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Ottawa Restaurants Paying a Heavy Price for Minimum Wage Hike

March 1, 2018

 

On January 1, 2018, Bill 148 came into effect in Ontario raising the general minimum wage from $11.60 to $14 per hour.The minimum wage is set to increase again in January 2019 to $15 per hour. This represents a 32% increase in the general minimum wage between 2017 and 2019.

 

The heated pitch of public debate has pitted the interests of business owners versus those of students and workers in low-skilled jobs. Reporting on the issue has featured at one end of the spectrum high-profile and controversial restaurant closures, such as The Black Tomato in Ottawa’s Byward Market. After 22 years in business, owner Pete Besserer cited $80,000 in added expenses due to the wage increase as a contributing factor. On the other end, the “minimum wage bully hotline” set up by the Ottawa Labour Council.
 

Archan Consulting set out to obtain preliminary feedback from the local restaurant

community in Ottawa as to the effects of Bill 148 five weeks into 2018. 67% of local proprietors replied that they don't object of the size of the wage increase itself. But they did need a more graduated timeline for implementation and/or greater assistance from the provincial government to accompany the increase.
 

We found that the minimum wage increase has forced nearly all restaurants to reduce hours for staff earning an hourly wage, shifting work to existing salaried staff and increasing their own workloads to compensate. Some local restaurant owners are now earning less on a monthly basis than many of their full-time staff.
 

As expected almost all the restaurants surveyed have been forced to raise menu prices. In some cases certain menu items are simply no longer offered. The effect that price increases will have, especially on middle and upper market restaurants in Ottawa, will not be clear for some time. This will depend on the willingness and ability of Ottawa’s consumers to pay premium prices. There's a limit to how much proprietors can raise menu prices before customers get turned off. Many indicated that they’re already experiencing reduced sales because this.
 

As an indication of the consequences to Ottawa’s independent  restaurant community, 42% of proprietors responded that they are “very concerned” about their business’s ability to survive in the face of the wage increase. One proprietor informed us that they have been in businesses in Ottawa for 21 years but will be “very fortunate” if they remain open through the end of 2018. Another revealed that the wage increase had recently forced them to close their business.
 

Respondents to our survey voiced strong frustration at having their input and interests marginalized in the consultation process (or lack thereof) behind Bill 148. When prompted for general comments on the legislated wage increase, a high percentage of respondents expressed dismay at the Province's lack of outreach or assistance, and seemingly antagonistic stance towards the small business community. Our research suggests that as a direct result of the legislated wage increase, a number of the restaurants in our sample will unfortunately be closed by the end of 2018.
 

As 2019 approaches, an evidence-based dialogue between small businesses and legislators will be crucial to ensuring the resilience of Ottawa's independent restaurants.

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