How the Minimum Wage Hike Could Affect Your Favourite Restaurants

In addition to the sky-high rent prices and the ever-growing competition, restaurant owners are now taking a hit with Ontario’s minimum wage hike.

Running a profitable restaurant in Toronto isn’t an easy gig. In addition to the sky-high rent prices and the ever-growing competition, restaurant owners are now taking a hit with Ontario’s minimum wage hike, which took effect on January 1.

Not even a week after the wage hike – which saw minimum wage jump from $11.60 to $14 – went into effect, Tim Horton’s made headlines for its highly controversial move to cut paid breaks and benefits for their employees in response. Now, the company has raised the price of their breakfast sandwich to account for profits lost as a result of the hike.

future of tim hortons

If a major, big deal corporation like Tim Horton’s is feeling the wrath, imagine the blow faced by Toronto’s independent restaurants, especially in a climate where another restaurant closes up shop practically every month in the city. Naturally, this means we could see changes at some of our most frequented Toronto spots.

Many Toronto restaurants will be forced to raise their menu prices if they haven’t already done so. Pricier meals, of course, means fewer dinners out for most of us (it adds up, especially when Uber rides are added to the equation). According to a recent Globe and Mail piece, price hikes aren’t the only byproduct of the minimum wage increase experienced by the customer. Some restaurants have been forced to remove pricier (and beloved) dishes from the menu – either eliminating them altogether or featuring them as occasional specials. Some may change portion sizes to account for losses – in everything from the pour of a glass of wine (sadly), to the size of a filet. Free bread could also get axed at some spots.

A handful of restaurants may eliminate tipping all together in favour of an all-inclusive menu with higher prices. This is to account for the often-overlooked-by-the-customer pay gap between those in the back of the house (i.e. chefs and dishwashers) and those serving the food. In recent years, U.S. restaurants have experimented with alternatives to tipping with mixed results, but the concept hasn’t gathered much traction in Canada (yet). Some restaurants – mainly south of the border (i.e. Chili’s and Applebee’s) – have even replaced servers with tablets for placing orders and paying bills.

We may also see hours cut at some establishments when the dollars dropped (or lack thereof) during specific times don’t outweigh the costs of keeping the place operating. According to a Restaurants Canada survey, the minimum wage hikes will force 81 per cent of restaurateurs to cut jobs. Sadly, the hike may cause some spots to close their doors for good.

All this comes at a time when Toronto rent prices continue to escalate (with no rent control on commercial real estate), pushing restaurateurs out of business or into neighbouring cities on the regular. With restaurant food now available for delivery via multiple apps (coupled with a brutal winter) you can only wonder if the hike will result in restaurants seeing the same fate as the shopping mall did once online shopping entered the equation.

The minimum wage is slated to increase to $15 in January 2019, adding even more pressure to restaurants as they experience one of the highest minimum wage rates in the country.

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Perhaps we will start to hear of more places like the newly opened Assembly Chef’s Hall, a reimagined, refined spin on the food court that features an 18,000 square foot, chef-driven community market focused on fresh food prepared by some of Toronto’s best chefs and restaurateurs. Its grab-and-go nature eliminates servers from the equation.“Assembly Chef’s Hall is pioneering the direct-to-chef experience for guests in Canada,” said Andreas Antoniou, President of Assembly Chef’s Hall. “Our chef-service model allows guests to connect directly with the talent that slaves over delicious food. As technology has evolved away from cash, pay-as-you-go systems have created an opportunity for chef-service models to flourish. Historically, guests tip more when they enjoy a great food experience.Those incremental gratuities never make it to the kitchen- Isn’t that perverse?  In the chef-service model, the direct beneficiaries of that reward are the chefs.”

The Assembly Chef’s Hall concept offers prime commercial real estate (right in the middle of the city’s financial district) that may otherwise be too pricey for independent chefs. We will likely also see more less risky, rotating pop-up restaurants in the near future, as restaurateurs steer clear of longer-term leases.

At a time when we can enjoy a meal from a favourite restaurant delivered to our doors, we have to make an effort to help keep the city’s beloved spots up and running. That means filling their seats, not being cheap about it, and passing along positive reviews and recommendations to others.

Do you agree that the minimum wage hike affects our favourite restaurants?

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