create their own identity. And they're starting to be to feel very comfortable with that identity. All grocers in Canada are a little bit different. And I think they're comfortable with that which is great.
Michael LeBlanc
We should talk about Amazon and the grocery space and then we'll kind of kind of move on. Is, you know, they've opened up now, they've had their Amazon Go, which is more like a convenience store, but now they've opened up three or four full line grocery stores in the US. And you know, grocery has been evasively, evasively successful so to speak. Of course they own Whole Foods, which is at the one end of the market. But now you see Amazon, more, more in the US. Of course they've got what, 14 whole food stores here in Canada. So, somebody, something to keep an eye on, but really, you know, everybody wants to be a grocer until they're a grocer. It's, a tough business, right.
Sylvain Charlebois
Yeah, I mean, for years now, we've heard, we've heard rumors about, you know, a new player coming into the Canadian marketplace. But I think the complexity of our market is under appreciated. It's, it's,
Michael LeBlanc
Yes,
Sylvain Charlebois
Being a grocer
Michael LeBlanc
Target, Target certainly appreciated.
Sylvain Charlebois
It's a, it's a tough business. And so yeah, there's only 38, 39 million people in one of the largest countries in the world. To make it happen, is not easy. The one player that I think we should keep an eye on is, Couche-Tard. I mean, Cuche-Tard, looked at (inaudible), of course, in Europe and, and failed. I don't know if they've given up on that. They're looking at partnerships and doing some business with European based grocers. But, I wouldn't be surprised if Couche-Tard makes a move at some point in the grocery business in Canada.
Michael LeBlanc
Oh that interesting.
Sylvain Charlebois
That's a player that I'm watching right now very closely.
Michael LeBlanc
Very interesting. All right, well, listen, we wish, we wish everyone in the deal, much success, continued success. We wish the best. I mean, I think for Longo's employees, they now, you know, if they choose the executive level, they can start, you know, working in different formats and get experience in everything from discount to specialty. So I you know, I, you know, wish, wish everyone the best. And
Sylvain Charlebois
Yesterday, I was I was asked, "Oh, are we going to see a bunch of layoffs at Longo's now?" Honestly, I don't think so. If you're, if you're an employee of Longo's, you shouldn't, you shouldn't start rewriting your resume anytime soon. I think you're, you'll be fine. And I suspect that Empire will be very respectful towards the legacy of the Longo family for a very long time. Yeah,
Michael LeBlanc
Well, in fact, and I would, I would say there's probably upside, neutral to upside, and the upside is, you know, get your resume ready, because now you've got a wide variety of formats that you may want to choose to, you know, explore as a buyer, right. Maybe you want to be a buyer in the discount category and round out your skills.
Sylvain Charlebois
That's true.
Michael LeBlanc
No, I, you know, I think, I think there's, I think there's mostly upside, you know, it's gonna change, right, things will change. But mostly, I think neutral to better anyway. So again, we wish you much luck.
Just before we get to our interview with Carl, I wanted to, I noticed you, you posted something about, you know, just talking about buttergate a little bit, you posted something that's that seemed to be actually a little bit favorable to the Dairy Farmers of Canada, they seem to have made a statement that you were you were surprised at, or pleasantly surprised that tell us about that.
Sylvain Charlebois
Well, I mean, they did promise an investigation. And they made an announcement this week as to what the investigation will look like. Frankly, I was skeptical at the very beginning, because they are going to be investigating themselves. And that's the reality.
But they've, they actually gave the group the opportunity to design their own mandate, which is interesting. I thought they wanted to, they would, they would have wanted this to really scope the mandate out very carefully. That's, that tends to be the DFC way of doing things. Because it's all about image. It's all about the message. But now they're empowering the group to actually design the mandate, which I thought was very interesting.
The other interesting thing that I found is that you look at the group of people on that committee, on that investigating committee. And of course, most of them are funded by the DFC. I mean, they do have a lot of money and they do support a lot of research in this country. I've always argued that they're supporting the wrong research because it's all about yields and dairy genetics. It should be about how all of these practices are impacting food quality in the end, to consumers. But they disclosed all the funding. I honestly Michael, I was very surprised they were very, they were very forthcoming about who is being funded by them. We're starting to see, I think, a group that wants to be more transparent and more accountable towards the Canadian public. And on that committee also, the representative of Food Processors is actually on there, Mathieu Frigon, which is again, and Mathieu Frigon as you know, Michael, the Processors, their Processors have asked for a ban of palmites two, three weeks ago.
