Food Service Opportunity at Toronto City Hall. Government Management Committee. P:\2016\Internal Services\RE\Gm16012re (AFS #22969)

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1 GM11.7 STAFF REPORT ACTION REQUIRED Food Service Opportunity at Toronto City Hall Date: March 16, 2016 To: From: Wards: Reference Number: Government Management Committee Chief Corporate Officer Ward 27 Toronto Centre-Rosedale P:\2016\Internal Services\RE\Gm16012re (AFS #22969) SUMMARY The purpose of this report is to present the findings of the food survey conducted by staff in January 2016 and the feedback from the food advisory committee established at the request of City Council, and to present the Request to Pre-qualify ("RTP") criteria that will be used to screen qualified proponents. This report serves as a progress update on the food service opportunity at City Hall. City staff determined, after consulting with the advisory committee, that the survey results revealed basic patterns and trends that provide insight into the type of food service operation that would be suitable in the food service space. Moreover, the Committee suggested some ideas which will be further explored during the subsequent stages of the tenant selection process. RECOMMENDATIONS The Chief Corporate Officer recommends that: 1. The Government Management Committee receive this report for information. Financial Impact There are no financial impacts arising from this report. However, if the City decides to model the food space at Toronto City Hall after a food court, it should be noted that the interior design and theme would need to be consistent among all the tenants. Moreover, due to the state of the base building, which was last Food Service Opportunity at Toronto City Hall 1

2 renovated between the years 1996 to 1998, and the amount of work required to achieve a modern appearance with lots of natural light as per the advice of the food advisory committee, such improvements could be the responsibility of the City and thus, financial investment would be required. The Deputy City Manager & Chief Financial Officer has reviewed this report and agrees with the financial impact information. DECISION HISTORY On February 10 and 11, 2015, City Council adopted Item GM1.4 and directed the Chief Corporate Officer to consult with various training and social enterprise organizations to determine the feasibility of and interest in a social enterprise food services operation being established in the food service space at City Hall following the expiry of the lease between the City and Ontario Limited o/a Café on the Square ("Café on the Square"), the current operator: On September 30, October 1 and 2, 2015, City Council adopted Item GM6.11 and directed the Chief Corporate Officer to establish a volunteer advisory committee composed of members of the public with extensive experience in the food service industry to explore social enterprise food service options for the food service opportunity at City Hall. City Council also directed the Chief Corporate Officer to undertake a tenant selection process, which includes identifying appropriate financial/experience-based qualification criteria for potential tenants, including consideration of social enterprise, to find a commercial food service operator, making this report for information purposes only: ISSUE BACKGROUND Café on the Square's current lease has been extended to August 31, 2016 to accommodate the estimated time line needed to select a new tenant. Café on the Square will be invited to participate in the new food service provider selection process. The Chief Corporate Officer assembled a volunteer advisory committee (the "Committee") to assist City staff with the tenant selection process. The Committee consists of John Higgins, Director and Corporate Executive Chef at George Brown Chef School; Jason Parsons, Executive Chef at Peller Estates Winery Restaurant; Arron Barberian, Owner at Barberian's Steak House; Bob Bermann, Special Project Manager at Barberian's Steak House; and Anthony Walsh, Corporate Executive Chef at Oliver & Bonacini Restaurants, all of whom have extensive experience in the food industry. Two meetings were held with the Committee to gather input from the panel. Food Service Opportunity at Toronto City Hall 2

