Running a restaurant in Toronto is no easy feat – it never has been. Add today’s climate of sky-high interest rates, pricey lease costs and lingering pandemic recovery to the mix, and being a Toronto bar or restaurant owner isn’t for the financially faint of heart.
With the city bustling back to life post-pandemic, however, a healthy handful of buzzed-about new restaurants open their doors each month throughout the Greater Toronto Area (GTA). And many – from Dundas West to King Street and Yorkville – are packed with patrons. Some older spots, however, are still feeling the pinch of the pandemic.
Rob Eklove, Vice President of Urban Retail at The Behar Group Realty Inc., owned a handful of popular former Toronto bars (Supermarket, Tempo, and Lava) and now specializes in helping chefs and owners find real estate for restaurants. He says the general consensus is that Toronto’s restaurant sales are down 30% compared to pre-pandemic levels.
“But that’s dependent on the market you’re looking at,” explains Eklove. “In the Financial District’s core, they may be suffering more than that because office attendance is nowhere near where it was prior to the pandemic. The suburban markets may fare better because people are working from home and staying there.”
In the years rife with pandemic-inspired lockdowns and restrictions, Toronto’s beloved bars and restaurants took a major beating, resulting in the fight of their lives for countless owners. Of course, some didn’t survive. So, the reawakening of Toronto’s restaurant scene – complete with this slew of new additions – is cause for celebration. But that doesn’t mean life’s any easier for the city’s restaurant and bar owners.
Rents for commercial real estate – especially in the downtown core – remain costly. According to the most recent figures from the Toronto Regional Real Estate Board, the average commercial/retail lease rate in Toronto is $26.32 per sq. ft.
Eklove lays out the math with a real estate acronym: GROC (Gross rent occupancy cost). “In a restaurant setting, you want your gross rent to be 10% or less of your sales, in terms of a business model,” says Eklove. “If you’re paying $100K in gross rent annually, you need to be doing $1M+ in sales. So, if you signed a lease where you were paying $300K in gross rent annually, but pre-pandemic, you thought, ‘No problem, I can do $5M in sales,’ then you’ve got it made in the shade. But, post-pandemic, your sales are $2.5M, then you’re getting squeezed.”
As he highlights, some Toronto restaurant owners locked into leases made pre-pandemic may indeed be in a particularly vulnerable spot. “I think that some restaurant groups downtown that did deals at premium rates pre-pandemic are feeling the pressure,” says Eklove. A handful of restaurants throughout the city have subsequently made headlines as of late for their closures due to their inability to afford rent.
For those entering the bar and restaurant market, while rent costs may be down in some cases, Eklove says that deals are harder to come by these days.
“There has been an uptick in activity; there has been an uptick in people engaging landlords and figuring out if deals are possible,” he says. “But, with borrowing costs up and construction costs up, deals are very hard to come by — that’s the bottom line. People have to have a very sharp pencil when it comes to figuring out whether deals make sense. You’d assume that landlords would be more flexible with lease rates rather than continuing to have vacancies, but that’s not always the case. There are other metrics involved that have an impact on the valuation of particular properties. So, landlords are reluctant to do deals because it could adversely impact the valuation of their property.”
Chef Roberto Marotta, who owns downtown Toronto restaurants ARDO and DOVA with his wife, Jacqueline Nicosia, says that something shifted with the pandemic and its devastation on the city’s food and beverage industry when it comes to commercial real estate. “Following COVID, more than ever, the restaurant industry is seen as high-risk,” says Marotta. “It’s extremely challenging to secure a new location because property owners and managers are looking for significant collateral. If you are new to the industry, it can be an extreme challenge to negotiate and secure the property you are interested in.”
The pair have experienced opening a restaurant both pre and post-pandemic. They opened ARDO in 2015, and DOVA in 2021. “Prior to the pandemic there were far less vacancies, so landlords were more willing to negotiate with you on the terms of the lease,” adds Nicosia. “The real estate market took a huge hit during the pandemic so landlords became incredibly strict on their terms for restaurants. Interestingly, despite the pandemic, rental costs have remained high and insurance costs continue to mount. We recently secured the space for our fourth business and third restaurant and these challenges continue.”
For what would become DOVA, Nicosia says she and Marotta were drawn to the private patio of the real estate at 229 Carleton Street, as well as the opportunity it offered to have a unique private dining room. “They were both features our first restaurant, ARDO, didn’t have,” says Nicosia. “We could see the potential in each space and picture what it could become. We took our time looking as it had to feel right and tick all of the boxes.”