Michael LeBlanc
We talked about that with what turned out to be our most popular episode, ever,
Sylvain Charlebois
Ever.
Michael LeBlanc
With our conversation with Mark Taylor from Lactalis, right.
Sylvain Charlebois
So, I'm ,I was pleasantly surprised, in fact, our lab just submitted a report to the Dairy Farmers of Canada, outining, you know, some of our findings that we've been working with the University of Guelph testing different butter. Seventeen different samples altogether. I'm not going to disclose that what the results are, but they were very interesting.
The one concern that I have is that the Dairy Farmers of Canada appear to completely disregard all the research related to palmitic acids and, and the use of palmites in dairy, which could impact, butter quality. There's a lot of literature on this. And they've actually said there's no science on this issue, which is not true. So we've, we've also reported that to the DFC, telling them that they should, science is not a buffet. I mean, you don't pick articles to support a narrative. That's not how science works. Science is about an entire body of work without discriminating against any sort of science whatsoever.
Michael LeBlanc
Well, I'm sure as I've said many times, I'm sure we'll come back to this as it, as it continues to evolve. It was great to hear Mark's, the biggest processors, perspective and, and great to hear your perspective. Sounds like the file so to speak, is moving forward.
Well, let's, let's move off that and on to our great interview with Carl Heinrich. from Richmond Station, one of the most accomplished chefs in the country. So let's have a listen to that.
Carl, welcome to The Food Professor podcast. How you doing this morning?
Carl Heinrich
Yeah, not bad, Michael. Thanks. How you doing?
Michael LeBlanc
I'm great. Thanks so much for joining us. Listen, it's a real treat to have you on. Sylvain and I, you know, we've had this, what's this Episode 22? We've had farmers, we've had regulators, we've had all kinds of different people on, politicians. We've had one chef, but we've never had a chef of your caliber and a restauranteur as well rolled into one. So we're really excited to have the conversation. Lots of interesting issues to go after. Why don't we jump right in and start with where we always start, tell us a bit about yourself, your personal, professional journey, and about Richmond Station as well as, as a restaurant?
Carl Heinrich
Sure, well, just first off, thanks for, for the hard work you guys are both doing for this industry. I think everybody benefits from it and more conversations based around food and agriculture and business and the economy of the restaurant industry is so, it's so necessary and so needed. So, I really appreciate both of you for your hard work here.
I just, I really love food. And I love restaurants. And, and I really just enjoy hospitality. I was, I've never done anything else as far as a job, than working in restaurants. When I was a, when I was a kid, my mother was a single mother and I have two sisters. And she was working often a few jobs at a time. And it was, it was on us often to make sure that there was dinner on the table. And I started cooking in my mother's kitchen when I was 11 years old. And and I liked it. And I've always been a little bit, I don't want to say OCD, but I was very particular. And if my mom said, you know, this is the way that you boil the hot dogs. That's the way I boiled the hot dogs. Or, this is the way you make the meatballs. I did it that way every time and I wanted to make it every time.
And when I was, when I was a little bit older, I had a knee injury.
Sylvain Charlebois
How old were you when it happened?
Carl Heinrich
I was really into when. Oh, I was young, like 13 years old. I was really into sports at the time, and my mom looked at me and she said "You're an asshole, you've got to get out of the house, I'm going to get you a job". And so I started dishwashing when I was, when I was just 13. I mean just family restaurants and then it sort of grew from there.
But I always just really gravitated toward the restaurant industry. I loved the culture. I loved the teamwork. In a lot of ways it was like being on a sports team when you're in a kitchen and when you're in a restaurant. Everybody working different positions for the same common goal. And at the end of the day, you turn the lights off and you go home right. Just the way the clock runs out in a game.
And I went to culinary school to the Stratford Chefs School. I trained in New York City with Daniel Boulud for four years, or two visas. And I did a little traveling into Europe. And, and moved back to Canada when I was 23. And, I've been in Toronto now for about 11 years. Richmond Station,
Sylvain Charlebois
How long were you in Europe for?
Carl Heinrich
Just, just for a short stint, a couple of months. And, I knew that it was probably my only chance to see European, 3-Star Michelin, while I had those connections. I had grown pretty quickly in the ranks with Daniel and his company ther. And when I said, "Hey, you know i'd like to go see George Blanc at Vonnas" he said "Great, let me call". So, so I got to see some great restaurants out there. Some great bistros. Some great 3-Star, some great 1-Star.
