OPEN LETTER - LCBO Mix-up: Diplomats get wholesale price discounts, while restaurant owners pay full retail price

TORONTO, July 30, 2013 /CNW/ -

Dear LCBO Board of Directors,

I am writing to you on behalf of an industry that represents nearly 10 per cent of LCBO sales, contributes $25 billion annually to Ontario's economy, and employs 425,000 Ontarians.

Restaurant and bar owners across the province were disappointed and frustrated to learn that the Liquor Control Board of Ontario has granted a 49 per cent price discount -- equivalent to wholesale pricing -- to foreign diplomats and the federal government, while continuing to mandate that restaurant industry licensees pay full retail price.

Yet again, the LCBO has demonstrated that it is out of touch with current business challenges, and the financial burden of an overly complicated liquor control system. Sales at bars and pubs in Ontario fell almost 10 per cent in 2011 and barely rose in 2012. The LCBO's continued refusal to follow normal business practices and introduce wholesale pricing for licensees is perpetuating these challenges, and is an insult to thousands of business owners.

Restaurateurs and bar owners generate HST on every beverage and pay corporate, property and income taxes. These financial contributions help to pay for health care, education, and the municipal services provided to Ontarians. Providing diplomats with a discount provides no benefit to Ontarians. Restaurateurs and bar owners also create spin-off jobs and economic activity that diplomats do not.

Ontario restaurant owners have one of the lowest pre-tax profit margins in Canada, averaging just three per cent of operating revenues. Providing a wholesale price discount would mean that restaurant owners could grow their businesses, create new jobs, and support their communities. As well, permitting restaurateurs to sell wine, beer and spirits at prices closer to those seen in the LCBO will encourage Ontarians to support local restaurants, increase sales, and generate additional tax revenue for the Ontario government.

While CRFA has no expectation that the LCBO would ever consider matching the generous discounts you are providing to diplomats, we hope you will consider introducing a little more fairness into the beverage alcohol system for hard working Ontario business owners.

Sincerely,

Joyce Reynolds
Executive Vice President, Government Affairs

SOURCE: Canadian Restaurant and Foodservices Association

CONTACT: Prasanthi Vasanthakumar, CRFA media contact at [phone] or [email protected].