Escoba Bistro is Closing Down

[Ozy_Flame]

Well any cognizant business would (should) constantly assess their cost of operations especially as it pertains to moving to a different jurisdiction for profitability.

However, if those exponential year-over-year increases happen and it's still not feasible to move, then the best a business could do is keep an eye on the situation until it makes more sense to move.

Also, people who own businesses in Alberta, most of them probably live in Alberta. If it actually came to having to move a business, but the next best legitimate place to do it only ends up saving them minor peanuts, is it really worth it to uproot the family and the life just to save a few bucks?

I would think a business - assuming they move provinces - would do so for a discernible competitive advantage - that has to be there.

[jammies]

Originally Posted by OMG!WTF!

This one was in business for 18 years. Their property tax went from $34k in 2013 to $67k in 2014. That increase was because of improving net sales. Now that sales are down, the city needs to do something to react faster to keep people in business. Next year is too late.

Property tax is linked to net sales? When did this start?

I don't usually agree with Psycnet, however this one time he is correct because this is all the most Soviet of all red herrings. It's amusing how so many people focus on irrelevancies to push a narrative.

High-end restaurants fail all the time, and restaurants in general fail all the time. Some of you are acting like the city increased taxes 95% (67k is 33k more than 34k) across the board and we're all going to be camping in Locke's backyard with the Young Pioneers after Trudeau nationalizes his house. Get some perspective.

Further, those of you talking about simple economics don't understand economics either, because if you did, you'd have been the first ones clamouring for for increased taxes years ago so that budgets weren't based on oil revenues. I fail to remember those discussions, being as they mostly didn't happen, or were mocked (Cut waste instead! Cut waste!), because the usual TAX = BAD argument is even more venerable than BIG=GOOD in FoI.

I didn't vote for "Do-Nothing Duerr" when he ran the city, nor for David "Let's Build Out to Okotoks!" Bronconnier. Nor did I vote for Ralph Klein, Stelmach, or the rest of the clownshoes whose belief that the only good provincial government is one that acts like a miserly uncle too cheap to fix the holes in the roof of his tarpaper shack. Those of you that did, and congratulated yourself on your fiscal prudency, are just as deluded as the free-wheeling pie-sky zealots of the NDP and their cadres.

[Resolute 14]

Escoba's demise is a lot like the climate change argument and natural disasters.

While government activities may or may not be a direct cause of this eatery's demise, government's activities are helping create an environment where they happen more frequently.

[CorsiHockeyLeague]

I mean, I've personally always been pro-PST... but regardless, "businesses fail all the time" continues to miss the point. Yeah, they do. They're probably more likely to fail in the current economic climate. The issues raised are examples of public policy initiatives that are adding to the straws on the back of the camel that is local small business, and we shouldn't be too surprised when those straws are occasionally enough to break it, particularly for thin-margin businesses. There's no loss of perspective in pointing that out.

Really, it just boils down to, "certain decisions by governments at various levels are currently making it a little harder to successfully carry on business in an economic environment where it's already pretty tough sledding. Ideally, you'd want goverments to be making things a little bit easier."

[The Yen Man]

At the end of the day, there's a myriad of factors that contribute to a business's success and failure. Yes, the economy tanking is probably the most important factor, but perhaps the business could have rode it out had it not been hit with a whack other ones.

Sure, you can say "suck it up buttercup, that's how owning your business works sometimes", but guy is just airing out all the contributing factors to why his business failed, all of which I find were pretty reasonable, TBQH.

[stampsx2]

Just wanted to include i avoid shopping on 130th because of traffic and parking. I no longer spend time on 11th and 12th ave because of traffic and parking. I'll go wherever is easier.

There's a reason so many people rather take the drive to the okotoks Costco instead of the Deerfoot one - traffic, parking and crowds.

[OMG!WTF!]

Originally Posted by jammies

Property tax is linked to net sales? When did this start?

I don't usually agree with Psycnet, however this one time he is correct because this is all the most Soviet of all red herrings. It's amusing how so many people focus on irrelevancies to push a narrative.

High-end restaurants fail all the time, and restaurants in general fail all the time. Some of you are acting like the city increased taxes 95% (67k is 33k more than 34k) across the board and we're all going to be camping in Locke's backyard with the Young Pioneers after Trudeau nationalizes his house.

I actually totally misunderstood what the owner was saying on the radio. Until 2014 the city assessed business tax based on the rental value of the property it occupied. In 2014 they switched that over to a land value approach for businesses that owned their property. So several business/property owners got totally hosed in the downtown core...Escoba wasn't the only one...Diversified Staffing on 5th was another one. So instead of paying based on what other businesses would be charged to operate in their space, owner/occupiers are charged the same way as forty story high rises. Diversified's tax bill tripled based on two sales in the downtown area. Seems like a valid complaint to me.

The restaurants fail all the time argument is sooo ridiculous anyway but especially so in this circumstance.

[troutman]

Sentry Box and Mikey's were faced with big tax bills too (before NDP):

http://www.calgarysun.com/2015/01/18...for-the-future

[PsYcNeT]

Originally Posted by troutman

Sentry Box and Mikey's were faced with big tax bills too (before NDP):

http://www.calgarysun.com/2015/01/18...for-the-future

Could explain why Sentry Box thinks it's okay to charge $80 for a used 3.5 supplement book when I can get it on Amazon for $50 after shipping.

[rain_e]

Originally Posted by OMG!WTF!