The spot is located in the city’s rapidly up-and-coming Cabbagetown neighbourhood. “We wanted to bring something new to the Cabbagetown area that was missing,” says Marotta. “We love the east end of Toronto and wanted to stay in that neighbourhood. We saw DOVA’s current location a few years prior and when it came on the market again the timing was right.”
Local entrepreneur and beverage expert Evelyn Chick, on the other hand, wasn’t looking for bar space at all when she stumbled upon the Parkdale spot that would later become Simpl Things Cocktail & Snack Bar. “I was actually looking for a secondary event space, but Simpl Things came along and it was such a unique space and my vision was so clear as to what I can do with it – to span across two different addresses, with a massive footprint for a patio that will double the size of the restaurant,” says Chick. “The area is difficult because it’s Parkdale, which to some can be rough around the edges, but with the right aesthetics, unique concept, and good hospitality it can be a destination spot. It is a bit tucked away from the chaos of Queen Street, so often people refer to it as a ‘hidden gem.’”
Securing a place to call home is just the first of many challenges for restaurant and bar owners. “It’s challenging in terms of everything being extremely expensive to maintain, including labour, maintenance, insurance…even if the base rent is ‘cheaper,’” says Chick. “New restaurant owners may find a property that they like, but once they get into the build-out stage, budgets are tight as the cost of materials start to increase rapidly and it’s much harder to make your investment back.”
Eklove calls it “a wash” when asked whether the GTA is gaining or losing wining and dining spaces. “We are losing some spaces downtown, and gaining some spaces in the suburban markets,” says Eklove. “I think we’re in the middle of some uncertainty, but in the long term, there’s no doubt that we’re going to gain more food and beverage spaces.”
Along with this, commercial rents and property values will continue to rise, says Eklove. “It may not be in the foreseeable future, but long-term, I’m confident this is the case.” For those currently in the market for restaurant or bar space, available supply varies throughout the GTA, says Eklove.
“Supply is limited, especially in the suburban markets, because construction costs and borrowing costs have increased significantly, so builders are not building new plazas,” says Eklove. “So, there’s certainly a shortage of supply in the suburban markets, where landlords are getting multiple offers for 1,200-sq.-ft USR space. In the downtown core, there are more options, but people are still quite nervous. The population in the downtown core is nowhere where it was pre-pandemic. People are being careful; they don’t know if a recession is going to hit, and lending and construction costs have increased, so people are being judicious.”
For those looking to secure bar or restaurant real estate, doing the research is key. “Do your homework, research the market, have a solid concept and stick with it, even if small parts of it need to be flexible,” says Chick. “Think about variables and costs involved, as it’s often much more than anticipated. Go through the proper channels, cover your bases, and don’t be frugal with things that have to be done properly – like licensing, plumbing, electrical etc. It will save you a lot of headache in the long run.”
Hiring an in-the-know professional or two also doesn’t hurt. “Hire a seasoned lawyer who is an industry expert and don’t be afraid to push back to secure terms that make sense for you and your business,” says Nicosia. “Know what terms you are willing to negotiate and ones that are off the table because they will directly affect your business. The terms you are able to negotiate will make or break your success.”
Marotta also stresses the importance of finding a strong real estate agent that you trust completely and who has dealt with restaurant locations and negotiations before. “You need to find the right person you can count on,” says Marotta. “We are so grateful we have found the right fit. Finally, don’t be afraid to reach out to industry peers. It will surprise you how much anyone in the hospitality field wants to see fellow restaurateurs thrive.”
For diners, today’s uncertain culture may mean higher food prices – something patrons are just going to have to accept (or stay home). But at the end of the day, most of the city’s restaurant owners are driven by passion over profit. And, if we have to dish out a few more dollars to experience their culinary creations, so be it.
“Despite the uncertainty, I’m very bullish about Toronto,” says Eklove. “It’s a great city. I think with all the immigration that the government is promising, the city is going to continue to explode. So, although there are some short-term growing pains in the food and beverage industry, I’m very optimistic about the city in the long term.”
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Toronto Commercial Properties
Stephen & Mariya Lilly
Commercial Brokers
Office: 416-494-7653
Mariya Cell: 416-824-5078
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RE/MAX Hallmark Realty Ltd., Brokerage
685 Sheppard Avenue East Suite 401, Toronto
Riverdale Office
RE/MAX Hallmark Realty Ltd.
630 Danforth Ave
Toronto, ON M4K 1R3
Office: (416) 462-1888
Fax: (416) 462-3135
Leslieville Office
RE/MAX Hallmark Realty Ltd.
