In just over a week, Ontario will see the minimum wage officially rise to $15 per hour as Bill 43, the Build Ontario Act (Budget Measures), 2021 was recently passed into law. This legislation is specific to provincial regulations, though the federal minimum wage was also recently set to increase.
A $15 minimum wage increase won’t create drastic change across all sectors but for the restaurant industry, the impact will be far more significant. The reason food service businesses in Ontario are more directly affected than other industries has to do with how restaurant staff are currently paid. Most individuals making minimum wage will see an hourly increase from $14.35 (the minimum wage in Ontario as of October 1st, 2021) to $15 (the new minimum wage as of January 1, 2022). At first glance, this doesn’t seem like a substantial increase. However, what a lot of people do not realize is that the liquor server wage is increasing from $12.55 per hour (the current minimum) to $15 per hour. That is a much larger difference for employers.
We have created the table below to help you determine how much this wage increase is going to affect your restaurant’s bottom line.
As you can see, this wage increase may pose a significant challenge for your restaurant as it causes a trickle down effect that impacts all facets of operations. If this is the case, there are several ways to control costs and maintain revenue.
In the short term, you may need to reduce service employee hours to offset the additional impact to your bottom line. Although this will not fix the issue, it will help your business keep from operating in the red while you are navigating these new challenges.
Explain to your staff why this (potentially temporary) change is happening and how the wage increase is affecting your revenue and/or ability to operate the business as a whole. This may help to alleviate any emotional reaction from staff losing out on hours. Essentially, if they are well-informed about your logic and goals, they may be more understanding during this period of transition.
Short Term Solutions
Consider implementing a theme or ‘specials’ night at your restaurant. Chances are you already have a day of the week that is more popular with your patrons, but by creating a menu special on that evening or promoting a theme night, you can drive more traffic to a specific day, control the menu and better manage your staffing and costs.
Identify busier periods and ensure that on those days, your business is fully staffed. Look back on your sales and also identify slower periods that you can afford to cut back on server or staff hours. This will help you to offset the additional costs associated with the impending wage increase.
Inform Your Customers
Price increases on your menu are likely going to be a part of the long-term solution, and it’s best to be transparent with consumers. The more you inform your customers about what is happening, the better they will feel about supporting you and your staff when menu prices increase.
A lot of your customers will be understanding of challenges related to cost increases, particularly after the pandemic-related struggles every restaurant has faced in recent times. Many consumers are already aware of this new legislation and for those who were not aware, providing an informative and honest update to patrons may make a big difference in managing the changes to your restaurant and how they will be perceived by regulars.
Update Your Menu
Now is an excellent time to think about updating your menu. We recently shared a helpful article on our blog about adapting your menu to deal with supply chain issues.
Did you know that Morton Food Service can help you update and improve the efficiency and cost-effectiveness of your menu? Our talented team can offer a consultation on your current menu and help engineer a new one to enable you to be best prepared for the upcoming wage increase.
Menu changes should include components other than just cost. We can give your brand a refresh and help you to create a menu that will entice your customers to drop in or make a reservation while also taking into account current supply chain issues and the new demands a wage increase will place on your business. Let’s position and market dishes together with higher contribution margins to offset wages. We are here to help! Please click here if you would like to schedule a menu consultation with your sales rep.
A change is coming on January 1st–that is inevitable. But how you handle it can make a world of difference for your business, staff and customers. Be prepared and start thinking about the future today.