Highland Pub deficit

SFSS owned and operated Highland Pub has been losing student money for years

By Jennifer Bednard
Photo By Mark Burnham

Running a chronic deficit, SFSS Food and Beverage Services continues to soak up hundreds of thousands of dollars of student funds with no solution in sight.

It will come as a surprise to few who have come in during the day or on Monday or Tuesday nights that the Highland Pub is not the most popular food option around. But what many people don’t know is just how much money goes into keeping it open. SFSS Food and Beverage Services (which includes The Ladle, Higher Grounds Coffee, the Highland Pub, and catering services) has been losing significant amounts of money for years. Everyone has a different idea as to why, and no one seems to be able to come up with an effective solution to change the trend.

And it is a trend — SFSS Food and Beverage Services has consistently lost money in each fiscal year for as long as most people can remember. However, over the past few years the problem has worsened. According to audited financial records publicly available on the SFSS website, SFSS Food and Beverage Services lost $68,487 in the fiscal year ending in 2008, $219,793 in 2009, $131,064 in 2010, and $314,167 in the fiscal year ending in 2011. In addition, as of 2010, building operating costs were no longer added to the list of expenses. “That was approximately $90,000 a year,” said Keenan Midgely, current SFSS treasurer. “So if you add that to $314,000, you have approximately $400,000 that food services is costing us. When you start breaking down the numbers of how much it costs each student per year, it’s close to $15 per student [to keep the services running].”

Of course, this deficit includes all of SFSS Food and Beverage Services. “It’s not just the pub — and that’s really important to make the distinction,” said SFSS president Jeff McCann. General opinion may implicate the pub, but there is no publicly available breakdown of the numbers. In fact, up until this fiscal year, no individual records for each of the different food and beverage services existed. “We’ve finally got a breakdown of the items and the cost of the actual goods,” said Midgley. “We actually didn’t know where we were losing the money. Everyone points to the pub, but we don’t know that for sure. My opinion is it’s the pub, but we haven’t actually run the numbers.”

In spite of the fact that there is little indication where exactly the SFSS Food and Beverage Services are losing money, everyone seems to be able to find factors that they believe are at fault for the deficit.

The rise in food prices is one of the factors for the deficit cited by current executive board members McCann and Midgely. In 2008, food accounted for 34 per cent of Food and Beverage Service’s cost of sales. Compare this to 2011 when food accounted for 37 per cent of cost of sales, or the current fiscal year where food has so far accounted for nearly 39 per cent of cost of sales. “Costs are going through the roof,” McCann said. “We’re starting to even see suppliers tack on fuel service charges because of having to come up the mountain.”

The recently expanded menu is also a factor in food costs. “Why is our menu so massive?” asked McCann. “It’s because we’re trying really hard to please everybody, and I think that part of what we’re going to have to accept is that we can’t. It’s a massive menu and it’s not effective. If we had a guy flipping Canadian burgers and someone else frying — and that was our entire operation — we would make money.” Yet, as SFU student Debra Mackinnon points out, menu options such as vegetarian dishes are already limited. “I do think I’m personally to blame a little. I’m a picky eater — but there are, like, four vegetarian options on the menu. Maybe two more, if you include a salad without certain things.”

 

“Why is our menu so massive? It’s because we’re trying really hard to please everybody, and I think that part of what we’re going to have to accept is that we can’t. It’s a massive menu and it’s not effective.”

– Jeff McCann, SFSS president

 

Another factor Midgley points to is the current collective agreement with CUPE 3388, which expired in April 2010 and has yet to be renegotiated. “There’s a web site with an average of 200 food and beverage operations and their wages, so I took that average and compared them to our wages, and the annual difference would be approximately $150,000, just in wages. And then, also, in the industry, lots of workers don’t get benefits, or they get partial benefits. Here, employees get 100 per cent benefits, and that’s pretty costly to the organization.” Medical, dental, and extended medical plans are provided for the 16 permanent full-time employees at a cost of approximately $4,500 each. In addition, the SFSS will match employee contributions to RRSPs to a maximum of $40 per pay period — which adds up to over $1,000 per employee each year.