I left with a very clear idea of the food that I wanted to pursue for my career. And, and I as much as I appreciated the the highest end of fine dining, I realized that going back to my roots and cooking the food that I would cook for my family when I was a kid, that always stuck with me.
And, and I grew up on the west coast of Canada. I grew up on Vancouver Island for the most of my childhood. And we had a great herb garden in the in the yard. We had, we always had a vegetables, we had a great strawberry patch, there were wild blackberries all around. And there was always good food on the table. Now, we didn't have a ton of money. We didn't eat extravagantly. A lot of food came out of the freezer. But we cooked from scratch.
After my training and my schooling and my (inaudible) and, and traveling, I knew that what I wanted to cook was food that made people happy. I wanted to work in an environment that was really inviting. And not just for those that could afford it because they had an enormous amount of money. I knew that I wanted to cook food that was sincere and had provenance.
And for me, that always started with ingredients. And, since I've been in Ontario now, I've spent a lot of time getting to know producers, farmers, cooking whole animal and, and really cooking from scratch. And, when it comes to Richmond Station, just making sure that we're having fun at the same time and that we're hiring people that are, that really want to be there and really care about hospitality. That was the first time I ever owned a business, my first venture into entrepreneurship, but I can tell you that it works. And it doesn't work because of Carl, and it doesn't work because of Ryan and our partnership. And it works because people like good food. And they like good hospitality. And that model is it's been a great model for us.
Michael LeBlanc
Let's talk a little bit about you know, one thing you jumped over, I just want to touch on you wound up on some kind of TV show. And, I think it was kind of, it sounds like it was a bit of an accelerant, you tell me, to to your career both, you know, certainly from a from a notoriety or from a prominence perspective. But tell us, for a minute or two talk about that, your experience on, in the world of television.
Carl Heinrich
Well, I was, I was 25 when I applied for Top Chef Canada. I was in the States. I was living in New York when the first seasons of Top Chef America came out, one and two and three. And I was hooked. I loved the show. And I remember watching the show, I mean, I would have been quite young back then, but just thinking "God, there's no way. Like, there's no way, you could put somebody into this position and imagine that they were thrive.
Michael LeBlanc
Successful, yeah, yeah, yeah.
Sylvain Charlebois
Do you enjoy the aspect of competition?
Carl Heinrich
I do, yeah, I really do. I love playing games. And I don't mind, I don't mind losing. I just, I love playing games. I've got two kids now. And we play Snakes and Ladders. I taught my son how to play chess the other day. And win or lose, I just loved, I love the action, I love the sport.
So, when it came to Top Chef, the first winner of season one, of season one of Top Chef Canada, Dale MacKay, I'd worked with him. Not too long before he won. And I looked at the contestants on the show and I said, "You know what, I probably wouldn't win". But the restaurant I was at, Marvin, it was just down the alley from Insight Studios, which was the production company for Top Chef Canada. And the producer came in often. And he would sit at our Chef's Table and said "You should apply for this show". A few of my colleagues in the restaurant looked at me and said "Yyou should apply for the show". And so I talked to my girlfriend and my friends at the time and said, you know, "Well, maybe I'll give it a shot. Who knows?" But it's a grind, man. I mean, it's, it's six weeks, there's, I mean, it's 16 contestants, there's no phones, no TV, no internet. You were totally secluded. It was, it was hard. And I think at the end of the day, I won not just because my food was better. I don't look at that show and say I was the best cook on that show. But I look at that show and say "I was able to play the game". And that prevailed at the end.
Michael LeBlanc
Let's get into talking about, about consumers. Let's talk about the era that we're in today on, you know, no need for a history lesson about what's happened in COVID. We're all well aware. But when you, in the before time, you know, pre COVID, how were you seeing the evolution of what consumers were eating? And where I'm going with this is you know, during this COVID year, what do you think is going to change? You know, more people are eating at home. Does it make them more discerning? Does it make them just desperate? And maybe they're treating themselves more. Maybe they're having higher fat food, let, you know more treats. But as you think about your menu today, you know, before, today, and in the future. Any, any thoughts on how you might adjust to that within your concept?
Carl Heinrich
It's a great question. And I'm really curious to see how all of this plays out. I'm totally honest with you, I think when it comes to the economy of restaurants right now, I think certainly the worst is yet to come. Frankly, from the restauranteur point of view. The hand that we've been dealt right now is a shitty deal, but it's a deal that we can play. We have enough cards in our deck to choose from to, to make sure that we get through this time.
