Mediocre marks for Provincial Liquor Policies

TORONTO — For the third time since 2015, Restaurants Canada has taken stock of liquor policies impacting foodservice and hospitality businesses from coast to coast in its biennial Raise the Bar report. Marks for provincial liquor policies were not stellar. Alberta received the highest rating, a B, while New Brunswick and Newfoundland and Labrador were at the bottom of the class with a D- rating. To download the full report, click here.

Full 2019 Raise the Bar report card rankings:

GradeProvinceB

Alberta

Licensed foodservice and hospitality businesses are still hungover from the following actions taken by the former provincial government, which led to Alberta being downgraded from a B-plus to a B back in 2017: new markups on beverage alcohol; the elimination of the liquor server wage; and the cancellation of a comprehensive review to modernize provincial liquor regulations.

Alberta Gaming, Liquor & Cannabis deserves credit for reaching out to Restaurants Canada for consultation on a number of issues, as well as continuing to modernize outdated liquor policies on a piecemeal basis over the last few years. But more progress is needed on bigger ticket items in order for operational realities to noticeably improve for bars and restaurants.

B-

Nova Scotia

There are a number of reasons to raise a glass in Nova Scotia.

— Prohibition is history at last. New provincial legislation has finally eliminated the Prohibition-era requirement for communities to hold plebiscites to permit the sale of alcohol. Municipal governments can now unilaterally end their “dry” status as soon as a business wants to sell liquor within their jurisdiction.

— A new public safety tool. Anyone under the age of 19 years can now face a fine of $150 for either: Presenting false identification at a licensed establishment; or Being on licensed premises where underage patrons are not permitted. Restaurants Canada advocated for these reforms so that bars and restaurants would have a way to deter youth from using false identification to enter their establishments or to order liquor.

— Recent reforms to liquor rules. Nova Scotia has introduced a few other liquor policy reforms since 2017 that have improved operational realities for bars and restaurants. Most notably: Restaurant patrons can now enjoy two alcoholic drinks without ordering a meal; and Liquor service hours are now the same every day of the week, giving Sunday brunch-goers the ability to enjoy alcoholic beverages before noon.

Nevertheless, the glass is still half empty

The following impediments are still keeping foodservice and hospitality businesses from reaching their full potential: relatively high tax rates; no liquor server wage; no wholesale discounts on beer; and unfair competition from craft breweries.

Policies originally intended to give market access to Nova Scotia’s small liquor producers have increasingly been encroaching on the restaurant sector: consumers can enjoy restaurant fare at wineries, craft breweries and distilleries, yet those businesses are spared the much higher regulatory and tax burden placed on licensed foodservice establishments.

Restaurants Canada is hopeful that the province’s continued willingness to work closely with industry stakeholders will soon lead to progress on these key issues.

B-

Prince Edward Island

Despite being Canada’s smallest province, Prince Edward Island manages to punch above its weight for bar and restaurant operators.

The Island provides a very supportive environment for liquor licensees, mainly because it’s the only province besides Alberta with a wholesale discount program for wine, spirits and beer.

For more than a decade, Restaurants Canada has enjoyed a constructive relationship with the Prince Edward Island LiquorControl Commission, as well as elected officials working
on the province’s liquor file. The Island’s policy-makers

have demonstrated a clear appreciation for the critical role that licensed foodservice and hospitality businesses play for communities across the province and have taken many concrete steps to support their success.

Restaurants Canada looks forward to working with the province’s newly elected minority government to further build on this groundwork and raise the Island’s already enviable grade even higher.

B-

Quebec

Quebec earned credit for simplifying its liquor licence regimeback in 2017 by allowing licensees to have one liquor licenceper use, instead of one licence for every room where alcohol is sold or served.

This major reduction in red tape, coupled with an overall decrease in licensing fees, was the main reason why the province’s graderose from a C-plus to a B-minus on the last report card fromRestaurants Canada.

Building on this momentum, Quebec has moved forward with further liquor policy reforms over the last two years. But a numberof new measures that would benefit bars and restaurants remain stalled and still need to be implemented. Meanwhile, insufficientprogress on liquor pricing continues to hold the province back from receiving an even higher grade.

C

British Columbia

While hopes are high that the B.C. government will follow through with recommended improvements to the province’s liquor system, bar and restaurant operators are now facing another challenge all together: Plans to phase out the liquor server wage by 2021 threaten to undercut their ability to allocate sufficient resources towards non-gratuity earning kitchen staff, who are typically harder to attract and retain. Reversing this decision would provide more flexibility for licensed establishments who are already struggling to compete for back-of-house employees amid rising labour shortages.

