With Lick's taking a licking, some wonder how much longer the Homeburger chain will last

7. MikeJefe That spells class action lawsuit but Meehan will have declared bankruptcy by the time that ever gets before a judge.

The Toronto Star
September 26, 2013

With Lick's taking a licking, some wonder how much longer the Homeburger chain will last
The GTA chain, facing stronger competition in the gourmet burger trade, has dropped from a reputed 30 to just 12 outlets.
Alex Ballingall

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Lick's flagship store in the Beach, being taken over by a condo development, promised to reopen in a new location when it closed last October. But it hasn't, amid a string of closings at other outlets. RICHARD LAUTENS / TORONTO STAR

When the flagship Lick’s burger joint in the Beach closed down last October after 32 years, some took it as an ill omen. It appeared Lick’s was getting burned by hot new purveyors of Toronto’s gourmet burger scene, including The Burger’s Priest and The Works, which set up shop on that convivial stretch of Queen St. E.

But Denise Meehan, Lick’s founder and president, put on a bright face. “It’s not goodbye,” she declared on Facebook. “It’s see you soon!”

Months later, there’s still a banner in the window, though the lettering has faded with time, much like the ardour of its promise: “We will see you in the Spring!”

Now it’s autumn, and eight more Lick’s outlets have shuttered, most recently at Pape and Danforth in mid-August.

According to the property landlord, that location was locked out because head office couldn’t pay the rent.

In an interview early last year with local business program Professionally Speaking TV, Meehan spoke of “more than 30 stores.” Now the Lick’s website lists 12.

On top of this, provincial liens show four of Meehan’s companies— Lick’s Homeburgers and Ice Cream Shops Inc., two numbered companies and Beaches H.O. Administration Corp. — collectively owe the government more than $225,000. Meehan herself owes the government more than $500,000, according to the provincial liens database.

It’s enough for some to herald the fall of Lick’s, once vaunted as a homegrown entrepreneurial champion for pioneering high-quality fast food with a zany in-store experience.

“They’re displaying all the signs of a struggling chain that’s about to go under,” said Robert Carter, a restaurant industry analyst with the NPD Group.

A Lick’s employee said Meehan wasn’t available to speak with the Star for this story, but responded to a list of questions with an emailed statement from Meehan, saying closures are part of a “restructuring process” to increase efficiency.

“Over the years overheads have crept upward for all businesses,” Meehan wrote, adding that her restaurants have “slimmer” profit margins due to high quality products.

“Lick’s has responded by restructuring its store footprint, reducing overall costs for greater efficiencies in areas such as labour, rent, electrical, maintenance and taxes.”

The first Lick’s opened as an ice cream parlour in downtown Oakville in the spring of 1978, when Meehan was 27, according to her biography on the Lick’s website.

She soon installed a grill, and the Lick’s “Homeburger” was born: a handmade patty on a fresh Italian bun, topped with grated old cheddar, banana peppers and “Guk,” the special sauce Meehan invented in the store’s early days.

By 1988, when the Star profiled Meehan as a business visionary, Lick’s had added four Toronto locations and was gobbling up more than $1 million in annual sales. The restaurant’s famed singing-employees tradition was also established, lending fun-filled warmth to the place.

Kaley Jevnikar is well-versed in Lick’s lore. In 2000, then 19, Jevnikar got a job as a cashier at the now-closed branch near Highway 401 and McCowan Rd., working alongside her future husband.

“I thought it was really neat and unique,” she said, describing how she and her co-workers would sing songs about signature dishes — vegetarian “Natureburgers” and “taters n’cream” — using melodies from Nirvana and Beatles songs.

“We have very fond memories of it.”

It appears trouble with franchisees started within the past few years. The Lick’s footprint, which had stretched from Sudbury to Niagara Falls and east to Ottawa, started shrinking towards the GTA.

This summer alone, at least four locations were locked out because Lick’s head office fell behind on the rent, in some cases by tens of thousands of dollars, according to franchisees and signs posted by landlords on storefronts. Now several former store owners — some of whom claim to have lost their livelihoods trying to keep Lick’s locations afloat — have taken issue with the business model they initially believed in.

“Very poor sales, no marketing support from head office, all kinds of problems,” said Saurabh Shah, a former graphic designer who ran a Lick’s in Hamilton for two years. Shah closed his store in December 2012, when he declared bankruptcy after losing his entire personal savings of $300,000.

“I just walked out because I couldn’t handle the pressure,” he said.

Two groups of former franchisees from Mississauga and Oakville have filed a rescission claim against Lick’s, arguing the potential profits were exaggerated by head office.

Kevin Doyle, a bus driver who ran a Lick’s with his wife in Burlington, accused head office of painting a rosier picture of the money he’d make as a franchisee. They walked out on their contract in June, claiming to have lost $250,000 “and three years of our lives.”

