Ontario minimum wage hike will force 81% of restaurateurs to cut jobs, survey says

Toronto – Ninety-five per cent of restaurateurs in Ontario believe raising the minimum wage to $15 an hour – a 32 per cent hike in just 18 months – would hurt restaurant employees, according to a recent Restaurants Canada survey.

To keep their businesses afloat, operators plan to take the following actions:

• 98 per cent will raise menu prices;
• 97 per cent will reduce labour hours;
• 81 per cent will lay off staff;
• 74 per cent will explore labour-saving technology such as self-service touch screens; and
• 26 per cent are likely to close one or more of their locations.

“The survey results are not surprising, given the average pre-tax profit margin for a restaurant operator is just 3.4 per cent,” said James Rilett, Restaurants Canada’s vice-president for central Canada, in a news release. “The government’s drastic minimum wage hikes will reduce profitability by five to seven points – forcing restaurateurs to lay off staff, reduce employment or close their doors entirely. Many of our members just don’t know how to cope with an increase of this magnitude.”

“Raise the minimum wage, but at least do an economic study to justify the amount and speed of the increase,” said Shanna Munro, Restaurants Canada’s President and chief executive officer. “Too much, too fast is not a recipe for success.”

Rilett will present these findings in more detail at the Ontario minimum wage hearing in Hamilton today.

Restaurants Canada’s survey was conducted in June and July. Results are based on nearly 800 respondents, representing 4,170 locations across the province.