KAWARTHA LAKES-Rob Foster and his wife own the Coaches Diner and Pizzeria in Bethany. They love owning their own business but Rob says the increase to minimum wage has hit his bottom line hard. “We basically work for free, we work 85 hours a week and we just keep going.” Foster says the move has added the equivalent of one full time staff member to his payroll. Something he can’t afford.
Foster was one of about a dozen people on hand for a presentation from Restaurants Canada in Lindsay this morning called Survive and Thrive. The event was organized by the Lindsay and District Chamber of Commerce. Steve Virtue, Interim Vice President, Ontario Chapter of Restaurants Canada offered local business owners some tips and advice for surviving the increase in minimum wage. “It’s really to help them understand what the current context is and telling them how they can be actively involved letting their local candidates know in the upcoming election be very very aware of how this government legislation and their mandate has impacted their local businesses.” Virtue told Kawartha 411.
According to Restaurants Canada there are 1022 Restaurants in the Kawartha’s with sales of $710,000,000. The food service industry employs for than 13,000 people locally. Virtue says a recent survey done by Restaurants Canada found that 26% of those businesses say they will not be able to continue to keep the doors open with the increase in minimum wage. That means 265 local restaurants could close. “When we look at the foodservice sector specifically what you are looking at with this legislation, not even looking at hydro rates and all the other legislation combined to make it very very cost prohibitive.” Virtue says. “Just Bill 148 is going to cost Ontario restauranteurs 1.8 billion dollars. Thats 1.8 billion in new revenue that they are going to have to find but it’s also going to put 17,000 jobs at risk in this province.”
Some economists disagree though. 53 economic experts across the country published an open letter saying the move “makes good economic sense” and could generate “substantial benefit to low-wage workers, their families and the economy as a whole.”
“For years, we have heard that raising the minimum wage will kill jobs, raise prices and cause businesses to flee Ontario,” the letter says. “This is fear-mongering that is out of line with the latest economic research.” They say productivity has increased 40% over the last 40 years and when adjusted for inflation minimum wage has only gone up $1.
Those who signed on to the letter include 40 economists at Canadian universities and two former president of the Canadian Economics Association.
Ontario increased the minimum wage from $11.60 per hour to $14 and hour on January 1st 2018.
Virtue says it’s not just about minimum wage. “The reality here is there’s an entire cost envelope here for restaurants and food service because they are so labour intensive that it makes it almost untenable to operate in this current climate.” Restaurants operate at very low margins with an average of 3.5% profit. “The increase in our costs as an employer, not just only the minimum wage but also now the cost of our source deductions and what we pay into EI and those kinds of things has raised our labour costs. “Its though to be able to make ends meet at the end of the month.” says Foster.
The survey by Restaurants Canada also found 97% of operators asked how they would cope with the minimum wage, will decrease about hours, 71 % will lay off staff and 98% will increase prices. “We put prices up annually, which our neighbourhood has accepted and they are ok with but we would rather give our raises based on performance.” Foster says. “It should be based on the worth not what the government tells us we have to do.”
Restaurants Canada created a model of a “typical foodservice operator” in Ontario and found if they don’t cut staff or hours, menu prices would have to jump by more than 8% to offset the minimum wage increase.
Raising menu prices, reducing operating costs and reducing labour costs are three of the options presented by Restaurants Canada. Other possible solutions offered by the gory would be to change the hours of operation, fins less expensive ingredients and control portion sizes. “Theres a lot of concern in the province about this increase and yesterday the Chamber of commerce released that one in two businesses in Ontario are really shaken, they don’t have confidence,” according to Virtue. “Overall with all these additional costs and with the uncertainty with nafta there’s a lot of concern.”
Despite all the challenges the Coaches Diner isn’t going anywhere. “We love what we do so we are going to keep doing it.” Foster says with a smile.
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