Toronto City Hall was buzzing on Tuesday with fresh talk about money losses with news the building's main eatery, Café on the Square, is deeply in debt and can't pay its bills.

The operator, Tony Polermo, confirmed with the CBC's Jamie Strashin that, just one year into a 10-year lease, the eatery is nearly $400,000 in debt and loses money every day he opens his doors.

If the city wants to terminate his lease, "it can go right ahead," Polermo told Strashin.

Lease agreement costs

Café on the Square owes the city renovation costs and maintenance fees that were part of the lease agreement.

The money problems prompted some blunt talk from city councillors.

"It does not surprise me in the least," Coun. Paula Fletcher told CBC.

"They have a few things to do inside that they are balking at doing. That's too bad. There's a standard we are trying to create here," Fletcher added.

"As a councillor, it's my job to ensure if the city signs a contract it's well enforced," Coun. Peter Leon said.

"It's a fairly expensive restaurant," noted Coun. Denzil Minnan-Wong, adding that most of what is served in the café is "grab and go" type food.

The cost of the restaurant's offerings may need a rethink, he said.

"If they would drop their prices they might get more customers."

City staff want to terminate lease

Councillors believe steps need to be taken to attract interest in what should be a desirable space, Strashin said, noting that city staff want the café's lease terminated.

Fletcher said it was time for a fresh start in terms of the restaurant. She believes it has the potential to be a "fabulous space."

Many said the arrangement was doomed from the start, Strashin reported, noting that the city's request for proposals to run the restaurant attracted only one applicant.

As well, the arrangement was not done as part of overhaul of Nathan Phillips Square, which underwent a four-year renovation.