LCBO strike means opportunities – and uncertainty – for companies

It was Friday, just after 10 a.m., and Adin Wener, co-owner of Henderson Brewing Company, already noticed a small crowd streaming through the entrance of the liquor store in Toronto’s west end.

Private liquor retailers and breweries like Henderson are bracing for a surge in customer traffic after LCBO stores across Ontario closed Friday in the first strike by their unionized workers.

“This morning alone there were 10 to 12 more people here than usual,” said Wener. “It will be total chaos.”

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For some in the bar and restaurant industry, still reeling from pandemic-related closures and rising inflation, the uncertainty created by the strike presents another hurdle to overcome.

Workers at the Liquor Control Board of Ontario went on strike after talks between the state-owned company and the Ontario Public Service Employees Union (OPSEU) failed just hours before a deadline Friday morning.

The biggest sticking point is Premier Doug Ford’s recent decision to allow alcohol sales in convenience and wholesale stores starting in September, particularly ready-to-drink beverages like coolers. Union officials said the move threatens the livelihoods of the LCBO’s more than 9,000 employees; the government says it is part of its long-standing promise to liberalize alcohol sales in the province and give consumers more choice.

Neither side backed down on Friday as LCBO workers picketed. LCBO stores will now remain closed for two weeks, with a limited number of Fridays, Saturdays and Sundays open for in-person shopping starting July 19. Online ordering for customers and businesses will still be available, and the LCBO will also allow businesses to shop at five stores starting July 10. However, licensees ordering through the wholesale website have been advised by the LCBO that they can only order full cases of alcohol to their stores – a move that could impose even higher costs on already struggling businesses.

John Sinopoli, executive chef and partner at Toronto-based Ascari Hospitality Group, which includes catering company Ascari Enoteca and is part owner of Abrielle restaurant at the Sutton Place hotel, said he has instructed his teams to stock up on at least a week’s worth of extra alcohol.

However, he said requiring licensees to always order a case of liquor at a time – rather than individual bottles – is a huge cost that many restaurants may not be able to afford.

“I would say 95 percent of restaurants are not ordering a whole case of anything on a weekly or bi-weekly basis, and with the current economic climate, spending three or four months’ worth of money on alcohol that we don’t currently need … is beyond impractical, I would say,” he said.

“This whole thing is bad for our business. It’s ruining our cash flow.”

Some restaurant and bar owners took advantage of the pre-strike period to stock up on alcohol, but industry experts still predict a significant impact on operations, with nearly half of restaurants barely breaking even or making a profit at all, says Kris Barnier, vice president for Ontario at Restaurants Canada.

“This is another thing that restaurants have to deal with,” Barnier said. “If the strike lasts longer and product selection is limited, restaurants that rely heavily on LCBO products could be more affected.”

Ryan Mallough, vice-president of Ontario legislative affairs for the Canadian Federation of Independent Business, said he is particularly concerned about smaller distilleries, whose largest customer remains the LCBO.

“The loss of the LCBO as a retail outlet could have a significant impact there. On the other hand, hopefully we’ll see that encourage more consumers to get out and go directly to those places, but I think that remains to be seen,” he said.

However, other companies could benefit greatly from it.

Wine and beer stores, privately owned retail chains across Ontario, also saw increased customer traffic during lunchtime on Friday.

“Many of our stores are currently experiencing a lot of traffic,” said Mark Wasserman, a spokesman for Wine Rack. “We expected and planned for this.”

Mr. Wasserman said Wine Rack stores in some of the busiest locations have extended their opening hours by up to two hours and hired more staff to serve more customers. Those who buy online can also have their goods delivered the same day.

A statement from The Beer Store said stores will have regular summer opening hours during the strike, with some extensions in individual cases.

Troy Burtch, senior manager at Great Lakes Brewery in Toronto, said that to meet demand, sales staff who normally handle business with the LCBO would now focus their efforts on selling more to private chains and fulfilling delivery orders.

Despite the increase in direct transactions, many breweries rely on the LCBO for a large portion of their revenue and fear that increased customer traffic will not offset the financial decline in this revenue stream.

“We don’t believe it would even come close to offsetting the losses we would incur by closing LCBO; LCBO has been our largest retail partner for 20 years,” Burtch said.

Maggie Kiwanuka, manager at Mascot Brewery, echoed that sentiment. Although the Toronto brewery sold 148 cans of beer in the first 30 minutes of opening Friday — up from the usual 24 cans — she said that still doesn’t compare to the LCBO’s sales.

“LCBO covers all of Ontario,” she said. “We expect it will have a big impact on us.”

While Mr. Wener of Henderson Brewing Company is optimistic about the rush of customers, he also hopes that his team can meet demand while the strike continues.

“Breweries were not given time to brew more beer,” he said.