10/07/2014 05:20 EDT | Updated 12/07/2014 05:59 EST

Montreal tavern Magnan to close down as business slows down, beef prices rise

MONTREAL - Magnan Tavern, considered an institution among Montreal eateries, will close its doors for good on Dec. 21 after 82 years.

The restaurant, best known for its roast beef and prime rib steaks, has about 65 employees, including some who have worked at the family-owned business for more than 20 years.

Company president Alain Gauthier blamed never-ending construction work in the area, tough competition and the high cost of beef as factors in the decision to shut down.

The restaurant has seen business slow down over the last decade.

It has also been difficult to recruit staff, often because of taxes and tip-related issues.

Gauthier said chain restaurants pose a challenge with their ability to buy in bulk and offer lower prices to customers.

"I've seen people in a better mood at Magnan," Gauthier said Tuesday. "People found it (the announcement) difficult but they've seen that the number of customers just wasn't the same."

He said the rising cost of beef would have forced the restaurant to compromise the quality of its cuts, which was "out of the question."

"Right in March, we had an increase of 35 per cent in the space of a month," said Gauthier. "Beef is our star product. We can't ask our customers to absorb such an increase in such a short time."

The surge in prices has put restaurateurs in a difficult spot. Some have decided to absorb the costs, while others have reduced their portions or passed the hike along to clients.

Some economic analysts have said consumers can expect increases of 20 per cent in beef prices because of the difficult years encountered by producers in North America.

The Teamsters union, which was negotiating a new contract on behalf of Magnan employees, expressed its surprise at the decision to close.

It noted that some workers had agreed to small salary increases in recent years to help the restaurant survive.

"I was assured the decision has nothing to do with negotiations," union representative Michel Richard said after meeting with the company.

"The employer doesn't seem to want to offer improved severance packages despite the years of service of a number of employees."

The tavern was founded in 1932 by Marie-Ange and Armand Magnan. Gauthier said the brand would continue through its Boucherie Magnan Cuisine outlet located in Brossard on Montreal's south shore.