Kamloops Keg will close its doors at end of August

The Keg is in the historic CN Railway Station building in downtown Kamloops, immediately east of Sandman Centre. Allen Douglas/KTW Despite being "pretty proud of our product," a developer who invested $40 million into revitalizing Lorne Street is out of the restaurant business due to a disagreement with The Keg franchise.

"We were pretty proud of our product, we were pretty proud of our people," said Fred Marin, associate of Culos Development Group. "We could just not come to terms with the continuation of the Keg."

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Kelowna-based Culos Group -- which built 151 condominium units and revitalized the historic CN Railway Station building in downtown Kamloops -- will shutter the upscale steak eatery on Aug. 31. Sixty full and part-time employees are expected to lose their jobs.

Mike Culos and Marin own the franchise location and building.

Marin told KTW a 10-year-franchise agreement expired three years ago and they have not since come to new terms. He said new branding came into effect and, despite remaining busy, the Kamloops location is an "old-style" Keg.

"If you go to The Keg in Kelowna or any of the new ones in Vancouver, there's a marked difference in the branding they have," Marin said. "They were wanting us to either find another location or build another Keg or quit. They didn't feel like The Keg at CN Station represented the brand anymore."

Location, parking and configuration of the building were an issue with branding, Marin said. The CN Station, for example, has multiple floors and most new Kegs are one level.

"Those are all factors in us not continuing and it's part of the reason the franchise agreement wasn't renewed," Marin said. "We were not prepared to do the things required to bring it up to Keg standards and The Keg was not prepared to allow us to continue without doing those upgrades."

Marin said Culos tried negotiating for three years.

"There was no meeting of the minds," he said.

Culos began running the restaurant 13 years ago after leasing the property from the City of Kamloops at next-to-no cost with the commitment of redeveloping Lorne Street. Condo units now run from Sandman Centre all the way to the CN Station and Culos invested about $3-million to bring the CN Station to heritage standards.

"The place was a boarded-up mess," Marin said. "It had to be completely rebuilt from the inside out."

Culos spent about $40 million in total on Lorne Street, Marin said. The Keg was the only restaurant in its portfolio. The building is now for sale or lease.

The company is keeping busy developing phase four of the Landmark buildings and will be staying out of the restaurant business.

"We're not restaurant operators, we're developers," Marin said.

KTW made multiple calls to The Keg's head office, which is located in Richmond, and no one could speak to a previous media release before press time.

The statement paints a different picture.

It says The Keg operated in Kamloops for more than 40 years and "is always looking to expand and will continue to search for more opportunities to reopen a Keg in this area in years to come."

"We are deeply appreciative of the patronage of our incredible guests at the Kamloops location and we hope to see them one last time before we close," said Jamie Henderson, vice-president of business development Keg Restaurants.

"We want to recognize and thank our incredible employees who have helped us create so many special memories over the years for our Kamloops guests."

Those with gift cards can use them at the Kamloops location before it closes or at any other location across the country.

The restaurant chain has locations across Canada (except in Prince Edward Island) and in five U.S. states.

It trades on the Toronto Stock Exchange under The Keg Royalties Income Fund.

The Keg is in the two-storey historic brick train station, which was completed in 1927 by the Kamloops firm of Johnston and Company.

The building was owned by the City of Kamloops until December 2013, when it was sold for $1 to the Culos Group, in exchange for the tax revenue generated by a private owner. Under city ownership, the heritage property was exempt from taxation. That exemption was finally phased out in 2015.

The building has a covenant on its title that protects its historic value and any alterations future owners want to make to the building will require city approval.

© Kamloops This Week



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