C

Manitoba

Pricing is still a sticky subject in the province.Unlike the retail of beverage alcohol to consumers, liquor distribution to Manitoba’s bars and restaurants is still controlled entirely by the province. As a result of the government’s price-setting policies, licensed establishments struggle to offer their patrons a wide selection of products at competitive prices. Licensees are still not even permitted to pay by credit card when purchasing liquor, while consumers are afforded this convenience at government-run liquor stores.

Restaurants Canada continues to advocate for more purchasing flexibility and the ability for all licensed establishments to benefit from wholesale pricing or discounts on liquor products.

Manitoba still has done nothing to address the uneven playing field created by the province’s rules around selling beverage alcohol for off-site consumption: While hotels can sell liquor products to go and third-party services can deliver alcoholic beverages to customers at home, restaurateurs continue to be shut out from having these options.

Restaurants Canada has recently had fruitful discussions with policy-makers, indicating that changes might be made in this area. But this progress was put on hold when an early election was called.

C-

Ontario

Since launching its liquor legislation review, Ontario has already moved forward with a number of reforms. While changes so far have mostly impacted retail settings, the following measures have directly benefited the province’s bars and restaurants:

— The term “happy hour” can now be used in marketing and signage; and

— Alcoholic beverages can now be served as early as 9:00 a.m. at all licensed establishments, in line with the new retail service hours for liquor and cannabis. This means restaurants with brunch service no longer have to tell patrons that they can’t enjoy a mimosa with their meal until the clock strikes 11 a.m.

These red tape reductions have been welcomed as a sign of more good news to come for the foodservice and hospitality community.

C-

Saskatchewan

Hope was on the horizon for Saskatchewan’s bars and restaurants when the province moved forward with plans to overhaul its liquor system back in 2016. But unfortunately wholesale pricing on beverage alcohol was introduced for retail permit holders only — including the roughly 450 establishments that previously had off-sale endorsements (authorizing them to sell alcohol for off-site consumption), essentially grandfathering them to become retail permit holders.

Meanwhile, all other licensees were shut out from wholesale pricing and the ability to apply for an off-sale endorsement. They did, however, become free to purchase products from any of the province’s liquor retail permit-holding outlets at negotiated prices. This initially put many licensed establishments in the absurd position of having to purchase products from their retail permit-holding competitors in the hospitality sector in order to get discounts.

With the number of private liquor stores continuing to grow, restaurateurs are increasingly able to negotiate volume discounts from retailers instead of their direct competitors. But the uneven playing field is still leaving a bad taste for many bars and restaurants who are at a disadvantage compared to their competitors with liquor retail permits.

D-

New Brunswick

New Brunswick has not updated its liquor legislation in decades.Consequently, the province’s beverage alcohol rules conflictwith consumer expectations, are a burden to businesses andstifle growth.

Numerous consultations have been held over the years, which haveprovided policy-makers with a clear road map of what needs to bedone to bring regulations into the 21st century. The only roadblock has been a lack of political will.

Foodservice and hospitality businesses are especially exasperatedwith the province’s unfulfilled promise to introduce wholesale liquor pricing. Foot-dragging on this front was why New Brunswick went from a C-minus to a D on the last report card from Restaurants Canada in 2017.

The province is now being downgraded once again due to the previous regime’s continued failure to improve conditions for bars and restaurants in the years since. But with a new government
in power already making strides to help small businesses thrive,the province might finally be ready to reform its liquor rules andimprove its ranking.

D-

Newfoundland & Labrador

Very little has been done to improve the liquor policy climate inNewfoundland and Labrador since the province received a failing grade from Restaurants Canada in 2015.

Foodservice and hospitality businesses are still: required to pay the same retail prices for liquor as consumers; faced with some of the highest liquor licence costs in the country; and burdened by an extraordinary amount of red tape from outdated alcohol regulations.

While some effort has been made to keep a positive line ofcommunication open with industry stakeholders, the province remains at serious risk of being downgraded. Stronger government action is needed to avoid another F, let alone improve its standing.

Newfoundland Labrador Liquor Corporation (NLC) deserves credit for continuing to consult with the Licensee Working Group that was formed in response to the first report card from Restaurants Canada.