Minimum wage and the restaurant industry: The sky isn't falling
A minimum wage increase means more labour costs for restaurant owners, which could lead to increased menu prices and lay-offs.
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Low-wage workers in restaurants may be rejoicing over the minimum wage increase, but restaurant owners are not, according to a new survey.
Restaurants Canada conducted a survey asking 800 restaurant owners across Ontario what they will do to offset increased payroll costs when the minimum wage increase takes effect. Most of the respondents were Toronto based.
Respondents indicated that in order to offset rising labour costs they will have to raise menu prices, reduce hours and lay-off employees. The survey concluded that small businesses will be affected most by the change.
"They're not able to absorb the costs as effectively," said James Rilett, Restaurant Canada's vice president of Ontario.
He said that larger businesses are more equipped to deal with profit loss during the transition period.
"Small businesses are often going month to month and a couple months of losing money would put them under," said Rilett.
Despite the negativity surrounding the talks on the minimum wage increase, Rilett said it's not as if the industry will collapse.
"All we're saying is there's going to be some negative impact," he said.
"We're not saying the sky is falling, all we're saying is to expect a little rain."
For Birreria Volo general manager, Julian Morana, "it is what it is."
"There is nothing I can add to this" he said. "I think all bars and restaurants will have to adjust accordingly."
Other Toronto restaurants who were reached for comment did not want to comment.
Restaurant consultants, The Fifteen Group, aren't too optimistic.
"I do think that there will be a number of restaurants that are going to go bankrupt because of this," said president of The Fifteen Group, David Hopkins.
Though, like Rilett, he does support a wage increase, he said restaurants and consumers need more time to adjust.
"We think it's great, minimum wages should go up, just let's do it in a smart fashion, not in 18 months," he said.
The proposed changes will see Ontario minimum wage increase to $14 per hour on Jan. 1, 2018 and to $15 per hour on Jan. 1, 2019.