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Options abound for aspiring Vancouver restaurateurs as sector rebounds

Empty former restaurant space swells; new restaurant concept offers turnkey kitchens
Club Kitchen operations managers JJ Fraser and Hugh Carbery stand outside their under-construction site.

With Vancouver’s restaurant sector enjoying a summer boom, entrepreneurs are once again starting to dip their toes into launching new bistros.

Options abound for how to get into the sector, with some being potential landmines and others being golden opportunities, according to industry insiders.

BC Restaurant and Foodservices Association CEO Ian Tostenson estimated that about 3,000 of B.C.’s 15,000 restaurants went belly up between spring 2020 and spring 2022, as uncertainty reigned thanks to government putting various COVID-19 restrictions in place, removing them and then in some cases reinstating them.

That closure rate is about double what would have happened in a two-year period pre-pandemic, he told BIV.

The result is a higher than average amount of prime leasable space that used to house restaurants.

Getting a business licence can be done relatively quickly in Vancouver, Tostenson said. Getting a liquor licence usually takes between six and eight weeks, he added.

The permits that take many months to get are usually ones for extensive interior renovations, Tostenson explained.

Another option for an aspiring restaurant owner is to buy an existing restaurant.

The restaurant's new owner could also purchase the site's liquor licence, refresh the menu, replace interior furniture and be up and running almost immediately, he said.

One soon-to-be restaurant concept that is aiming to attract tenants is located just outside Yaletown, at 988 Expo Boulevard, and is called Club Kitchen.

Operators tout the venture as being a great way for upstart chefs to launch small turnkey kitchens that come with many services provided, including employees who distribute orders to take-out customers and meal-delivery services.

Critics, however, told BIV that Club Kitchen’s fees are high and young chefs are better off buying a small existing restaurant or leasing space that has been vacated by a restaurant.

Kitting out the 6,000-square-foot Club Kitchen facility is being done now, thanks to financing from Concord Pacific CEO Terry Hui, who was unavailable for an interview.

Operations managers JJ Fraser and Hugh Carbery anticipate that the site will be ready for tenant occupancy this fall.

Their concept is that space will have 13 separate units that are each around 300 square feet, and are fully equipped with ovens, fridges, tables and other needed kitchen equipment.

The units would all come with insurance and needed permits. Club Kitchen would also provide preferential supply agreements with wholesalers that enable the 13 tenants in the facility to order food at lower costs because of the economies of scale of group buying.

The general public would be able to go inside the facility and order from the 13 tenants using common automated-kiosk technology that Club Kitchen provides.

“You could also order ahead of time,” Fraser said. “If you’re sitting at a Canucks game at the end of the third period and you want to order some food, you can place your order and by the time you walk over and pick it up, it will be ready.”

He said the site would have fewer than 10 inside seats for customers and that the lion’s share of business would be pick-up orders or those for meal delivery services, such DoorDash, Uber Eats or SkipTheDishes.

No restaurant owners have yet signed contracts to be part of the venue, Fraser said.

Costs include a one-time, non-refundable $50,000 "onboarding" fee, monthly rent that would be about $4,600 and a share of revenue that has yet to be determined. There would also be a fluctuating monthly fee for operational costs, which are likely to be around $4,500 per month, Fraser said.

The operational costs would include janitorial services, hydro and other expenses, he explained.

Critics of this option include Joseph Richard Group CEO Ryan Moreno and Glowbal Group CEO Emad Yacoub.

Yacoub told BIV that he thinks those fees are far too high.

“It’s a rip-off,” he said, before zeroing in on the one-time fee as being particularly high.

One-time fees that are many tens of thousands of dollars are common when entrepreneurs buy fast-food franchises from well-known brands.

Yacoub said that brand recognition would not be present in the case of the unknown Club Kitchen.

“I feel sorry for the poor chefs putting in $50,000 of their own, hard cash, because at the end of the day, with that price tag, they’re going to be working for the landlord.”

Yaboub has temporarily shuttered his Nosh restaurant at Telus Garden, but he said that were he to sell the business, the price would likely be in the $100,000 range, and the sale would come with all needed equipment. Rent for the space is about $15,000 per month.

That business, he said, would at least be something that a young entrepreneurial chef could sell in the future to recoup the capital outlay.

Another option, Yacoub said, would be to lease empty space that was formerly a restaurant.

Yacoub estimated that the former Johnny Rockets location at 2538 Oak Street, at West Broadway, is about 2,000 square feet. It would cost about $75,000 to put in new stoves, and furniture, and would have a monthly rent of about $14,000, Yacoub said.

“Two young chefs could partner together for $100 grand and they could build a dream restaurant,” he said.

“There’s lots of spaces like this in the city for lease.”

Moreno agreed with Yacoub that Vancouver has plenty of empty spaces where there used to be restaurants, and that many of them are in prime locations.

He told BIV that while he did not know all the details in the Club Kitchen proposal, he also thought the fee structure sounded high.

One thing to keep in mind, he said, is that marketing is important if you have a start-up brand. Simply being in a location with 12 other restaurants is not going to bring in business.

“How would I know to order from your ghost kitchen?” he asked.

“Vancouver has restaurants, great cafes, small boutique bakeries, and on top of that, we’ve got food trucks, kiosks and street vendors.”

Moreno runs 24 bricks-and-mortar restaurants under more than a dozen brands, and he has a significant delivery business.

While he likes both the bricks-and-mortar and the delivery-focused hospitality sectors, he said that one disadvantage with having a delivery-primary business is that there is almost no alcohol sales. It is those sales that have the highest profit margins.

Moreno advises aspiring chefs who want to run their own business to work in an established restaurant first in order to fully understand the business.

Once they have done that, if they want to open a restaurant, he suggests either leasing a former restaurant’s space, or buying an existing restaurant.

“For the amount of money [that Club Kitchen is expecting to charge], there are a few options that would be as risky – whether you consider that high or low risk – and be a lot more fruitful and sustainable.”

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