Chez Sophie owner blames city, bank for bridge restaurant's failure
CBC News | Posted: July 29, 2015 4:51 PM | Last Updated: July 30, 2015
Former owner of Chez Sophie speaks of frustration and financial ruin after six months of silence
The owner of Chez Sophie, the former restaurant on the Esplanade Riel, says the City of Winnipeg and credit union Caisse Financial Group contributed to an environment that led him into financial ruin.
"I will almost definitely have to declare personal bankruptcy. Which means that I have nothing. I have nothing left," said Stéphane Wild, who emigrated from France to Winnipeg in 2004.
Back in 2013, the City of Winnipeg issued an expression of interest (EOI) to find a new tenant for the vacant space on the bridge spanning the Red River. A few months earlier, the original tenant, Salisbury House, had closed its doors after seven years there.
With limited knowledge of the controversial and political history of this location, Wild decided to dream big and submit a business plan.
"It was an amazing location, and the Canadian Museum for Human Rights was supposed to open soon after we did, so it just seemed to make sense," he said.
- Chez Sophie shutters St. Boniface bistro
- Chez Sophie, Winnipeg's only bridge restaurant, closes its doors
- VIDEO: Inside the Chez Sophie location before it opened
In retrospect, Wild says there were early signs of trouble, starting with the fact he first become aware of his successful bid through the media.
"We woke up one morning and a dozen cameras were waiting outside of our bistro on Avenue de la Cathédrale. And we wondered what was going on, and then we learned that the city had made an announcement that they had selected our proposal," he said.
"We had no idea whatsoever that they had picked us."
The city had left a message on his voice mail earlier that morning, which Wild admits he only heard later in the day.
City officials say that a letter containing the terms and conditions of the deal were delivered by courier to his St. Boniface restaurant, signed by Wild and returned to the city on Feb. 15, nearly two weeks before the report was made public.
The other red flag was with Caisse Financial Group, which had initially rejected his request for a substantial loan approval. That loan was key to Wild's business pitch to the city and without it, he figured his effort was sunk.
But the same day he learned his bid was successful — and made headlines across the city — Caisse Financial Group called back to inform him they would approve a $177,000 loan.
"We found it really weird that [the city] had chosen us when they knew we were denied our financing. We figured that our proposal would have been rejected automatically," he said.
Asked for comment, the credit union declined to elaborate on what prompted the sudden approval or any details of their agreement.
About the loan, it was a personal loan, rather than business one, "so that meant that if ever there was a problem, the bank would come after us personally, not after the restaurant," Wild said.
Big bills
Three months into the restaurant's operation, Wild says he was penalized for overdue bills even though he never received mail at the bridge location.
The city says the location has a civic address and mailbox but Wild claims no mail was ever delivered.
Then came higher-than-expected bills. The city provided rough estimates for monthly costs when the RFP was first released, based on 2012 utility costs incurred by Salisbury House.
Estimated at $3,323 per month, Chez Sophie's actual heating bills averaged $4,805 per month (reaching as high as $6,159 in February 2014).
The provided water bill estimate was approximately $440 per month, however Wild paid in excess of $950 per month at times. The city says landlord consumption patterns and increased utility costs are responsible for the discrepancy.
Later, Wild was shocked when the estimated property tax payments jumped from the estimated $876 per month to $1,576 per month in December 2013 due to a new property value assessment of $694,000.
City officials later reassessed the value, dropping it to $295,000, effectively reducing Wild's tax bill to $639 per month. He was later refunded $10,437 for overpayment.
Winter struggle
Another problem was the drop in business during winter. Wild served up to 400 plates a day during the summer months, but during winter that number plummeted, sometimes generating only $250 a day in sales.
"City snow removal on the bridge wasn't great. There was always snow," he said. "[And] when it's –30 C out, nobody wants to walk for 10 or 15 minutes in high heels through snow and slush to get to a restaurant," Wild said.
For entire duration of his occupancy, Wild never did agree to a final lease agreement with the City of Winnipeg. Negotiations and exchanges of various proposed drafts were ongoing until he closed down less than two years after opening the doors.
The city had wanted a five-year lease deal.
"Our lawyer told us that it was far too restrictive and that we should never sign it. All of the responsibilities, everything was on us and had to be carried out at our expense. So we didn't sign it," Wild said.
Conditions for success
In May 2015, the city approved a new deal with Wow Hospitality that has recently opened the restaurant Mon Ami Louis on the bridge.
The contract only requires the tenant to operate a restaurant during the summer months (May 1 to Sept. 30). It would then operate as an event centre for the remainder of the year.
Among other changes, in lieu of a fixed $2,000-per-month rent as was the case for Chez Sophie, Mon Ami Louis will instead pay the city five per cent of its net sales.
Wild believes if he had benefited from the same sort of flexibility at the lease bargaining table, his restaurant could have succeeded.
"They knew that winters would be catastrophic for us," he said.
Brink of bankruptcy
Since closing up their restaurant, Wild and his partner have had to liquidate all their personal investments and sell their home and business to pay back Caisse Financial Group.
"We're still short about $160,000," he said.
Wild admits he made his share of errors along the way but says he would try it all over again — albeit, a little differently.
"The support that we had from the community, just thinking about it is giving me goose bumps. It was extraordinary," he said.
Faced with bankruptcy, the couple now lives in a small apartment and is working part-time trying to pay off their bills.
The ending to his story is not happy one, Wild said.
"I honestly don't think that we'll be able to stay. We'll have to go back to France."
Former city councillor for Saint-Boniface Dan Vandal and property and planning committee chair Coun. John Orlikow were unavailable for comment.