Richmond restaurants are considering raising prices, due to the province's plan to hike the minimum wage to $12.65 per hour this June and to $15.20 by 2021.The provincial government also intends to introduce a new payroll tax for small businesses and the City of Richmond is hiking property taxes as well.
“The costs of my restaurant will increase and I will have to bump up the price on the menu,” Richmond's Ginger restaurant owner Bob Singh told the News.
“Increasing the menu price is the only choice. Not only do I need to pay more wages to people, but also my suppliers are going to increase the price too,” he said. “I used to pay $11 for my onion supplier and after the minimum wage increased last time, they increased the price to $12 because they also needed to pay more wages to their employees.”
Singh also said the increase in menu price will be the only action he is going to take, and that he would not reduce the number of employees in his restaurant.
“Hiring less people is not the solution. If the restaurant hires fewer employees, it means others will have more workload,” he said. “If they have more workload, they won’t feel happy and they might quit.”
A Vancouver restaurant owner made similar comments regarding the minimum wages increase.
“If the wages go up, that money has to come from somewhere,” Glowbal Restaurant Group owner Emad Yacoub told Business In Vancouver, whose 10 restaurants include three branded Trattoria and others under brands such as Glowbal restaurant, Coast and Italian Kitchen.
“We were making five per cent on the bottom line and now we’re running around three per cent,” Yacoub said. “We can’t go below that number or we’ll go into bankruptcy. Pricing has to go up for the product.”
Yacoub pays chefs and other kitchen workers about $14 per hour, or well above the current minimum wage, and those wages are also supplemented with a portion of the tips that customers give servers.
He currently pays his servers $10.10 an hour, or $1.25 less per hour than the minimum wage, because the government allows employers to pay those who serve alcohol a lower wage to account for tips.
Even with that reduced wage, his servers are some of the highest-paid workers at his restaurants, with take-home pay in the $30-to-$45-per-hour range, Yacoub said.
A government commission is studying the practice of allowing servers, and some other workers, to be paid below the provincial minimum wage, and it is expected to release a report in March with a recommendation on whether that practice should be allowed to continue.
While workers’ advocates such as BC Federation of Labour president Irene Lanzinger want to eliminate the exemptions from the minimum wage that now include restaurant servers and farm workers, Yacoub said servers’ minimum wage should be lower, as it is in many U.S. states.
Puerto Rico and 17 U.S. states require that restaurateurs pay tipped employees only the $2.13 federal minimum wage while 26 other states allow restaurateurs to pay tipped employees a rate lower than the state’s official minimum wage.
Fast-food operators are also considering raising prices or allowing the added expenses of a higher minimum wage to cut into operating margins.
Fatburger Canada owner Frank di Benedetto told Business in Vancouver that reducing staff hours and laying off workers would be “counterproductive” because it would hurt the quality of service at his restaurants. It is for that reason that he is also not planning to install touch-screen kiosks.
“Whether a price increase would occur, it will certainly be considered but only in the context of offsetting some costs, not entirely eliminating additional costs,” he said.
A&W Food Services of Canada Inc. president and chief operating officer Susan Senecal similarly told BIV that she does not favour cutting staff levels or hours.
And while her chain has some self-serve kiosks, she said that the point of using that technology is customer convenience, not necessarily to cut costs.
The result is that her chain will either maintain the status quo or incrementally raise prices as a result of a higher minimum wage, she said.
With files from Glen Korstrom – Business In Vancouver
