Let's remember that we're in a recession here. There's a lot of people out of work, plenty of people who are nervous about overspending and working to pay down debt plus tourism is down. That combined with rent increases on Church Street, Queen Street, all along Bloor Street, Yonge Street etc. I'm seeing lots of places closing down and empty storefronts. It's a cycle, I've seen this happen in the area 3 or 4 times now during recessionary times. Our well traveled/well loved retail areas/neighbourhoods will recover.
That said Il Fornello will be missed. California, Hair of the Dog and Il Fornello are my favorate nabe places to go when I go out with friends or take out-of-town friends out for dinner. Zelda's was too, but more of a summer patio luncheon place.