December 8, 2011
The Honourable Dwight Duncan, MPP
Minister of Finance
Frost Bldg. S., 7th Floor
7 Queen’s Park Crescent
I am writing to you today on behalf of Ontario’s $23-billion restaurant industry regarding the Auditor General’s 2011 Annual Report. In particular, I would draw your attention to the AG’s Value for Money Audit of the LCBO’s New Product Procurement process.
Ontario’s restaurant sector is the province’s fourth largest employer, creating some 400,800 direct jobs and accounting for 4 per cent of GDP. Restaurants and pubs are a vital part of every community: the favourite place for people to gather with family and friends, a top draw for tourists, the number one source of first time jobs, and a valued partner to the agri-food industry.
One of the biggest barriers to growth and job creation for Ontario’s restaurant sector is the outdated pricing model for beverage alcohol. Licensees in our sector are forced to pay close to, or in some cases more than, retail prices for the wine, beer and spirits they serve in their establishments. Every other product that is purchased for resale by business owners offers wholesale pricing. Why is this not the case with the LCBO?
The Auditor General reports that the LCBO has a clear opportunity to negotiate lower prices from its suppliers. We urge you to act on this recommendation and in turn introduce true wholesale pricing for restaurant and bar owners. The current 5 or 10 per cent licensee discounts are extremely low, and are often eclipsed by sale prices at the LCBO that are available to consumers, but not to licensees. In addition, licensees are charged a mark-up on the total invoice price that effectively negates the discount. LCBO Agency Stores in smaller and remote communities receive a flat rate discount on all product purchases from their designated LCBO Store, including sale priced product. As a first step towards a more progressive pricing system, restaurant and bar owners are entitled to at least the same treatment.
At a time when your government has rightly committed to examining all of its programs and policies with a view to eliminating a near $16-billion deficit, we urge you to follow the AG’s lead and undertake a comprehensive review of the antiquated and unfair policies of the LCBO monopoly.
The Canadian Restaurant and Foodservices Association is asking for a fair and equitable beverage alcohol system that would bring more money into the provincial coffers, retain government oversight of social responsibility, and allow our members across Ontario to bring more prosperity to communities across the province. It’s time to introduce true wholesale pricing.
I look forward to an opportunity to meet with you to discuss this important issue.
Vice President, Ontario
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