785 Queen Street East
Toronto, ON
M4M 1H5
Office: (416) 465-7850
Fax: (416) 463-7850
Bayview Village Office
RE/MAX Hallmark Realty Ltd.
685 Sheppard Avenue East
Suite 401
Toronto, ON
M2K 1B6
Office: (416) 494-7653
Fax: (416) 494-0016
The Beach Office
RE/MAX Hallmark Realty Ltd.
2277 Queen Street East
Toronto, ON
M4E 1G5
Office: (416) 699-9292
Fax: (416) 699-8576
College Street Office
RE/MAX Hallmark Realty Ltd.
968 College Street
Toronto, ON
M6H 1A5
Office: (416) 531-9680
Fax: (416) 531-0154
Merton Office
RE/MAX Hallmark Realty Ltd.
170 Merton Street
Toronto, ON
M4S 1A1
Office: 416-486-5588
Fax: 416-486-6988
Richmond Hill Office
RE/MAX Hallmark Realty Ltd.
9555 Yonge Street, Suite 201
Richmond Hill, ON
L4C 9M5
Office: (905) 883-4922
Fax: (905) 883-1521
Newmarket Office
RE/MAX Hallmark York Group Realty Ltd.
25 Millard Ave West Unit B
Newmarket, ON
L3Y 7R5
Office: (905) 727-1941
Fax: (905) 841-6018
Ajax Office
RE/MAX Hallmark First Group Realty
314 Harwood Ave. South, Suite 200
Ajax, ON
L1S 2J1
Office: (905) 683-5000
Fax: (905) 619-2500
Pickering Office
RE/MAX Hallmark First Group Realty
1154 Kingston Road
Pickering, ON
L1V 1B4
Office: (905) 831-3300
Fax: (905) 831-8147
Whitby Office
RE/MAX Hallmark First Group Realty
304 Brock Street South, 2nd Floor
Whitby, ON
L1N 4K4
Office: (905) 668-3800
Fax: (905) 430-2550
Oakville Office
RE/MAX Hallmark Realty Ltd.
515 Dundas Street West
Oakville, ON
L6m 4M2
Office: 905-257-7500
Bayfield Head Office
RE/MAX Hallmark Chay Realty
152 Bayfield Street
Barrie, ON
L4M 3B5
Office: (705) 722-7100
Toll Free: (866) 606-2429
Fax: (705) 722-5246
Caplan Office
RE/MAX Hallmark Chay Realty
112 Caplan Avenue
Barrie, ON
L4N 9J2
Office: (705) 722-7100
Toll Free: (866) 606-2429
Fax: (705) 735-6980
Caplan Office
RE/MAX Hallmark Chay Realty
112 Caplan Avenue
Barrie, ON
L4N 9J2
Office: (705) 722-7100
Toll Free: (866) 606-2429
Fax: (705) 735-6980
Innisfil Office
RE/MAX Hallmark Chay Realty
2095 Thompson Street
Innisfil, ON
L9S 1T1
Office: (705) 431-7100
Toll Free: (888) 822-2606
Fax: (705) 431-7667
Alliston Office
RE/MAX Hallmark Chay Realty
20 Victoria St W Box 108
Alliston, ON
L9R 1T9
Office: (705) 435-5556
Toll Free: (866) 936-3500
Fax: (705) 435-5356
Tottenham Office
RE/MAX Hallmark Chay Realty
22 Queen St S Box 636
Tottenham, ON
L0G 1W0
Office: (905) 936-3500
Toll Free: (866) 936-3501
Fax: (905) 936-5356
Bradford WG Office
RE/MAX Hallmark Chay Realty
4-450 Holland Street
Bradford, ON
L0G 1W0
Office: (905) 778-0292
Toll Free: (866) 606-2429
Fax: (705) 722-5246
Innes Office
RE/MAX Hallmark Realty Group
Unit# 200 4366 Innes Road
Ottawa, ON
K4A 3W3
Office: (613) 590-3000
Carling Office
RE/MAX Hallmark Realty Group
Unit# 101 2255 Carling Avenue
Ottawa, ON
K2B 7Z5
Office: (613) 596-5353
Ottawa Downtown Office
RE/MAX Hallmark Realty Group
344 O'Connor Street
Ottawa, ON
K2P 1W1
Office: (613) 563-1155
Ottawa Central Office
RE/MAX Hallmark Realty Group
610 Bronson Avenue
Ottawa, ON
K1S 4E6
Office: (613) 236-5959
Kanata Office
RE/MAX Hallmark Realty Group
700 Eagleson Road
Ottawa, ON
K2M 2G9
Office: (613) 663-2720
Fax: (613) 592-9701
Richmond Office
RE/MAX Hallmark Realty Group
6159 Perth Street
Ottawa, ON
K0A 2Z0
Office: (613) 838-4040
Fax: (613) 596-4495
