The recent move by the Ontario Liberals to increase minimum wage to $14/hour this coming January (and $15/hr in 2019) is nothing short of shocking. If there was consultation with industry, they ignored ours. Every one understands the need to look after those families living at, or below the poverty line, but the government could have been more resourceful and creative in taking the appropriate measures.
Foodservice operations will have little choice but to raise their prices. It’s difficult to know how much but a 5-6 per cent price increase is not out of the question in the near term and that will just keep business profits neutral. There are a few assumptions underlying this projection and one of them is that the kitchen crew will want to maintain their pecking order and so even if you were making more than $14/hr pre-increase, they will still expect some kind of increase.
There is compelling data from similar situations that suggests there will be significant fallout in the restaurant space. The stronger operators will withstand the aftershocks but the already thin margins come under attack again. Everyone I know has spent time looking for cost savings opportunities over the last few years and there are not more places to look.
The saddest part of this move is that it will be more difficult to be able to afford to enjoy fresh, crafted food. There will either be fewer places or the necessary price increases will reduce customer visits.