Two months into Ontario’s first of two planned minimum wage hikes, Ottawa restaurant owners are coping by cutting down hourly workers’ shifts and passing the extra costs on to the customer, according to a local study.
Ottawa-based Archan Consulting surveyed three dozen local restaurant owners in Canada’s capital to gauge how they’ve adapted to meet the demands of Ontario’s rising general minimum wage, which rose to $14 from $11.60 at the start of the year and is slated to increase by another dollar in 2019. Archan says the number of respondents represents roughly 12 per cent of locally-owned and independent restaurants in Ottawa.
In the first five weeks of the year, 89 per cent of those surveyed said they raised menu prices to offset the higher wages. Roughly two in five respondents said they raised prices between six and 10 per cent, with more than a quarter saying they raised prices even higher.
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Fourteen per cent said they had laid off staff, and 42 per cent reduced new hires. One in ten say they’ve reduced workers’ benefits, a move that attracted harsh public response towards businesses including Tim Hortons franchises in Cobourg and Whitby, east of Toronto.
Survival concerns
The minimum wage increase also appears to be changing who’s doing the work at restaurants. Nearly two-thirds of those surveyed reported they’d reduced shifts for hourly workers – often students or those just entering the service industry.
In their place, salaried workers and owners themselves are taking on more work: 28 per cent of respondents said they’d increased shifts for the former group and 61 per cent said they were doing more themselves, in some cases working up to 80 hours a week.
Archan’s Brent Taylor said he first wanted to take a look at the response to the minimum wage hike when he was discussing it over lunch at a friend’s cafe. He says the public debate that surrounded the wage increase before it was implemented seemed to miss the points many small business owners were trying to make, devolving into a “heated game” that often pitted owners against their staff and the provincial Liberal government.
“There’s a lot of empathy from the business owners.”
“There’s a lot of empathy from the business owners that we talked to,” Taylor tells OBJ. He says most of those surveyed didn’t have an issue with the increase itself, but noted in comments that they would’ve appreciated a more gradual implementation or more support from the provincial government in transition.
When considering the impact of the minimum wage increases, 42 per cent said they are “very concerned” about their restaurant’s ability to survive.
“We had 36 responses and we imagine that at least four or five of those will be out of business by the end of the year. That’s not good for anybody,” Taylor says.
It’s a good time to collect feedback, Taylor says, because of the summer’s coming provincial election. An informed debate around the effects of the higher minimum wage can sway votes, and perhaps even affect whether the planned $15 wage is implemented next January.
Archan intends to do a follow up study in the final quarter of this year to look at how owners have adapted throughout the first year and what they’re doing to prepare for the coming additional costs.
