Concessions provider may walk away from deal
Company will cease to operate venues without reduction in fees, owner says
With the ink “barely dry” on contracts between a private firm and the city to run food concessions at arenas and the downtown aquatic centre, that firm is warning it will walk away unless it gets a better deal.
CGC Concessions is asking for a reduction in the fees it pays the city, from a total of $80,000 annually to $36,000, citing lowerthan-expected revenues. Without the reduction, city administration believes the company will “likely cease to operate,” according to a staff report going to council Monday that recommends agreeing to the price reductions.
The union representing city hall’s inside workers, CUPE Local 543, was in the midst of a grievance process seeking to bring the non-union concessions staff into the local in 2016 when the city issued a request for proposals from private operators, according to local president Mark Vander Voort.
CGC’s five-year contract to run the concessions at Adie Knox Arena, the Capri Pizzeria Recreation Complex (formerly South Windsor Arena), Forest Glade Arena and the WFCU Centre’s community arena commenced in June of 2016. Its three-year aquatic centre arrangement started five months ago on June 19.
“The ink is barely dry on the contract and here we are and these are the problems,” Vander Voort said Tuesday, adding “that’s what you get,” from outsourcing.
“There are lots of reasons why jobs should be kept internal and this is exactly one of them, because you’re at the whim of people who underbid and then can’t deliver a service at the cost they bid on.”
But owner Rico Razaiy insisted he expected to make a go of the concessions. He’s been in the business 27 years, with similar operations at municipal arenas and pools throughout the province. When he began running the Windsor concessions, he believed business would grow.
“But this year it’s really been awful,” he said.
“When you open a business you have to have at least one or two employees in and when sales are $40 or $50, that doesn’t even pay for your staffing,” said Razaiy, who said the coming raise in the minimum wage starting Jan. 1 is going to further damage his bottom line.
He said if the city doesn’t agree to the reductions, he’ll have no choice but to shut down, probably before the end of the year. “I would like to stay as long as I can to help my employees find other jobs,” he said, saying his 26 employees are like family members. But he said he’s losing money every day he stays open.
Executive director of parks and recreation Jan Wilson said that maybe Razaiy was “overly optimistic” when he originally bid on running the concessions. But she added: “We know this is a challenging business and we didn’t think his request (for reduced fees) was unreasonable.”
The city wanted to issue the request for proposals because it was struggling running the concessions, she said.
“It was certainly not profitable for us, but we recognized that people want the opportunity to buy a coffee or a beverage or a snack and we felt, let’s let someone who’s in the food service industry have the opportunity to do that,” said Wilson, who said the money-losing concession at Adie Knox was closed and replaced by vending machines before CGC came along.
She also said that for many years the City of Windsor concessions have been run by a mixture of private operators and in-house operations staffed by non-union employees.
The staff report says that contingency plans — in case the concessions are closed — involve installing vending machines at the various sites “to help mitigate the customer impact.”
The report provides three options, including requiring that CGC live up to the contract. But that would likely result in the closure of the concessions. The second option is to go back to the previous operating model — having city staff run the concessions. “This is not recommended as it will ultimately result in increased operating costs to the city,” the report says.
The preferred option of reducing the fees for CGC by more than half is “a bit of a drop,” said Andrew Daher, manager of arenas and the WFCU Centre. “But our position is it provides the least financial impact for the city and allows (CGC) to stay financially viable and continue to provide those goods and services to our community users.”
When you open a business you have to have at least one or two employees in and when sales are $40 or $50, that doesn’t even pay for your staffing.