Greenbank Office
RE/MAX Hallmark Realty Group
100-1073 Greenbank Rd
Ottawa, ON
K2J 4H8
Office: (613) 596-5353
Fax: (613) 596-4495
Ajax
513 Westney Road South
Ajax, ON
L1S 6W8Office: 905-683-5000
Fax: 905-619-2500
Alliston
20 Victoria St W Box 108
Alliston, ON
L9R 1T9Office: 705-435-5556
Fax: 705-435-5356
Angus
2 Summerset Place
Angus, ON
L0M 1B2Office: 705-424-7200
Fax: 705-424-6940
Re/Max Hallmark Trends Group Realty
15004 Yonge Street
Aurora, ON
L4G 1M6Office: 905-727-1941
Fax: 905-841-6018
Aurora
15004 Yonge Street
Aurora, ON
L4G 1M6Office: 905-727-1941
Fax: 905-841-6018
Re/Max Hallmark Lind Group Realty Ltd.
15105 Yonge Street
Aurora, ON
L4G 1M3Office: 905-841-0000
Fax: 905-727-2230
Re/Max Hallmark Peggy Hill Group Realty
374 Huronia Rd.
Barrie, ON
L4N 8Y9Office: 705-739-4455
Fax:
Bayfield
152 Bayfield Street
Barrie, ON
L4M 3B5Office: 705-722-7100
Fax: 705-722-5246
Caplan
112 Caplan Avenue
Barrie, ON
L4N 9J2Office: 705-722-7100
Fax: 705-735-6980
Chilton Team
152 Bayfield Street
Barrie, ON
L4M 3B5Office: 705-722-7100
Fax: 705-722-5246
Bradford WG
450 Holland Street Unit 4
Bradford, ON
L3Z 0G1Office: 905-778-0292
Fax: 705-722-5246
Innisfil
2095 Thompson Street
Innisfil, ON
L9S 1T1Office: 705-431-7100
Fax: 705-431-7667
Re/Max Hallmark Ciancio Group Realty
190 Main Street Suite 203
Markham, ON
L3R2G9Office: 647-247-6000
Fax: 647-429-6100
Bayview Village
685 Sheppard Avenue East, Suite 401
North York, ON
M2K 1B6Office: 416-494-7653
Fax: 416-494-0016
Innes
4366 Innes Road Suite 200
Ottawa, ON
K4A 3W3Office: 613-590-3000
Fax: 613-590-3050
Carling
2255 Carling Avenue Suite 101
Ottawa, ON
K2B 7Z5Office: 613-596-5353
Fax: 613-596-4495
O'Connor
344 O'Connor Street
Ottawa, ON
K2P 1W1Office: 613-563-1155
Fax: 613-563-8710
Bronson
610 Bronson Avenue
Ottawa, ON
K1S 4E6Office: 613-236-5959
Fax: 613-236-1515
Richmond
6159 Perth Street
Ottawa, ON
K0A 2Z0Office: 613-838-4040
Fax: 613-596-4495
Greenbank
100-1073 Greenbank Rd
Ottawa, ON
K2J 4H8Office: 613-596-5353
Fax: 613-596-4495
Kanata
105-700 Eagleson Rd.
Ottawa, ON
K2M 2G9Office: 613-663-2720
Fax: 613-592-9701
RE/MAX Hallmark Pilon Group Realty
4366 Innes Road Suite 200
Ottawa, ON
K4A 3W3Office: 613-909-8100
Fax: 613-590-3079
RE/MAX Hallmark Jenna & Co. Group Realty
2255 Carling Avenue, Suite 101A
Ottawa, ON
K2B 7Z5Office: 613-596-4300
Fax: 613-596-4495
Re/Max Hallmark Jacki Lam Group Realty
1154 Kingston Road
Pickering, ON
L1V 1B4Office: (905) 831-3300
Fax: (905) 831-8147
Pickering
1154 Kingston Road
Pickering, ON
L1V 1B4Office: 905-831-3300
Fax: 905-831-8147
Richmond Hill
9555 Yonge Street, Suite 201
Richmond Hill, ON
L4C 9M5Office: 905-883-4922
Fax: 905-883-1521
Riverdale
724 Pape Avenue
Toronto, ON
M4K 3S7Office: 416-462-1888
Fax: 416-464-3135
The Beach
2277 Queen Street East
Toronto, ON
M4E 1G1Office: 416-699-9292
Fax: 416-699-8576
Yonge
3434 Yonge Street
Toronto, ON
M4N 2M9Office: 416-489-3434
Fax: 416-489-5445
College
968 College Street
Toronto, ON
M6H 1A5Office: 416-531-9680
Fax: 416-531-0154
Mount Pleasant
723 Mount Pleasant Road
Toronto, ON
M4S 2N4Office: 416-486-5588
Fax: 416-486-6988
Leslieville
785 Queen Street East
Toronto, ON
M4M 1H5Office: 416-465-7850
Fax: 416-463-7850
Re/Max Hallmark Batori Group Inc.