I actually totally misunderstood what the owner was saying on the radio. Until 2014 the city assessed business tax based on the rental value of the property it occupied. In 2014 they switched that over to a land value approach for businesses that owned their property. So several business/property owners got totally hosed in the downtown core...Escoba wasn't the only one...Diversified Staffing on 5th was another one. So instead of paying based on what other businesses would be charged to operate in their space, owner/occupiers are charged the same way as forty story high rises. Diversified's tax bill tripled based on two sales in the downtown area. Seems like a valid complaint to me.

The restaurants fail all the time argument is sooo ridiculous anyway but especially so in this circumstance.

So if he sets up a real estate company that owns the building and leases it to the restaurant would he be fine?

[Fuzz]

I was thinking that too, but then realized he'd have ot pay twice, probably matching his total now, or costing even more. In some ways it makes sense that if you own you would pay more, as the city should still recoup the same total tax amount for the property. Right?

[username]

If the recession is the main reason for this business going under then how did it survive the last 20 years:

2008/2009 - Great Recession
2001 - dot com bust
1998/1999 - Last major drop in oil

Strange, Escobar managed to run a high end restaurant during those recessions but this one made them pack up.

What's changed??????

[OMG!WTF!]

Originally Posted by rain_e

So if he sets up a real estate company that owns the building and leases it to the restaurant would he be fine?

Yeah I'm totally unclear on any of that. I suspect not because they changed their approach by basing business tax on the land value, not market value of rent. So while cap rates determine property value a small building like Escoba's would be worth much less to an owner operating a business than it would a developer owning the land for best and highest future use. So even if they rented it back at proper market rent, the land value would jack up the assessed rate. But who knows? I just know it was a problem for several business/property owners in the downtown core who's building was almost entirely land value.

I just read that Escoba disputed the assessment and had it restored to 34k in 2014.... However it cost them 14k to achieve the reduction and it went back up to 58k again in 2015. It seems like a patent mistake by the city that they are unwilling to fix.

[Enoch Root]

While restaurants do 'fail all the time', they most certainly don't fail on a regular, steady basis.

Business failures are much like extinctions: they can happen at any time - and often it is self-inflicted. But they also tend to come in bunches. And when they do, it tends to be the result of an external shock.

Instead of simply dismissing this closing as a self-inflicted happens-all-the-time event, the more useful analysis is to ask: is there an external event here?

And I think the answer to that is pretty clear.

[Handsome B. Wonderful]

If only they had embraced new infrastructures. If they had served locally sourced vegan food prepared by collectives of native artisans and ex-oilfield refugee workers, cooked over heat provided by geothermal energy. If they had mandated their customers arrive via public transit.

But they didn't, they tried to run their business via capitalism and failed. There's a lesson here comrades.

[zyzz]

Originally Posted by shermanator

I have to laugh at part of the blame going to a bike lane. A downtown restaurant is not losing a lot, if any, customers because of a bike lane.

Wrong.

[heep223]

Originally Posted by Enoch Root

While restaurants do 'fail all the time', they most certainly don't fail on a regular, steady basis.

Disagree. I have not looked at data but I would say the restaurant industry has the highest failure rate of any, and at any given time there are multiple restaurants both failing and launching at any given time in the city. Both high profile and low profile.

[jammies]

Originally Posted by OMG!WTF!

In 2014 they switched that over to a land value approach for businesses that owned their property. So several business/property owners got totally hosed in the downtown core.

In other words, the huge increase in property tax wasn't directly related to government hiking taxes to cover a spending spree, but rather an adjustment in the way tax is calculated, where presumably there was an equal amount of winners to losers, as that was intended as revenue neutral.

How does that align with the narrative that socialism ruined his business, though?

Originally Posted by Handsome B. Wonderful

If only they had embraced new infrastructures. If they had served locally sourced vegan food prepared by collectives of native artisans and ex-oilfield refugee workers, cooked over heat provided by geothermal energy. If they had mandated their customers arrive via public transit.

But they didn't, they tried to run their business via capitalism and failed. There's a lesson here comrades.

The lesson that its easier to blame an identifiable group than impersonal forces?

[polak]

Originally Posted by username

If the recession is the main reason for this business going under then how did it survive the last 20 years:

2008/2009 - Great Recession
2001 - dot com bust
1998/1999 - Last major drop in oil

Strange, Escobar managed to run a high end restaurant during those recessions but this one made them pack up.

What's changed??????

lol yes who can forget all of those tech companies in downtown Calgary that laid off more than half their workforces in 2001.

Lets also forget all of the international praise from around the world at how well Canada's banking industry handled the 2009 financial crisis and how unaffected Canada was by it because of the regulations on that industry.

None of those things were anything like you're seeing today. You know that. You're really reaching here.

Originally Posted by Enoch Root

While restaurants do 'fail all the time', they most certainly don't fail on a regular, steady basis.

Business failures are much like extinctions: they can happen at any time - and often it is self-inflicted. But they also tend to come in bunches. And when they do, it tends to be the result of an external shock.

Instead of simply dismissing this closing as a self-inflicted happens-all-the-time event, the more useful analysis is to ask: is there an external event here?

And I think the answer to that is pretty clear.

If you answer anything besides Oil is now worth less than half of what it was a couple years ago, you have the wrong answer.

[username]

Originally Posted by polak

If you answer anything besides Oil is now worth less than half of what it was a couple years ago, you have the wrong answer.

So what was the reason for Escobar surviving the last 3 recessions? During 2 of those recessions in Alberta, oil dropped to prices lower than this recession when adjusted for inflation.

Knowing this, what else has changed in 20 years while this guy was in business?