Mark McEwan’s restaurant and grocery business file for creditor protection
The company behind Canadian chef and businessperson Mark McEwan has filed for creditor protection, as ongoing financial struggles were amplified during the COVID-19 pandemic.
McEwan Enterprises, which operates six Toronto restaurants, three grocery locations, and a catering operation, has approximately $11 million of outstanding liabilities and a cash balance of $1 million, according to a court filing.
The company’s liabilities include a $2.3 million loan from its largest shareholder, Fairfax Loans; $2.3 million owed to suppliers; approximately $500,000 in customer gift cards; and $1.2 million in accruals and vacation payable.
The filing by the appointed monitor, Alvarez and Marsal, states that many of the company’s locations have been historically successful and profitable; however certain locations have been underperforming for a number of years.
“The underperforming locations, even without taking into account the impacts of the COVID-19 pandemic, have proven to be unsustainable based on their negative financial results,” the filing states. The impacts of COVID-19 on Toronto's restaurant industry only heightened the company's pre-existing financial challenges.
The McEwan Grocery Locations were also impacted by the pandemic, "with two of the three McEwan Grocery Locations in particular being negatively affected by greatly reduced foot-traffic at their locations and much lower sales.” As a result, the business has experienced “significantly reduced” revenues for 2020 and 2021.
McEwan Enterprises’ grocery locations include McEwan Don Mills, the company’s flagship gourmet marketplace which opened in 2009 at the Shops at Don Mills; McEwan TD, which opened in 2015 and is located in Toronto’s financial district; and McEwan Yonge & Bloor, a food hall that opened in 2019, with offerings such as an all-day café, on-site butcher, bakery, deli, sandwich station and sushi bar.
The court filing states that the food hall has created “significant strain” on the company’s finances. “With an extensive footprint and significant lease and operational costs, combined with disappointing sales results, McEwan Yonge & Bloor has had the most detrimental impact on the Company’s overall financial performance,” the filing states. “With the benefit of hindsight, the Company would have not entered into operations at this location based on the existing lease terms. McEwan Yonge & Bloor has been a significant challenge since its opening and currently remains a material issue for the Company.”
McEwan’s company is attempting to restructure and right-size the business. As part of its efforts, the company is proposing a sale of the business to its current shareholders, McEwan and Fairfax Financial Holdings Ltd., under a new numbered company.
“The proposed transaction is the best executable transaction that would be available to the Applicant in the circumstances, and will create a sustainable Business for its key stakeholders, including its employees, suppliers, customers and other key stakeholders,” the court filing states.