I can't say the same for a lot of people in the industry as a whole, right now. And not just restauranteurs, but restaurant workers who have been laid off for a year. Restaurant suppliers who entered the lockdown, the first lockdown a year ago with a million dollars in accounts receivable, all of which on credit which restaurants saying that they wouldn't pay. I'm thinking about farmers who very much relied on restaurants to buy food from them. And in this time restaurant, not ours specifically, but a lot of them have been focused on "How do I cut these costs." And and buying good local organic food from people that you know is certainly one way to do that.
Michael LeBlanc
And for the listeners, just because not everyone is in Canada and everyone's different a different situation from coast to coast, in Toronto, I think you've been closed, probably since Toronto restaurants been closed since October? Like it's been a long long haul just. And, where Sylvain is of course, in Halifax, it's a little more normal. But so you know that it is, you know, the order of magnitude is quite dramatic.
Sylvain Charlebois
Absolutely.
Carl Heinrich
It's, it's interesting, man, it's, it's totally interesting. I have a friend I was talking to from Egypt the other day. He has a lot of family back home. And they're having a really hard time right now with this virus because the government is not supporting any of its civilians. Which means that shops have to stay open because people need to go to work because if they don't go to work, they're not going to eat that day.
We have this luxury in Canada of being very well supported by all levels of government in Toronto, you know what Richmond Street looks like between Yonge and Bay. It's a drag race for a lot of cars, but the city put a patio out there for us last year. They took off the entire curb lane on Richmond Street on the south side. That was a huge benefit for us.
We, our business would have really struggled without that last year. And we'd have had a lot more staff that wasn't on payroll. We have been receiving wage subsidy since the wage subsidy program was in play. We've received rent subsidy. So, there's a lot of benefits and subsidies and help out there that restauranteurs and small businesses are able to grab.
What I'm looking at, and frankly, they had to, because if we're focused, if we're forced to close our business, and like you said, now it's been about four months of that, if we're forced to close our business, you better make sure that you support us at the same time. So, what I'm looking ahead is, at, is restaurants are going to reopen. The lockdown is going to go away. The restrictions are going to go away. The subsidies are going to go away. And at the end of the day, tourism is still going to be down.The economy is still going to be in a recession. And, we're, restaurants are not going to see 100% of the revenues that they used to have. It's going to take a while to get back there. It might take a year, it might take two years. But in that time, what are they going to do? Because it's no secret that the average restaurant is not very profitable. So if you're already not very profitable in normal times, what happens when your revenue is down by 10, 20%?
Personally, we're ready for that. We're excited about making some great changes in our business and for this industry. But, we're also cognizant of, hey, there's going to be the hard work is still ahead of us.
And just, just to your, your point earlier about, you know where we were, and where we're going to be, a year ago, we were in this sort of strange golden age bubble in restaurants. You could open any restaurant that you wanted to open. You could spend $30 million doing so. You could hire whoever you wanted to hire. And then a lot of ways too, it was an employee's market because there were so many restaurants to choose from. It became really hard to find quality staff. And this was something that chefs and restaurant owners complained about constantly.
In so many ways the industry is going to change. Certainly we're going to get to a place, when we do reopen, where we have, as a restauranteur, we have many more talented people out there willing to work. And, so we have a great opportunity, if we can afford to hire them. And at the same time, I think that people are going to be really wary of how much money they spend.
I mean we saw this in 2008, 2009. And that's when, in Toronto anyways, fine dining kind of disappeared. That's where pastry departments kind of disappeared. Garmage cooks, we're now putting the pies on the plates. And restaurants had to get creative and restaurants had to get smaller. And we were just getting back into that, like I said, golden era of "We can do whatever we want". And then we get a slap down again. So, I think restauranteurs and chefs are going to have to be very creative coming out of the next few years.
Michael LeBlanc
But, Sylvain, you've called it the "great reset" in terms of the structure of restaurants in the industry. Talk about that a bit.
Sylvain Charlebois
Yeah, I actually look at the great reset very positively. So, if you look at recent numbers that came out of Stats Can, if you compare Q4 2019, with Q4 2020, sales in food service dropped 32%. Okay, and I agree with Carl actually, I don't think we've seen the worst of it. So, the great, we're in the middle of the great reset right now. It's gonna last for a while. But coming out of it, I actually think that not only they'll, they'll be space for innovation, but we're also going to be dealing with a different clientele.