In her statement, Meehan said Lick’s works hard to help franchisees, and that location operators are partly to blame when they struggle. “Some franchisees resist doing what they should do to grow their business and sometimes there are disputes,” she wrote.

Marufa Ahmed, one of the locked-out franchisees, has since reopened her restaurant at 1585 The Queensway. She said she’s now paying franchise royalties directly to the landlord, instead of Lick’s, to pay down the $88,000 rent allegedly left unpaid by head office.

Another branch that was locked out in June, on Argentia Rd. in Mississauga, remains closed as the former operators contemplate how to recover the money they sank into opening the business.

“We don’t know what’s happening with head office, because each of the locations is closing one by one,” said Shamsa Rajani, who left her job at a bank to run the location with her husband for three months.

It seems head office on Queen St. E. hasn’t been spared, either. A former employee who spoke on condition of anonymity said morale there has been chipped away as unfilled positions were eliminated and branches were boarded up. There are now five people working in the office, down from “more than 13” at the start of the year, the worker said. The worker added that four people were laid off on Sept. 13 because “of the financial situation” of the company.

The Star was unable to confirm if layoffs took place.

On Thursday, the Lick’s website was gone, while the head office was locked, although employees still appeared to be using the building.

For Carter, the restaurant analyst, it amounts to blood in the water for Lick’s.

“Clearly, they’re not maintaining guest counts and getting customers through the door,” he said, citing his firm’s survey data that shows that, among 5,000 regular gourmet burger customers surveyed in Ontario, only 5 per cent visit Lick’s more than once in a three-month period. Carter called that “brutally” low; by contrast, 57 per cent of burger customers visit McDonald’s multiple times.

Carter added that the gourmet burger market, particularly in Toronto, has burgeoned to $300 million in sales this year in Ontario, with newer grillers whose smaller stores and flashier menus have managed to out-compete and out-innovate the former staple of the now sizzling burger scene.

“Lick’s is just not keeping pace,” he said.

In the opinion of Toronto-based burger blogger Michael Nusair, the GTA’s gourmet burger torch — nay, spatula — has thus been passed to a new generation of grillers.

No tragedy, he quipped. Just change.

Comments

1. GGJJGG
Lick's has been going downhill for ages. It started when they went from handmade real ground beef patties to preformed and ground patties.
If they want to try and compete and stay alive, I think that they need to go back to a real ground beef patty. There is a huge flavour and texture difference. Also, add some cool new toppings to choose from.

2. BrunoPuntzJones
Lick's problem is easily corrected.
1 - Double prices. Immediately.
2 - Come up with a new, pretentious name for the Homeburger - follow up by snickering at customers who ask for 'regular mustard'.
3 - Hire pretentious hipsters instead of gleeful servers.
4 - Stop offering customers a place to sit and eat their meal. Offer at most 3-4 stools and a ledge.

3. MikeJefe
5- Two words - SECRET MENU. And refuse to help any customer that doesn't know it but tries to describe such an item.

I think we both know who you're poking fun at, And it isn't Five Guys.

4. Riversides
They use to have an amazing mushroom burger. Went to one in Mississauga last year and it was pretty bad. Generic burger with a fall apart bun and boring toppings. Atmosphere scored a zero. Too bad they didn't keep the good quality.

5. MikeJefe
They got complacent and didn't bother trying to keep up with the competition, thinking they'd survive on name alone, just like BlackBerry. Both are facing extinction.

6. observer1
Licks is a franchise operation. All their stores are owned by investors who wanted to make a go of the food business but Licks screwed them. When a franchisee pays Licks each month the fee include the RENT on the facility which is normally owned by the mall. The licks that closed next to me had a sign posted in it's window saying that the company owed the land owner over $84.000.00 !! Don't know how much rent they paid at this little location but even at say $10,000.00 per month the franchiser did not pay the owners rent for 10 months. That is CRIMINAL behavior not just a company that is facing competition. Some part of the monthly payments were to go to rent and Lick's kept it. To me that makes them criminals. Anyone who buys into a franchise needs to look at the people they are dealing with as far too many are not HONEST.

7. MikeJefe
That spells class action lawsuit but Meehan will have declared bankruptcy by the time that ever gets before a judge.

8. Lookout
In the '80s and '90s, Lick's rocked. Years later I went to one in Thornhll (Yonge St.) but the food quality dropped. I tried to contact Head Office and Customer Service, there was no one to answer the phone and no one ever returned my call or email. Went to another one about 2 years ago that had good quality food (now closed).

