Layoffs and price hikes could hit restaurants as minimum wage goes up

Apr 5 2023, 9:20 pm

An industry leader says BC restaurant owners will be making some difficult decisions in response to the minimum wage increase. 

Despite the BC Restaurant and Foodservices Association (BCRFA) asking the provincial government to consider a 3% increase to the minimum wage, the province announced a different decision Wednesday. 

Starting June 1, the minimum wage will increase from $15.65 to $16.75 an hour. The province said the $1.10 raise was based on BC’s annual rate in 2022 and is necessary for low-income earners. 

That means an employee who works full time could see an additional $2,000 more a year, at the cost of the employer or small business.

CEO of BCRFA Ian Tostenson warns this raise will not only be noticed by the restaurant industry but by customers as well. 

“We pretty much have to… cut costs or increase revenues,” he admitted. 

“Who wants to pay for a $30 hamburger?”

So, over the next few months, you may notice your favourite menu item costs a bit more. However, Tostenson questions, “At what point does this get out of hand?”

“We have to be very careful at our price increases because who wants to pay for a $30 hamburger?” he told Daily Hive. 

The minimum wage jump is not the only reason for changing prices but is also a combination of the ongoing labour shortage, Tostenson said. This is why British Columbians will also notice more technology used in a restaurant setting — like robots delivering food. 

“You’re gonna see the business owners… really assess how much labour they really need… so it’s possible this could cause job loss,” Tostenson warned. 

He added eateries may even need to simplify their menus or have servers attend to more tables. 

During the announcement, Minister of Labour Harry Bains said he believes the minimum wage increase will go a long way in attracting and retaining workers.

“So that particular need of not having enough support to run the business out of full capacity is met at least,” he said.

Restaurants should be considered differently

Tostenson admitted that he does not think the provincial government fully comprehends how a minimum wage increase will impact businesses like restaurants. 

While he admits he appreciates the government helping minimum wage earners, wage increases impact other British Columbians too as “everybody’s faced with this inflation.”

“It’s not just the people making minimum wage that get an increase, everybody wants an increase,” Tostenson explained. 

The BCRFA CEO said businesses have already had trouble staying afloat amid new taxes, mandatory benefits, food inflation, five paid sick leave days and a new stat holiday — all while trying to recover from the COVID-19 pandemic. 

“Don’t get me wrong, employees are our biggest asset, but our employees typically are paid very well. Generally, servers make minimum wage, but the servers have access to tips and the tips are way more important to them than their wage… so, that’s a consideration for us that’s a little bit different,” he said. 

“The fact is there’s going to be some difficult decisions for employers now whether they increase their payroll for everybody… or they make selective adjustments.”

However, Minister of Jobs, Economic Development and Innovation Brenda Bailey clarified that in the past, creating a different wage structure for the restaurant industry has not worked well for people working in the industry.

“I don’t believe that’s on the table,” she said.

“But aside from that, I would say that really the best solutions will come when we sit down to work collectively and that’s what I’m doing with the restaurant industry.”

While the BCRFA had asked the province to give businesses six months’ notice for the minimum wage hike, Tostenson said owners will now be expected to adjust in two months.

“Six months… would have [given businesses] a chance to adjust, especially in our case, with… having to… perhaps reprint our menus. June 1 doesn’t give us a lot of time and it’s expensive.”

Before the announcement, BC already had the highest minimum wage in Canada.

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