After the recent permanent closures of Rocky Mountain Coffee Co. and The Social Room, 29 people have been left without jobs. But owner, David Gan, says he has been trying to keep the businesses afloat for months.
Gan has owned Rocky Mountain Coffee Co. since 2016 and in 2017, was awarded the contract to provide retail food services in North Island Hospital Comox Valley and Campbell River campuses. However, a few months after the cafés in the hospitals opened, Gan moved back to Singapore to care for his sick mother.
Since then, he has been travelling back and forth between Canada and Singapore to run his businesses. In 2018, he also opened the Social Room in Comox with a business partner.
“Of course when you’re not around much of the time, you are not able to manage the business properly. So I think that’s when the business kind of started its up and downs,” he said.
According to Gan, the business really started struggling towards the end of 2018, losing a total of $190,000 last year. Gan added he had tried to sell the businesses in November of 2018, and began trying again in February of this year. But there were no takers.
“Even when the money’s negative, I have always taken money out of my own pocket to pay the payroll,” said Gan. “And I would say in the last six months, I’ve probably put in myself more than $100,000 into the business just to pay payroll and to pay the suppliers. What I really wanted to do was to sell off the business and get someone to take over the café so the staff could continue to have a job instead of just closing it.”
He acknowledges that many employees received paycheques that bounced within the last month, but he said he made sure most of them received their paycheques through an e-transfer the next day. When reached on Wednesday, he added there were still four employees who have not received their paycheque from April 30, but he hoped to rectify the situation this week.
However, on Thursday, a day after their final semi-monthly paycheques should have been received, employees and managers of both Rocky Mountain Coffee Co. and the Social Room still had not been paid.
Sheryl Alexander was the manager of the Social Room and has been working to ensure each employee gets their paycheques.
She said Gan had told her to hand out cheques to employees Thursday (one day after payroll), but upon going to the bank to check the account balance, she was told there wasn’t enough money to pay each employee and the majority of the cheques would not be cashed.
Lonnie Howat, manager of the Courtenay and Campbell River hospital locations, said with the previous payroll, a number of employees received paycheques that bounced, and she was forced to gather cash deposits from the stores to pay those employees.
To her knowledge, there was no one who received an e-transfer from Gan following a bounced cheque.
Payworks had been doing the business’s payroll, but eventually cut them off as the unpaid bills were piling up. This forced the task of payroll onto one employee, who had to calculate each paycheque by hand, without access to the payroll system. That employee quit approximately a month ago.
On May 10, Rocky Mountain Coffee Co. and The Social Room managers decided to close the businesses due to the rising number of unpaid bills from suppliers. Gan says he was hoping to keep the cafés open longer in order to sell the businesses , but ultimately left the decision up to the managers.
From Howat and Alexander’s perspectives, they had no other choice.
Both managers said they were not getting any responses from David prior to the closure. Howat pulled out her phone to show Whatsapp messages sent by her to Gan, marked as read, but with no reply.
Gordon Food Supply would no longer supply the food as the number of unpaid bills continued to pile up. Howat said Gan had suggested they use a different supplier, but Howat was not comfortable with this.
“Morally, we couldn’t do that, because we felt that was fraudulent because how is that bill going to get paid?” she said. “Why would you think that that was the right thing to do? So we (Howat and the Campbell River manager, Peter Russell) made a decision together that we were not going to do it, knowing that the suppliers weren’t going to get paid.”
Following this decision, Howat spoke with Island Health to inform them they could no longer order food. Two days later, they closed the cafés, breaching the five-year contract that Gan had agreed to in 2017.
Howat and Alexander are prepared to go to the labour board to fight their case.
According to the Government of Canada website, once a business ceases operations, the business must “remit all CPP contributions, EI premiums and income tax deductions withheld for the former employees to your tax centre within seven days of the day your business ends.”
The record of employment for each employee must also be issued five days after the end of the pay period, which in this case, was supposed to end May 15.
Gan says he is working to slowly pay off suppliers, with the more urgent bills getting paid first.
“In my honest truth, I’ve tried my best to keep the business afloat for as long as I possibly could but I also don’t own a bank. I can’t keep on taking money. I also have my own family to take care of.”
He says the reason the businesses were losing so much money was that they were overstaffed and Gan himself was not able to operate the business locally. He said the businesses’ labour costs were 70 per cent – way above the ideal 33 to 35 per cent – due in part because of the need for additional managers.
Gan added that he wanted to pay his staff a fair wage and provide benefit packages for managers, and he was not willing to reduce staff wages or increase prices.
However, both Howat and Alexander refute this, saying that the labour costs were never that high. To her knowledge, Howat was the only employee with a benefit package and she believed she was paying for the majority of the cost. Alexander adds that most employees were being paid minimum wage, except for some who had been with the company for longer.