357 Eglinton Ave W
Toronto, ON
M5N1A3Office: 416-485-7575
Fax: 416-484-4448
Re/Max Hallmark Ari Zadegan Group Realty
3434 Yonge Street Suite 101
Toronto, ON
M4N2N9Office: 416-489-4287
Fax: 416-352-0118
Re/Max Hallmark Estate Group Realty Ltd
2277 Queen Street East Suite A
Toronto, ON
M4E1G5Office: 416-699-2992
Fax: 416-699-8576
Re/Max Hallmark Bibby Group Realty
723 Mount Pleasant Road Suite 105
Toronto, ON
M4S2N4Office: 416-481-0888
Fax: 416-486-6988
Re/Max Hallmark Corbo & Kelos Group Realty Ltd
785 Queen St. East Suite 301
Toronto, ON
M4M1H5Office: 416-462-4787
Fax: 416-463-7850
Re/Max Hallmark Elite Group Realty
685 Sheppard Avenue East, Suite 401-11
Toronto, ON
M2K1B6Office: 416-494-8557
Fax: 416-494-7653
Re/Max Hallmark Emerson Group Realty Ltd
2277 Queen Street East Suite 104
Toronto, ON
M4E1G5Office: 416-690-2727
Fax: 416-699-8576
Re/Max Hallmark Francis Group Realty
785 Queen St. East Suite 7
Toronto, ON
M4M1H5Office: 416-466-1888
Fax: 416-463-7850
Re/Max Hallmark Fraser Group Realty
685 Sheppard Avenue East, Suite 401-47
Toronto, ON
M2K1B6Office: 416-494-7686
Fax: 416-494-0016
Re/Max Hallmark Joy Verde Group Realty
723 Mount Pleasant Road Suite 104
Toronto, ON
M4S2N4Office: 416-481-5666
Fax: 416-486-6988
Re/Max Hallmark Kathy McLachlan Group Realty Ltd
723 Mount Pleasant Road Suite 103
Toronto, ON
M4S2N4Office: 416-486-6565
Fax:
Re/Max Hallmark Montano Group Realty
785 Queen St. East Suite 201
Toronto, ON
M4M1H5Office: 416-424-3038
Fax: 416-465-7850
Re/Max Hallmark Pierre Carapetian Group Realty
785 Queen St. East
Toronto, ON
M4M1H5Office: 416-424-3434
Fax: 416-465-7850
Re/Max Hallmark Richards Group Realty Ltd
2241 Queen Street East
Toronto, ON
M4E1G1Office: 416-699-0303
Fax: 416-699-8576
Re/Max Hallmark Yu Group Realty Ltd
685 Sheppard Avenue East, Suite 401-19
Toronto, ON
M2K1B6Office: 416-494-9858
Fax: 416-494-0016
Muskoka
C/O Yonge St. Office (3434 Yonge Street)
Toronto, ON
M4N 2M9Office: 416-489-3434
Fax: 416-489-5445
Re/Max Hallmark Jamie Dempster Group Realty
685 Sheppard Avenue East, Suite 401
Toronto, ON
M2K1B6Office: (416) 494-7653
Fax: (416) 494-0016
Tottenham
22 Queen St S Box 636
Tottenham, ON
L0G 1W0Office: 905-936-3500
Fax: 905-936-5356
Re/Max Hallmark Lino Arci Group Realty
3420 Major Mackenzie Dr Suite 103
Vaughan, ON
L4H4J6Office: 416-479-1550
Fax: 416-913-2044
Whitby
304 Brock Street South
Whitby, ON
L1N 4K4Office: 905-668-3800
Fax: 905-430-2550
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