And I wanted to ask Carl a question about that. I mean, people have been cooking, like a lot. So, has it, as a chef, as an entrepreneur, like, how, how are you going to see the marketplace? Do you think that food literacy is going to be an impact? Do you think that, that people will be coming into your restaurant being a little bit more sophisticated in terms of what they're looking for, with ingredients, expectations? What are you expecting, coming out of this pandemic?
Carl Heinrich
I don't get out much right now. But I, you know, everybody that I talked to, not just in the industry, but friends, back home in BC and around the city and my colleagues across the industry. You're right, everybody is cooking more, nobody I know, is thriving, right now. Nobody I know, is really happy about having to cook three square meals a day for themselves and their family. Now, every everybody I know, is very much excited about getting out into a restaurant.
I mean, going and it's the tactile things. It's the sitting down at somebody else's table. It's being given a menu that you can hold in your hand and not have to read a bloody tablet. It's, it's being spoken to from, by a person, and being served upon. And being in somebody else's space. These are things that maybe we didn't appreciate as much before, because there were endless opportunities to get those experiences. People are sick of ordering their food for delivery off of Uber Eats, they want to go out to a restaurant. And so, I don't think that will ever change. I think that certainly people are cooking at home more now than they ever have.
And I'll be honest with you, I don't think that's a bad thing. I really appreciate that. And, and specifically for kids, seeing mom and dad having to cook every day, I think that's a great thing. Kids are coming out of school now, not knowing how to put food on the table for themselves. Not knowing how to put food on the table for their families eventually. And we've seen this incredible illiteracy in the kitchen, in the past few years. And I think that this is gonna kick that in the butt a little bit. So, I think people appreciate the value of food more now than they ever have. But, I think they're going to take that first chance to get out to a restaurant safely and use it.
Sylvain Charlebois
I agree. I mean, I was actually speaking at the RC Show. I don't know if Michael, you saw the our segment, but I certainly agree with you, Carl, a more educated, appreciative clientele will just make that connection much better as you go through, as your experience dining in someone else's place. Which is, feels foreign right now, because we've been we've been going through this, this pandemic for 12 months now. But I would say that absolutely, I think there's some clear positives coming out of this.
What about, I mean, I hate to say this word, that pivoting, but as an entrepreneur, looking at Richmond Station, looking at your business model, is there a fit there with home delivery? How do you see this evolve? I mean, there's been some discussions around extra fees. The cost to use some of these apps. Restauranteurs in different cities are getting together to develop new apps to counter some of the big players who are charging a lot. But this whole concept of pivoting and, and this omni channel approach as a restaurant operator, how do you see that evolve over time after the pandemic?
Carl Heinrich
Two things, one, just on the, on the third party platforms here, that's the cost of doing business. If any restaurant out there wants to create their e-commerce website and find ways to get their meals delivered, sometimes at 100 a night, go for it. But that's going to be very tricky. And those platforms already exist. If you want to use them, you have to pay for them. Now, that being said, some of them are more user friendly than others, some of them cost more than others as a percentage of the, of the bill. And, it's up to you decide if you want to use them or not.
But at the same time, let's say Richmond Station, didn't use any of those third party platforms, we created our own e-commerce we figured out our delivery. The only way for somebody to order that food is to find us, and to, to seek us out. We're on Uber Eats. Richmond Station is on Uber Eats. And I can tell you that eight out of every ten orders that we get come from Uber Eats. Not because it's promoted on our website, but that's because that's the tool that people use. If we didn't use Uber Eats, we, use Ritual as well. And if somebody wants to go and order food for their house, for delivery, or to come pick it up, you go on our website, you press the "Order takeout here, right now", that's going to go to our Ritual page. But Ritual is going to be one out of ten, out of every ten order. Which tells me that the marketplace, there's a clear market here, there's, there's clear advertising here, there's a benefit to being on a platform like Uber Eats that, I wouldn't get those sales if I, if I wasn't working with them. As far as the costs go, it's just the cost of doing business. And it's up to us to figure that out,
Sylvain Charlebois
We're gonna have to figure out a way for you to deliver to Halifax, as far as I'm concerned.
Carl Heinrich
Tricky, but we've done it.
Sylvain Charlebois
You've done it.
Carl Heinrich
Well, it's, it's, it's I don't
Sylvain Charlebois
What's the whackiest thing you've done so far in the last 12 months?