The contract also contains clauses concerning raises and assigns a minimum number of hours employees must be paid for per week. “Through our collective agreement,” Midgley said, “employees are entitled to COLA (cost of living allowance) so every year that goes up. Also, when hired, student [workers] are guaranteed eight hours a week. So, if it’s during exams or other times, we might not need all those hours, but we still have to give these hours.” McCann adds that minimum hour requirements prevent management from scheduling workers depending on how busy the pub is. “[In a normal pub], if you are slow one night, you cut people, right? Or you have several people on call. With the collective agreement, you can’t have that flexibility, and what that creates is where, if you schedule three people for a certain night, if there are five tables, 50 tables, or no tables, you’re paying three people.” McCann explains that this creates a situation where the cost of labour becomes a “fixed cost.”

However, Lorna Avis, a server at the Highland Pub who has spent 10 years in the industry, believes that the scheduling and terms of the contract are fair, especially for the part-time workers. “There’s a lot less freedom being in the union,” she admitted, “but also better wages — which takes a lot of the pressure off tips. Working in a student environment, if we didn’t have that [higher wage and minimum hours requirement], I think that the pub would be losing staff — just quitting — a lot. Because tips, you know, understandably aren’t as great as at a pub downtown.”

 

“Working in a student environment, if we didn’t have that [higher wage and minimum hours requirement], I think that the pub would be losing staff — just quitting — a lot. Because tips, you know, understandably aren’t as great as at a pub downtown.”

– Lorna Avis, Highland Pub server

 

John Bannister, union representative for CUPE 3388, also believes that the current contract is not the pub’s main problem. “I keep hearing that [the contract is the problem]. But more to the point is that they [the SFSS] go and they do a massive renovation, and then the next board comes in and then they do a massive renovation . . . Last year they closed or were partially closed during the playoffs. These are management decisions, and the union really questions them.”

It is difficult to know who to blame for any alleged issues with management, however, since the structure governing food and neverage Services spreads responsibility through both food and beverage management and the SFSS. “The way it works is that we have a general manager, John Laurin, and he oversees all of the operations of the food and bev services as a whole. We also have an HR person, [Colleen Knox],” said McCann. “Between the executive committee, which directs the day-to-day operations of the society, and the commercial services committee, we direct or make recommendations to Colleen or John, depending on the topic, about the operations.” But McCann stresses that SFSS board influence over pub operations is very limited. “No board members are allowed to direct any food and bev staff, and that’s a really important thing.” This means that any ideas that come from the SFSS must be negotiated through food and beverage management before they are implemented — which can be helpful because the managers’ years of experience can turn the idea into a successful one. McCann evidently values the management staff’s ability to provide the experience and expertise necessary to run Food and Beverage Services, arguing that the board couldn’t do it on their own — but this emphasizes the fact that management and other permanent employees need to also be held accountable for the pub. “You cannot hold a board accountable because we don’t have the experience,” he said. “We hire people to have that [experience] and do that for us. If we want to see there be, for example, a St. Patty’s Day event, that’s the type of autonomy or control that we have [over the pub]. We want to see Toonie Tuesdays — we can do that. We can talk about what the structure should be. But in terms of the overall vision and that mandate, the accountability has to fall with people who are here year after year — and that hasn’t been the case.” John Laurin, the current general manager of Food and Beverage Services, declined an interview with The Peak without Jeff McCann’s permission, which was not granted. Colleen Knox was also unavailable for comment before publication.

 

“You cannot hold a board accountable because we don’t have the experience. We hire people to have that [experience] . . . In terms of the overall vision and that mandate, the accountability has to fall with people who are here year after year — and that hasn’t been the case.”

– Jeff McCann, SFSS president

 

If the reasons SFSS Food and Beverage Services are losing money are unclear, the solutions to the problem are equally elusive. Current SFSS board members caution that though solutions may seem simple to outsiders, the realities of the situation are much less cut and dry. “I think everybody, especially now with elections around the corner, says, ‘Oh, I’m going to fix the pub’,” says Midgley. McCann is even more critical. “I think that it’s a very complex situation that people boil down to that one time they threw an event some place downtown and it was really successful, or to their narrow perception of their eating or dining, or drinking experience. I see this with all of the candidate platforms. And I’m tired of it. Get over it. You don’t know [the situation].”