3 COMMENTS Conclusions from the Food Survey During the first meeting of the Committee and City staff, the Committee recommended that the City conduct a food survey in order to obtain market intelligence on eating behaviours and preferences. Approximately 620 people responded to the survey, a statistically viable sample size that is representative of the true responses. The survey results showed the following tendencies and preferences: Staff prefer grab-and-go options over other types of dining (sit-down and buffet-style) City Hall staff, on average, purchase meals 2.4 times per week while working Breakfast, lunch, and snacks are the main purchases and thus should be the focus of the food service operation Price range (including tax) should be: o Breakfast: $9 or less, which represents 98% of the total respondents o Lunch: $11 or less, which represents 96% of the total respondents The successful proponent should serve either fast food or fast casual, since most City Hall staff only dedicate mins for lunch Competition is high since 73% of City Hall staff are willing to travel outside of the City Hall building to eat during work hours Most Frequented Lunch Spots Results (including Café on the Square and Unspecified): Place Percentage Breakdown Unspecified % Café on the Square 27.6% Food Court (Variety) 14.7% Fast Casual 2 7.6% Restaurant 6.9% Brown-bagged lunch 4.1% Fast Food 3.2% Hero Burgers or food trucks 1.7% Social Enterprise (Trinity Square Café) 1.3% TOTAL 100% Based on the above results and discussion from the first meeting between the Committee and City staff, the following represents the types of food models for consideration: Fast food 2 Fast casual 2 Food court model (multiple stations in the space) 1 Unspecified refers to the survey respondents who selected "Other" as their most frequented lunch spot, but did not type in an answer. 2 Fast casual differs from fast food in the following ways: it is freshly-prepared, its ingredients are of higher quality, meals tend to be custom made, and it is generally healthier and more expensive than fast food. Food Service Opportunity at Toronto City Hall 3

4 o One successful food court suggested by the Committee to consider modelling after is the Gotham West Market in New York City; the space has lots of natural light and casual open space designed for communal dining Dynamic restaurant in which the menu changes on a regular basis Social enterprise model (e.g. one model suggested by the Committee was a social enterprise in which one meal purchased is matched by a donation for a child for breakfast) A food service operation that has multiple food stations but is of one genre, such as Eataly in New York City; it has a huge selection of fresh Italian food A second meeting between the Committee and City staff was held on February 19 th, 2016 for the purpose of discussing the survey results, the food service models, and the Request to Pre-qualify. The Committee collectively decided that multiple compact food service stations, would be an option worth exploring for the food space in City Hall. Several supporting arguments were given, including: Ability to mitigate the financial risk; should one food service station out of multiple food service stations fail, it would affect the revenue less severely than if there was only one food service operation Many choices; the survey indicated that City Hall staff like choice and therefore, a food court-like model would address this need Flexibility for the City to choose multiple food service operators that have excellent financial potential and therefore, could produce better monetary returns to the City Flexibility to have both a social enterprise food service operator/consideration for social component and a commercial operator, to be evaluated later as part of the iteration process Potentially showcase the ethnic diversity of Toronto by having different ethnic stations Potentially showcase the best wines and beers (idea for attracting tourists) Ability to give the food trucks a home base inside City Hall, as exemplified by the annual food truck festival located at Niagara-on-the-Lake More opportunity for local businesses/small chains to bid The Committee also gave the City additional suggestions, such as: Leverage the programming on Nathan Phillips Square to attract tourists, one of the two main target audiences (the other being City Hall staff), into the food space o Liaise with Economic Development and Culture to determine the programming on Nathan Phillips Square over the upcoming five years and how it would affect the food space inside City Hall Have a common design theme for the food space, such as common utensils/plates/napkins The appearance of the space should be bright and inviting with lots of windows Have multiple cash registers since it was determined that a potential cause for long line-ups was not enough cash registers resulting in queues. Food Service Opportunity at Toronto City Hall 4

5 Ensure that each food station is focused on their own type of specialty food/product Being flexible to the proposed hours of operation from interested parties Request to Pre-qualify A portion of the Request to Pre-qualify Criteria, attached as Appendix A, was presented to the Committee for review and discussion. They commented that some scoring should be allotted for creativity and uniqueness when assessing a proponent. The pre-qualifying framework was otherwise accepted. Next Steps The full contents of the Request to Pre-qualify Criteria, along with details of the food service opportunity, will be available to the public by the first week of May 2016 on the City of Toronto website. The food service opportunity will be marketed towards the public across all of North America via media mediums such as the Globe & Mail, Nation's Restaurant News, and social media. Moreover, City staff will notify known potential tenants who may be qualified and interested in participating in the process. Subsequently, submissions from interested parties will be reviewed by both City staff and the Committee to determine qualified parties who can undertake the food service opportunity. CONTACT Joe Casali Director, Real Estate Services Tel: (416) jcasali@toronto.ca SIGNATURE Josie Scioli Chief Corporate Officer ATTACHMENTS Appendix "A" Response Contents for Request to Pre-Qualify for Food Service Opportunity at Toronto City Hall Food Service Opportunity at Toronto City Hall 5