Carl Heinrich
Oh, God, geez. There, there are a lot of things that we're going to take away from this, from this past year,. We've had to pivot like you say, constantly. And especially in early 2020, there, we were throwing everything at the wall. And it was bloody exhausting man. To figure out ways to be creative constantly. And a lot of the ideas were dumb. And a lot of the ideas were great. And a lot of the ideas broke even. But they all took the same amount of work. At the end of the day, we had to replace 100% of our revenue. We were dine-in and off-site event only, which means we had to be there in person and put food on a plate, before this pandemic. And now we can't do any of that. It's against the law.
So, our entire revenue model has changed 100%. And we're able, we were able to figure that out. But I can tell you that there's a lot of people around the industry that are bloody tired of constantly having to figure that out. So, it's, it's been a challenge. And, we found some ways that are going to stick some lines of revenue that are going to stick with us for a long time.
And, and just to get back to your question, again, I think that going forward, restaurants like ours that were sit down, we'll find other ways to get income into the restaurant, and not just rely on one model. Nobody saw this coming. I didn't see this coming. And even when it did come, I didn't think it was going to last this long. And now that we're hopefully on the upswing, we know that going forward, our revenue and our sales will have to be diversified. We probably still offer some some takeout and delivery. We probably still will do virtual events. We'll probably still do some sort of New Year's Eve and Valentine's take home meal package, and maybe one for Christmas and, one for Easter. So there is always going to be another tier of revenue for us.
Sylvain Charlebois
Reason why I know you is because you're a bit of a social justice activists in industry, I guess, with your position on no tipping. And I want you to talk to us about, about your position on no tipping. And I know you're very passionate about it. Of course, I didn't know much about tipping economics until I started to look into the no tipping policy and read some of your comments about that. Just want to get your thoughts on no tipping and and what's. I mean, because you're, you're a trailblazer. And it's, it is a sensitive issue in the industry. And, I actually really admire your guts, gutsy move and coming out and say this is something that we need to do. This is something we believe in as as business people in the industry. I just want to get your thoughts on no tipping in general. What's, what what's the rationale for you, for your business? And what could be the rationale for the rest of the industry?
Carl Heinrich
How much time do we have Mike?
Sylvain Charlebois
I know, yeah, because we're lengthy but this is, I think a very important topic.
Carl Heinrich
Well, I'll give you the the the bullet points here. Number one with a bullet, this industry, restaurant industry, hotel industry, the hospitality industry is a career. And it's a career for millions of people across this country. It's could vary for millions and millions of people across the world. And, for so many people out there, it is not seen as a career. It is something you do for a short period of time while you're looking for your career. And that is wrong. You look in places like Europe or Australia or New Zealand or almost everywhere else in the world, but North America
Sylvain Charlebois
Are you talking about fine dining mainly? Or are you looking at fast food or casual everything?
Carl Heinrich
Everything, everything. The thing more often, the big pin in stopping this from being a career for so many people is that it is a cash business. That employees are going to work and their earnings are uninsured. That there is no guarantee at the end of the day that you'll be able to retire. That you'll be able to buy a house. That you'll be able to raise a family. That you believe would get a car. That you'd be paid if you're sick, and you can't go to work, or you lose your job. Because of no fault of your own, like a lot of people have over the past year. There is no insurance out there.
So, if we look at a career professional server, and I'm going to speak modestly here in the amount of money that they make, but a year ago, in a busy restaurant, let's say in downtown Toronto, you work 40 hours a week, and you're going to make, let's say $500 a week on your paycheck. But you're probably going to make 200 to $200 a day in cash tips. Some places, it's a lot more than that. We're talking about $1,000 a week in cash and $500 a week on your paycheck. At the end of the day, you're making close to $80,000 a year, which is a great salary. It's a great career, it's a great profession.
But at the end of the day, you lose your job. And you're only eligible for the minimal amount of benefits from employment insurance. You have no CPP. You have no retirement plan. You have nothing to your name, because your income was in cash and was uninsured. And at the same time, there's an enormous issue with pay inequity in our business. And it is well understood.
Sylvain Charlebois
And that's a very important point there.
Carl Heinrich
Man and we are just going to get to the bullet points here. I mean, there are so many, I've got another one here for you. When you go to your dentist, how much do you tip your dentist? When you take a flight, if your airline loses your luggage, do you pay them less?
Michael LeBlanc
No. Now there's, there's, there's there's a long wrath,
Sylvain Charlebois
I wish I could, I wish I could.
