Cigarette sales a tough business

CARP – The convenience store business is similar to the newspaper industry – feeling incredible challenges under the rising cost of doing business against the desire for consumers to want to pay those rising costs.

Carp Foodliner owners August Guo and Cathy Xu spoke to West Carleton Online last August about the challenges of keeping the only convenience store in the Village of Carp open for a story that ended up being one of this media outlet’s most popular stories of 2019.

The Foodliner is the only place in Carp where smokers can buy cigarettes. But it’s becoming increasingly more challenging for Guo to be able to sell them.

In 2006, the license cost $350. By 2015 it had rose to $453 per year. In 2016 the license fee nearly doubled to $861. In 2019 it costs $909 for an annual license to sell cigarettes.

“The license fees of cigarettes went up to about $1,000 per year, an increase of about $200 from a couple of years ago,” Guo told West Carleton Online. “I sell an average of 40 package per day and I only make about $1 per package of cigarettes. I need to sell three months’ worth of cigarettes to cover the license fees. I don’t think it is correct.”

Last November, Guo sent a letter to his political representatives Coun. Eli El-Chantiry, MPP Dr. Merrilee Fullerton and Premier Doug Ford about the challenges of selling cigarettes, a legal, heavily regulated product in Ontario.

“I believe the government depends on the small business,” Guo wrote in his letter. “The government should save every penny to support other than force the small business closed. I hope the government, especially the City of Ottawa, should review the license fees and answer why they went up so fast, and don’t tell me it’s because of the inflation.”

Guo says selling cigarettes is an important part of his business. It brings people in to the store, and they often purchase other items on the same trip, but the margins are so slim, it hardly seems worthwhile.

“It goes up every year, I just don’t understand,” Guo said. “It’s smothering a small business. It’s all put on us and we can’t afford it. I have no choice. If we don’t have cigarettes, we don’t attract customers.”

The average cost of a pack of cigarettes is around $15 Guo says. He says he could raise the price to make a bit more money, but fears that will have the reverse affect and customers will shop elsewhere.

“In my opinion smoking is not good for the body,” Guo said. “But if the government says it’s legal, then we need to sell them because it brings in business. Smokers come in, get smokes and other items them might need. It’s a very important part of the business.”

Although sales of cigarettes have been slowly declining across the country as people cut the toxic habit out of their lives, they are still legal and heavily taxed.

“From 2005 to now, I would say sales are down 50 per cent,” Guo said. “Everything goes up in price, but you can’t do 100 per cent.”

Guo said he did hear back from Coun. Eli El-Chantiry, but nothing from the premier or MPP at the time of the interview last December.

“I don’t think the province will give me an answer, but I hope something will happen,” Guo said. “If the government doesn’t want people to smoke, why do the legalize it and regulate it? We need a break so we can survive.”

El-Chantiry did write back to Guo. His staff provided the cost increases since 2006 and provided a bit of information. He also spoke to West Carleton Online about it.

“The licenses to sell tobacco is not for profit,” El-Chantiry said. “The cost of the licenses goes to enforcement. Bylaw will visit those places and make sure the shop owner follows all the regulations.”

The nearly 100 per cent increase in 2016 ‘reflects the increased enforcement and administration costs’ the councillor’s office wrote in its reply to Guo.

That enforcement includes a mandatory minimum two youth access inspections for tobacco and one display and promotion per tobacco vendor by a bylaw enforcement team. City enforcement also includes one youth access inspection and one display and promotion inspection per Vape vendor and five annual inspections for vendors selling both tobacco and vapes.

“So, the money goes, or fee, goes for education, enforcement and things like that,” El-Chantiry said. “This is across the province, not the city, when we talk about this. When we speak about our city we have a license to sell food, to sell tobacco, to sell alcohol, and the license for the food is for the same purpose – you have the public health inspector make sure everything is done properly in accordance with the food guidelines.”

El-Chantiry says he hears lots of complaints about licenses and fees through his work as a city politician.

“I’m no stranger to the business that’s one,” the former restaurateur said. “Number two I’m the councillor in charge of all the Business Improvement Areas (BIA) in the city for at least the last 10 years, representing the mayor at the BIAs and I hear that. ‘Why are they charging?’ Well that’s the reason, they are charging for licenses so they can have bylaw enforcement to visit those places, not to make money on them. It’s cost recovery for the service they have to provide.”