Gourmet burger places elevated the burger to unexpected levels. In my neighbourhood, some restaurants around College & Ossington offer grain fed or grass fed (pastured) beef raised without antibiotics and growth hormones, and it's obtained from smaller farms, and this is what I want. (I try to avoid factory-farmed meat as much as possible). A couple of the best places I've found: 1. BQM (their 3 choices of beef cuts are ground to order with gourmet toppings) and 2. W Burger Bar at Yonge and College (choice of cuts and varieties, choice of mini-sides of toppings and garnishes including pickled beets, a customer fave).

9. dimples52
I will be sorry to see Lick's go under. As someone who has a severe allergy to beef and tries to eat fresh, high fiber, local food, a trip to a fast food outlet has never been a possibility for me-except for Lick's. The vegetarian burger is tasty, not too high in sodium (comparatively), and low fat compared to other commercial veggie burgers. I even keep a box in the freezer for when I am too tired to make my own. Also, it is a Canadian company and I'd rather support a smaller, local business than a big conglomerate.

10. Ohmbudsman
It's hard to say all the reasons why, but Licks doesn't hold a candle to the new burger places. Pre-made patties, over cooked to the point of grey leather. And it just feels dated when you go into one of these places. With the emphasis on fresh, not frozen and real ingredients, Licks loses against the newer places, and if someone wants pre-made, frozen, over cooked fake food, McDonalds is always going to win against Licks.
Burger's Priest and Five Guys completely blow away Licks from a flavor and enjoyment standpoint.
Hero Burger and South Street… Meh, not much special there except the extreme prices. They will go away before too long.
From day one, many years ago when I went into the Licks in the Beaches, I never really liked the place, it just felt 'off' for some reason.
Licks has more in common with McDonalds and Burger King etc than the newer gourmet burger joints.
Anyway, I make a burger at home that's just as good as anything any of them do, so why bother paying them anyway?

11. robguy
Funny how you read about some posters who have not been to a restaurant in years - yet they comment and read the article and somehow figure out why a business is going down??!! For those who have not been there in 'years' - Licks was not the same place at all. The service and food was not as good as before, and the singing and fun gone. Just the usual grumpy servers you get everywhere else. So Licks probably has failed not for the reasons these posters think and their opinion is irrelevant with respect to the causes…

12. ScreenName2112
Well….from my own experience - the food made me really, really sick. Why would I go back after two bad experiences? And I told everyone I knew about what happened to me….hope it helped drive a nail in the coffin of this crappy place.

13. observer1
I have eaten in my local Lick's many times and never got sick. It is not right to blame all of these places for you weak stomach. Anyway these are franchise operations so how the food is prepared is a store issue not Lick's.

14. robguy
Nor would I return to a place that got me sick. But it would be hard to find any restaurant that has not made someone sick and that includes the big chains. Licks is not going out of business for this reason, but several others as you can see by the comments. Apathy may be another - 33 comments in 1 day - looks like most do not care

15. observer1
Servers ?? The last 3 locations I visited were walk up and order places. Never been "served" in any of their locations. Anyway the restaurants are failing because Licks is not paying the rent for the places out of the checks they receive each month not because of the food. This who thing sounds like a pyramid operation to me

16. robguy
Servers was wrong word to use obviously - was hoping you could still get my point that the cashiers and food preparation staff was not very good quite often as compared to earlier years. But agreed that the worst part is seeing franchisees paying their bills only to watch the chain not pay theirs.

17. landtmark
Now they definitely have nothing to 'sing' about … tried the place one time and have never been back due to that annoying feature!!

18. cherrypie
This is probably the most annoying place to go for food!
Stayed away for years!

19. Sunmount
Meehan's cultish affinity to Ayn Rand's half-brained philosophy (which in earlier years her staff were forced to "study") has made her better suited to lead a cult than manage a business.

20. ScreenName2112
Glad to see this place on its way out….ate there twice in my life - both times I was violently ill.

And the singing? Just annoying.

21. considerthis
It's a shame that this is happening to Lick's. I would prefer to support a Canadian brand. I don't get all the hype about: Hero Burger - meh, Burger's Priest- totally not impressed it's just unseasoned ground beef. I haven't tried Five Guys yet but it doesn't look like they do anything special to it, again ground beef with nothing added. That equals boring to me! To each their own, I guess.

22. MikeJefe
Five Guys is taking the locals to school, as per the burger blogger mentioned in the article. Take a look: http://tastyburgers.ca/tag/five-guys/
Works Burger Bistro is just a poor Ottawa copycat of American chain Red Robin.

23. 416rocks
It's a shame Lick's went with the Toby's business model by opening too many locations too quickly. As soon as that started to happen, the quality of both chains suffered.

The last time I had Lick's on a visit home to Toronto, the burger only tasted vaguely the way it used to. Bummer.