Carl Heinrich
Well, and so and so how about this? You're sitting down in a restaurant, and you're not a big fan of the meal that you had, it was too cold. Or maybe the music was too loud. Or maybe the temperature in the room wasn't right. Or maybe the table next to you was too close to yours. Should your server be punished?
Michael LeBlanc
Yeah.
Carl Heinrich
Are you going to tip your server less? People go into a restaurant already knowing what they're going to leave as a tip. That doesn't change.
Michael LeBlanc
That 18%, I think, I think you said like that 18% plus or minus a percent When you do the math,
Carl Heinrich
It doesn't change,
Michael LeBlanc
Is what you see, right? Yeah.
Carl Heinrich
And over them having.
Michael LeBlanc
Let's talk about the other side of the coin. So the other side of the coin is consumers. And this is a really germane point, based on what we've been talking about is, listen, I really want to get back to restaurants. I have, will consumers on the whole accept the higher ticket price? Because they're paying, it's funny consumers struggle with math, right. I think because you're paying it anyway, as you said, most consumers know I'm going to tip. What I see on the menu is not what I'm going to pay out the door. But it's this weird logic right that the oh my goodness, that's an expensive meal. Is this the opportunity for a different kind of reset? This reset, this could catch on. You're gonna have to have you're gonna have to attract people back to the industry. There's no question about it. But, is this, is this one solution to you?
Carl Heinrich
This is the greatest opportunity to change anything you need to change in your business. And when it comes to, if you're if you're teetering on, I want to get rid of tipping. I know it's the best thing to do morally blah, blah, blah, blah, blah. It is the time. And,
Michael LeBlanc
If not now, when? Right.
Carl Heinrich
For us in the past, we struggled with this because we wanted to go no tipping for a long time. And we really wanted to follow Danny Meyer's suit in 2016. But at the end of the day, his issues and the reason that he went hospitality included were very different than ours.
Michael LeBlanc
Yeah,
Carl Heinrich
People, the reasons people go no tipping, because they want to pay their cooks more. Because they want to be able to pay their management more. Because they want to battle pay inequity. Because they want to be able to promote people. We were able to figure that out by just changing the tip out structure. But that didn't, that didn't solve the issue of uninsured income. Which is a very difficult thing to explain to your staff when they're making a good amount of money in cash.
Now, that's a very easy thing to explain. The benefits of insured income. The benefit of having a job where you can see growth. When we get back to normal, whenever that is,
We're going to have so many different roles and positions in our front of house. It's not just, your support staff, or your server, or your manager. And, just to be clear there, going from server to manager usually means that you're working longer, harder hours and making less money. So, that that transition was very difficult.
Michael LeBlanc
Yeah.
Carl Heinrich
Now what we're seeing is, in our business anyways, we have many levels of servers. We have many levels of support. We have many levels of hosts. We have many levels of management. And there's a very clear system for, hey, if I'm better at my job, or hey, I want to make more money, this is exactly how I'm going to do it. Not if I want to make more money, I'm going to work Saturday instead of Monday.
What we're, what we've done in our business anyways, is we've said to everybody, this is now a career. Now there are room, there's room for everybody to grow in our business. Just like, frankly, any other business in any other industry out there.
Michael LeBlanc
Well, Carl, you're, you're a wonderful advocate. And articulate advocate for change in the industry. You've, you know, I wish you much continued success once we get past the COVID era, getting at this industry in so many ways. Such a great insight into the industry. So listen, let's leave it there. Sylvain, any any last words? I mean, should we ask him if he thinks the butter is harder in the restaurant? That's buttergate that we're all over. But
Sylvain Charlebois
That's right, yeah. I just wanna I just want to thank Carl. I think both Carl and Ryan are visionaries. And, and I suspect that based on some of his positions, he's received some criticism. within industry, I'm sure. Because this is how people work in the food business. Change is never easy. And so, because I've, as an academic, and Michael would know, I do advocate for changing myself with, with different policies that we have in Canada. So I actually appreciate some of the some of the criticism you probably have received. And it takes a lot of guts. So I really admire your work. Continue on your journey. And looking forward to see how things, how things go and hopefully, hopefully one day you'll see me in your restaurant.
Carl Heinrich
Can't wait. Thanks, Dr. Charlebois. Appreciate it.
Sylvain Charlebois
All right.
Michael LeBlanc
Well, thanks, Carl. And, and yeah, Sylvain, maybe that's our first meal together back in Toronto. So I think we've we got a date.
Sylvain Charlebois
You got it.
Michael LeBlanc
Thanks, Carl.