All of this attention over the last little while is something new for SFSS Food and Beverages when, historically, the biggest problem has been lack of oversight from the SFSS board. “Some boards get elected, and they don’t touch the pub. They don’t look at it. They don’t talk about it. They don’t care,” McCann said. “The commercial services committee never even met some years.” In addition to the way financial records were previously kept, which did not distinguish the money flows of different food and beverage operations, there have been no outside consultations since the 1990s. This is currently being remedied with a currently ongoing review by outside consultants familiar with the industry, however.

Now, SFSS Food and Beverage Services face the opposite issue: in the election platforms printed last week in The Peak, many of the executive candidates mentioned campus food options in their platform, several of which referenced the Highland Pub directly. All of these different visions beg the question of what exactly is the role of SFSS Food and Beverage Services in student life, and what is the role of the Highland Pub?

“It really all depends on the board of the day and what their feelings are on it and what approach they want to take, and how they view the pub — whether they view it as a service or a business or a not-for-profit where you just try to break even,” Midgley said.

At UBC, for instance, food and beverage services run by the Alma Mater Society (UBC’s student society) must at least break even in order to stay open. However, McCann believes that it is difficult to base SFU’s food and beverage services on the experience of other campuses. “You look at Queen’s U — [which has a] huge campus population that lives in the surrounding area; UBC has the same thing. You live in Kits, and you’re that much closer, and so it’s that much less of a trek [to UBC’s pubs]. There’s accessibility in terms of that. You can go to a pub night and not have to worry about making a SkyTrain home.”

McCann argues that there needs to be a clear mandate on whether the pub is a service or a profitable business — or whether it is both. As president, however, he has had one main focus. “With the Food and Bev Action Plan,” he explained, “my focus has been ‘butts in seats’, because if you’re going to lose $300,000 — fine. Let’s at least have the place be full. I think we need to get back to a place where you stop by the pub after class, and you see people you know. That’s community.”

In the same vein, Midgley discusses the pub as an extension of student space. “I think it is definitely student space, but I think it could be used a lot more efficiently. I would personally like to see more students in there during the day. I know the downstairs area and the loft are closed for the majority of the daytime. That’s a lot of space, and on a campus where there’s not a lot of space, I think we should have students in there.”

Yet not all students agree that the pub should be considered student space and paid for accordingly by students. SFU student Jessica Fickell says, “I’ve actually been quite a few times. Living on residence, it is definitely is a place you go. But the pub isn’t the main priority for our money. I mean we’ll get together anywhere, realistically. Maybe if they had opened the lower part . . . Instead of opening the extra bar down there, if they had opened up the area as a student lounge, for anyone to go to, maybe that would have been better. Right now, they’re going to do that student union building — or they’re going to try. But what about these kinds of spaces?” However, as with all issues of student space on campus, the lower level of the pub is also a bit more complicated than it should be. The liquor license for the pub, which is owned by SFU, is for the pub as an entire space. Therefore, the bottom floor — regardless of whether the new bar was built or not — would still be licensed to serve alcohol. This puts the SFSS in a sticky situation because the space could be used more efficiently, but getting a new license with different stipulations — such as a food primary license — could be hairy, and getting rid of the license on the bottom floor altogether would mean that it could never be accessed by those drinking in the pub.

It seems that, overall, what the Highland Pub is guilty of is an attempt to be too many things, to cater to too many people. Sitting in the pub during the day, the place feels like a restaurant that caters to all ages. Coming into the pub during an event night, however, the place feels more like a student pub — lively, full of students, and with drinks flowing freely. Though no one explicitly mentioned it during the course of the investigation, my personal feeling is that the pub plays these multiple roles simply because no other business or service is stepping up to the plate. The Ladle and Higher Grounds Coffee both provide very specific services, but on a campus where space of every kind is extremely limited, the pub is forced to do double or triple duty in order to accommodate all of the different things that students want from it. The Highland Pub is a student employer, a restaurant with a diverse menu, a student pub that serves cheap beer, and a venue for club and DSU events. The pub is a service, a failing business, a meeting place on campus, and an SFSS problem child, all depending on who you ask. There are myriad opinions, but they all boil down to a few simple facts: SFSS Food and Beverage is losing money and student fees are keeping it open. Whether or not you agree with it, no matter what you believe is the cause, this is the current state of affairs and we can expect no change in the near future unless it narrows its scope — which might not happen until another business or service lightens the pub’s load.