The Joseph Richard Group (JRG), a restaurant chain that includes the S+L Kitchen and Townhall chains across Surrey, Langley, Maple Ridge, and Abbotsford, has filed for creditor protection in B.C. Supreme Court.
“The recent decision by the company comes after years of the ‘perfect storm’ of grappling with the COVID-19 pandemic, increasing inflation, supply chain challenges, labour shortages, increases to minimum wage, and of course, rapidly rising interest rates,” JRG said in a press release on July 24.
Like all other restaurants and hospitality businesses, the JRG’s restaurants were shuttered at the start of the pandemic, and then were only open with decreased capacity for some time.
Along with the added debt taken on, and increasing interest rates, have created “a debt load that these businesses cannot sustain,” said the filing.
“The fact that the company is still going strong after these past years is a testament to the commitment and passion of many people within the organization and the constant support of our local communities,” said Ryan Richard Moreno, one of the co-founders and co-owners of JRG. “But our company has had to take on enormous burdens these past years and a restructure under the CCAA allows us to position ourselves for the future and reallocate some resources back into our business, our people and ultimately our overall guest experiences.”
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The company operates 14 restaurants, pubs, bars and cafés across the Lower Mainland, along with a number of liquor stores, a catering firm, a food hall, and Glass House Estates Winery in Langley, totalling about 25 establishments. Several restaurants that have already closed, such as the Oceanside Yacht Club in White Rock, were also listed in the filing.
The company has about 830 employees, 84 of which are in management. That’s down from more than 1,000 employees before COVID, the filing notes.
The company’s primary financial assets are real estate, including a strata development in Pitt Meadows and a building that holds one of the company’s bars as well as its headquarters. Together, the real estate is worth more than $20 million.
The bulk of the company’s debts are $34.4 million in loans from Canadian Western Bank (CWB), and JRG is spending $330,000 a month just in monthly debt servicing to the bank.
“The petitioners will be seeking to re-structure their CWB debt to reduce the principal amount owing and lengthen the amortization period to reduce the monthly carrying costs,” the filing says.
There are also debts of $2.3 million to BMO, $600,000 owing in Canadian Emergency Business Assistance (CEBA) loans, as well as significant amounts owed to the Canada Revenue Agency and for PST.
“In order to maintain operations, the petitioners have prioritized payments to their employees and critical suppliers, and they are in arrears with the CRA, some of their landlords, and trade creditors,” said the petition.
While business appears to be returning to 2019 levels now, there are higher labour and operational costs, resulting in a less profitable business, it said. Combined with the debt accumulated during COVID, that mean that after June, JRG could no longer pay its debts.
The company plans to negotiate with its creditors and sell some assets.
A B.C. Supreme Court judge granted creditor protection on July 27.
The company was founded by Moreno and André Joseph Bourque, who together own a controlling stake the business. A third investor owns a minority interest in the company.
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