Carl Heinrich
Take care, guys. Bye. Bye.
Michael LeBlanc
All right. Well, that was great interview with Carl. You know, again, set up thanks, courtesy to the folks at Restaurant Canada, he was on the stage at their show. You know, I think you knew Carl, you certainly knew of them. Because I think you mentioned him early on, particularly around this social justice tipping issue. Yeah.
Sylvain Charlebois
Yeah. I've never spoken to him live. Some of my, some members on my team actually did contact him last year when he went public about the no tipping policy. Which I thought was very interesting. And frankly, at the time, I didn't know much about it. But the more I learned about it, the more I thought, wow, this could be an opportunity to make the hospitality industry better. I mean, I have kids, you have kids, and the hospitality industry is often the first, first job most people have. I mean, I think one in one in five Canadians, their first job is, is in the agri food industry. And a lot of them are in the restaurant business. And, and unfortunately for many Canadians, their first experience is not a great one. My own son actually works in a restaurant and he's 18 years old. His experience so far has been great, because I think he works for a very good company. But unfortunately, for a lot of people, it's not great and they move on to other careers. Carl's ambition is really to make his own industry a career choice.
Michael LeBlanc
A career, yeah, yeah. careers act like a, like a, not something to get you from first to third year in university. But something that you you know, and I think, like, in many ways, and, and it's a, it's an, it's a North American discussion point. So, I think it's something we'll come back to again, Alexandra mentioned in her profile.
Sylvain Charlebois
Yeah, absolutely.
Michael LeBlanc
And I want to conclude on I want to conclude at one thing, you guys, Agri lab, put out some research, talk about that briefly. What's in the news and take us through that for a couple of minutes.
Sylvain Charlebois
Well, it's the Coronavirus anniversary, or I know there's a term for, for celebrating, I know if we shouldn't be celebrating one year of this pandemic, but anyways,
Michael LeBlanc
Designating. Yeah, I don't know if a celebration is the right.
Sylvain Charlebois
It's been a year
Michael LeBlanc
It's been a year, unbelievably.
Sylvain Charlebois
Unlike, unlike a very similar event, like the shuttle or 911? Where were you when? I mean the pandemic is all, it the shocks spread, has spread over several weeks. And so I think people are are thinking about what happened last year, a year ago. And so we wanted to go back and ask Canadians. So, we saw empty shelves, you were concerned, so how concerned are you now 12 months in? And we were very happy to report last week that confidence levels are very high in Canada. Extremely high. In fact, over 83% of Canadians actually trust the food supply chain. And I suspect that 12 months ago, it wasn't, we weren't there at all. And so the food industry really delivered did a very good job, in reassuring the public. I don't think food access is a concern.
The one thing that we've noticed is that both Alberta's and BC's confidence levels are very low compared to the rest of the country. And so, I think there's there was something there with media perhaps and some of the issues with High River and Red Deer, most recently, with the Olymel plant.
Michael LeBlanc
Right?
Sylvain Charlebois
So, I suspect it really affected people's perceptions. Because that's what we measure right, perceptions. The one thing that was really interesting is that we saw a confidence paradox. So, a lot of people are still concerned about other people stockpiling. So on the one hand, people are trusting the food supply chain, and food access. On the other, they wonder whether or not their neighbors or fellow Canadians will start stockpiling again. So that's very interesting,
Michael LeBlanc
Confident, confidence in the food chain, the grocery. Skeptical about their neighbors.
Sylvain Charlebois
Exactly, yeah. Emotions are very powerful, you know. If you don't, last year, we didn't know much about the virus. We didn't know much about how public health officials would react. We didn't know whether or not we're going to be allowed back to the grocery store anytime soon.
Michael LeBlanc
How long? How soon? What's the end point? All these things.
Sylvain Charlebois
Exactly, it was a moment in time.
Michael LeBlanc
All right, well, listen, great episode. Let's wrap it up, bring it to a close. Great to interview with Carl.
And, so thanks again to the folks at omNovos for being our presenting sponsor. And if you liked what you heard, you can subscribe on Apple iTunes, Spotify or your favorite podcast platform. Please rate and review and be sure to recommend to a friend or colleague in the grocery, food service or restaurant industry. I'm Michael LeBlanc,Producer and Host of The Voice of Retail podcast and a bunch of other stuff.
Sylvain Charlebois
And I'm Sylvain Charlebois.
Michael LeBlanc
Have a safe week and have a safe week everyone. Talk to you next time.
Sylvain Charlebois
Take care