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Ontario restaurants consider business changes in wake of minimum-wage increase

Chris Stevens, owner of Kaboom Chicken restaurant, in Toronto on Dec. 29, 2017.

Christopher Katsarov/THE CANADIAN PRESS

As the Ontario government's minimum wage kicks in, restaurateurs worried about tight margins are upping prices, trimming hours and cutting staff across the province.

Beginning Jan. 1, 2018, the new general minimum wage is $14 an hour with a bump to $15 next January, following an announcement last May that also boosts the wage earned by liquor servers, triggering mixed reactions from restaurateurs.

Restaurants are among the most affected in an industry where the pre-tax profit for an Ontario food-service operator is 3.4 per cent – the lowest in the country, according to Restaurants Canada, which represents 30,000 food-service businesses nationwide.

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The former minimum wage will increase by 29 per cent by January 2019 and restaurants across Ontario have already taken matters into their own hands in protest. The timeline of the increase has caused the most concern.

"I've just had enough of all the changes. I'm trying to run a small business in a small town. I already believe in paying people a living wage and I already pay people above the minimum," said Stelios Dimakos, owner of Shorty's Grill in Owen Sound, Ont.

Mr. Dimakos channelled his frustration by printing a message on his menus indicating that a 9.5-per-cent service fee would be added to the bill as of Jan. 1 to help offset higher labour costs.

"I was just trying to be transparent by putting it on the menu. I did it in a different way by saying I'm putting a surcharge – we're not actually. We're just putting our prices up to compensate for the wages. It's just a statement against the government," said Mr. Dimakos, who says he will remove the message soon.

A Korean restaurant in east Toronto used a similar tactic. Kaboom Chicken published an Instagram post that blamed Ontario Premier Kathleen Wynne for its increasing prices.

"The thing that we're upset about is the speed it's being rolled out and without enough compensation for small businesses. It leaves us scrambling to figure out how we can carve this out with the margins we have without having to lay people off or charge too much extra," co-owner Chris Stevens said.

Preparations for the anticipated spike in payroll are under way, said Mr. Stevens, who is raising prices and eliminating menu items while taking on extra work shifts himself. "Everyone's being kept on the ship until it goes down. If you're a small business, you can't do it for money anymore. You have to do it because you love it and that's going to be part of your pay. Otherwise you're not going to make it."

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Although Shorty's and Kaboom Chicken haven't fired any employees, Bud's on the Bay in Brockville, Ont., has already made staff changes.

For years, the restaurant's patio overlooking the Saint Lawrence River has played host to students looking to earn money during the summer, but owner John Ackerman said that tradition could be in jeopardy.

"I'm going to be a little less likely to hire and train students at full wage when I can probably hire someone like an older adult that's already trained. I'm not going to have that money to spend on two or three weeks training," said Mr. Ackerman, who added that he's already fired two more workers than he normally would prior to January.

But while some Ontario restaurants gear up for potential layoffs, one Ottawa restaurateur believes owners are making too much of the new minimum wage. Ivan Gedz, co-owner of Ottawa eatery Union Local 613, has said owners can even take the new wage a dollar further.

In November, Mr. Gedz tweeted that his restaurant would raise its starting wage for kitchen staff to $16 an hour and that "all those local restaurateurs that said a fair living wage couldn't be done well, frankly you are full of s––."

Mr. Gedz said that Union Local 613 crunched the numbers to see what was possible after the announcement of the new minimum wage increase.

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"We looked at products that were more popular than others and based on sales figures we raised certain products by a buck here or 50 cents there. We found that it didn't change the overall perception of price points of our product," Mr. Gedz said.

"If you're going to improve in any environment, making sure you're looking after your most vulnerable staff is paramount. I'm not trying to bad mouth anyone, I just think it's a poor excuse."

Critics believe the bill caters to urban employers and leaves rural businesses to fend for themselves. "This is some of the most Toronto-centric legislation that we've seen. It's all of these smaller communities that don't have the same access to bulk purchasing agreements where you're going to see restaurants closing," said Steve Virtue, interim vice-president of Ontario for Restaurants Canada.

Projections of job losses caused by the new minimum wage vary. A TD Bank forecast estimated that the hike could cost Ontario as many as 90,000 jobs by 2020, while a Canadian Centre for Economic Analysis report predicted 185,000 jobs face immediate risk in the next two years. Labour advocates, including Chris Buckley, president of the Ontario Federation of Labour, believe such reports get ahead of themselves.

"There's been far too much fear-mongering. The sky isn't falling. When you pay workers a decent wage, they're going to spend within their communities," Mr. Buckley said.

Bill 148 was drawn in response to what Ontario Labour Minister Kevin Flynn said was "a growing disparity" between classes.

"We're bringing people of lower income into a position where they can actually afford to pay for the basics," Mr. Flynn said. "We didn't want to make the one big jump to $15, so we thought this was a reasonable way of doing it."

Ontario is the only province where liquor and student servers are subject to a wage lower than the minimum wage. Similar exemptions exist in B.C. and Quebec for tipped employees. The increase in wage for Ontario liquor and student servers roughly mirrors the 29-per-cent increase in minimum wage, but some workers remain unsatisfied.

"My tips are still my mainstay and I don't feel this is going to affect my bottom number, but we're still making less than everyone," said Cameron Carr, a bartender and manager at one of Gabby's 12 Toronto locations. "No one's going to win in this."

Ontario Premier Kathleen Wynne says governments are in place to create 'fairness,' which is what she claims the Liberals are aiming for with policies like a $14-an-hour minimum wage that comes into effect Jan. 1. The Canadian Press
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