Corruption in Restaurants: Is a Little Necessary?


La belle image.jpg

Corruption will always exist in the world, no matter the subject or area. As kids we may be exposed to it early on, as we perceive one or both parents favouring a sibling over another, or a teacher favouring a student. We deem corruption unfair or hazardous to our well-being; but what if it isn't? What if a little corruption would be able to help keep you afloat or on equal ground with a competitor? What if laws or rules worked not in your favour, but in those that are more than capable of sustaining their livelihood? This is what I wish to investigate through my profile of Mr. A.K., someone who has experienced this first hand.

Mr. A.K. was born and grew up in Montreal. After having a normal childhood growing up in Montreal suburbs, he began showing interest in the armed forces and joined the Navy. After serving 7 years in Halifax, he returned home to start a small business. He began working in restaurants until he was finally able to open his own almost 20 years ago. Now, at 50 years old, his slicked-back, jet-black hair has begun its peppering, and his trained muscles are starting to wear on him. At 5'11'' and 195 pounds he could still whip anyone into shape, which is what he does to new workers at the restaurant he currently part-owns.

Being a worker who was trained by him myself, A.K. is quite the open book. He is very hard to please and always demands perfection, but has a funny, bubbly side to him he shows on a daily basis. There have been many times where, after a long day of work comprised mostly of yelling for orders and complaining that the clients don't know what they want, he would grab a beer from the walk-in fridge in the back of the restaurant, guzzle down at least half the bottle, and begin Greek dancing with fellow "Greeksters."

His partner, F.K., has only the best things to say about him. He says that while he may be hot-headed at times, "he makes up for it with his dancing." Being partners for over 15 years, F.K. knows him almost as well as his wife, making the joke that they remember more about each other's personality and preferences than their respective wives.

Around May of last year, A.K. and his partner got a rude awakening; government workers came into their restaurant, emptied all the cashes and safes, and said they would be closed until further notice on account of them not paying their taxes for 3 years. The government left them a paper saying they owed over $10 million dollars in back taxes, fees, and penalties. A.K. could not believe the audacity of the government, threatened to throw them out, and was restrained by a bailiff and police officer. All of their cash and assets were being seized, both personally and commercially. Personal bank accounts were seized and limited, even cars and properties were threatened to be repossessed. For days they had to deal with the government watching them, cataloguing their possessions, and placing penalty upon penalty against them. "All this because the government at the time needed the money", A.K. claims. He broke down how the government was able to do this.

When owning a restaurant there are certain things owners can do to keep more of their money. One is to not claim high sales. Before the government got control over the cash register, a lot of restaurants (A.K.'s included) would use cash as their only means of payment. There would be an ATM close by, but there was not interact or debit, making it harder for the government to track. By doing this, restaurants are able to alter their corporation tax, making them pay less into a franchise or corporation. Another way is to claim high loss on products. Every product sold has an amount that is acceptable as losses, meaning if some of the products were dropped, destroyed, overcooked, and so on. Therefore, if one claims a high loss, they could get away with selling products at a cheaper price or even buying less than is shown on paper, normally pocketing the difference. These are two ways that the government accused A.K., his partner, and others involved.

What A.K. explained to me is that the government "over-estimated how much they actually took". Yes, they were guilty of this and a couple other accusations, but the government took it to a different level. A company that sells annually about $2-million dollars cannot rack up a $10-million plus debt in three years. Certain products were given much lower loss amounts as compared to before, and the government made everything retroactive; therefore, the law they put into effect that day was retroactive 3 years, even though A.K. had papers from 3 years ago stating what they were allowed to declare from the government. After nearly a year of battling with the government, the restaurant had to pay roughly $1-million, a far cry from the initial $10-million plus demanded. But does this count as a form of corruption, or a sneaky way to keep more of the money A.K. and partners brought in?

When comparing what A.K. was accused of and what actually happened, A.K. and his partner F.K. proved to me that the government overestimated everything. While A.K. did admit that they had cut corners and did pocket some of it, taking home upwards of $3000 dollars cash in his pockets weekly, he says "it doesn't compare to the amount they claim we took. Besides, the government always had its ways of taking money from us, we had fun taking money from them." So while trying to stay competitive with other restaurants, he was able to take advantage and keep more money than what he should have. But how different is this when comparing the large tax breaks and cut corners other companies and restaurants do? Why didn't the government attack those companies as it did A.K.'s and others like it?

Corruption is seen as being only bad, but without cutting corners as A.K. did, who knows where his company would be. There are powerhouse companies like McDonalds and Burger King that are able to sell products much cheaper due to various reasons, like aggressive marketing, franchise profit-pooling, owning large properties, and so on. Companies like that are able to turn profits nearly anywhere they go. The smaller ones, like the one A.K. runs, would be non-existent. So where would we go to have a quality product like he serves in his restaurant while watching him dance and move as he enjoys the day?

You wouldn't, plain and simple.


I guess the moral of the story is to pay your taxes when they're due.

Hmmmm... very interesting, puts a new light on running a business

This is an interesting piece on how the government and restaurants intersect. For some reason I kept picturing scenes from "Goodfellas" as I read this haha.

I feel like we as consumers tend to think of things behind the scenes as far more simple as they really are. This piece made me think about taxes and costs in a way I hadn't considered.

Leave a comment

Visit our community forum!