In their respective heydays before they started using preformed, supermarket style patties, Lick's (and Toby's) would have beat the stuffing out of Five Guys. Five Guys seems to be going the way of Toby's and Lick's with all of the expansion. They might want to consider slowing their roll.

24. Truth4U
Days of the 80s / 90s will be missed. Unfortunately, my last experiences were ones of anger, as store managers, or franchisees were far from accommodating, or courteous, and in some cases rude. When presented with a valid coupon, would either refuse, or accept, only after an argument.

25. alarmguy
Like the old Toby's, they'll soon be gone. I loved those fries with a side of melted cheese.

26. The Onlooker
Mentioning Tobys brings back so many pleasant memories. Thanks alarmguy.

27. powerboss
Great Homeburgers, awesome Natureburgers, the Gobbler was pretty good too!

However, I didn't care for the singing.

I also wished that they would stay open a little later into the evening.

I mainly went to the location on Yonge Street, south of Hwy 407.

It was a fairly large location.

That location was around for a long time and always seemed busy.

They did fine while there was no competition but they crumbled after Hero Burger opened up the street.

Hopefully, we'll still be able to buy their products in supermarkets.

I think what killed them was the overhead for their very large locations.

Their restaurants were about the size of a McDonald's but did a fraction of the volume.

For them to survive, they need to open smaller restaurants and not make a major production when someone orders a hamburger.

It's a good product with brand recognition but they need to become leaner and meaner to succeed.

28. MikeJefe
You forget that they switched from fresh meat to those frozen pucks full of filler, right? If you think about it, Lick's back in the 80's and 90's is like what South St. Burger is today. And you know which one is doing well and which one isn't. Also, who would want to go to Lick's when top American import Five Guys is rapidly expanding in the GTA? Bottom line, Lick's is like BlackBerry compared to Apple (Five Guys) and Samsung (South St.). Underestimated or ignored the competition and will pay the ultimate price for it.

29. GinsuGirl
My first teen-aged restaurant job was at Lick's, as a cashier/milkshake girl, calling out the orders to the singing grill and fryer guys. They only hired teens (cheaper minimum wage) and treated us all like dirt. I'm pretty sure I was fired because a manager overheard me say the word "union" one day. Crappy place to work.

30. DSM5
Licks was successful because they made good burgers when no one else did. Then Meehan got it into her head that people didn't go there for the good burgers and they switched to premade instead of fresh (because that's what everyone else did) right around the time other good burger joints started opening up. And she was a terrible franchisor. It's a wonder they lasted this long. How you can do an article on this without mentioning the switch to premade burgers is beyond me.

31. MikeJefe
And they sell the same pre-made patties at the supermarket too! Why go to a restaurant when you can make the same thing at home? That spice mix they use is nasty too. Five Guys is the real deal, Lick's has been irrelevant for years.

32. bychoice
A store just opened in Pickering…………..why??

33. MikeJefe
That location is Lick's Last Stand, literally and figuratively. That one is dead in the water - there's South St. just up the road, and Five Guys in Ajax. You'd probably get a better burger at the Crabby Joe's that shares its parking lot.

34. Arrbyy
What a shame. I used to go to Lick's for the veggie burger. Then I caught them doing it on the meat grill. And they once gave me a meat burger for takeout when I had asked for a veggie burger. When they cared, which means earlier in their business life, their veggie burgers were awesome. Yep, People like their grease and salt and have convinced themselves that they can't live without beef. Well, There's nothing wrong with beef, depending. As with veggies, 'industrial' is bad. Industrial meat is very bad. The Lick's meat burger I bit into was the foulest tasting thing. And I don't dislike the taste of meat! Was that a normal Lick's? And have people habituated themselves to it? Yikes! Anyway, I always fantasized about Lick's splitting up their stores into meat and veggie. I'd be all over that. But alas, Capitalism dictates that it's a dictatorship of the majority - who want their meat any way they can get it. And cheap. And who the hell cares about methane gas and global warming.

http://www.thestar.com/news/gta/2013/09/26/with_licks_taking_a_licking_some_wonder_how_much_longer_the_homeburger_chain_will_last.html


Risks: Access to justice, Bankruptcy, several, Blame the victim, Blocking for the industry, Can't afford to sue, Class-action lawsuits: lawyers take majority of risks & spoils, Comments on article are interesting, Excuse du jour, Franchisor corporations designed to keep franchisee fees but shirk liabilities, Franchisor insolvency, intentional, Franchisor withholds rent, Head lease advantage, Insolvency, Lease controlled by franchisor, Lease margins are an important source of franchisor revenue, Lost homes, Rent payments withheld, Rescission, Stores shuttered, System designed to fail for franchisees, System is collapsing, The game is rigged, Why franchisors sublease to franchisees, Why should we care? It's not our money., Canada, 20130926 With licks

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