Rising food prices, higher minimum wage putting the squeeze on restaurateurs

Anwar Ibrahim’s staff call him crazy when he places orders for his scratch kitchen.

“I pay a premium on certain items because I want my customers to have the best,” said Ibrahim, co-owner of the Baton Rouge in Kanata.

How much longer he’ll continue doing so is debatable.

The majority of restaurant owners polled by Restaurants Canada in the latest outlook survey are reporting business is stable or growing, however, they’re feeling the impact of rising costs for everything from food to labour to credit card processing.

“It’s putting a squeeze on the industry,” said Restaurants Canada’s Ontario vice-president James Rilett.

Commodities, such as beef, pork, and fresh fruit and vegetables are going up.

Food costs are a concern for 70% of respondents, while higher labour is impacting 68%.

In addition, 42% of respondents are struggling with escalating fees charged by big banks to process credit card payments.

There’s one payment posing the biggest challenge for Ibrahim: Labour.

“Minimum wage has really thrown us for a loop right now,” he said.

The 75-cent hourly increase kicked in June 1, now at $11 from $10.25.

Liquor servers are making $9.55, up from $8.90.

While he said he wants to pay staff “what they deserve,” the provincial government, Ibrahim said, has failed to offset the wage hike by alleviating gas and hydro costs.

“You’re trying to catch up, saying ‘what do I do now?’” said Ibrahim.

Running a large, high-volume location, “it keeps going up and up,” he said.

“That’s the way it is … what are you going to do?”

Food ranks second, expense-wise.

“For us, it’s astronomical,” Ibrahim said.

While lacklustre weather ranked 4th, with 33% of respondents, it tends to work in Ibrahim’s favour.

When it rains, “I say, ‘great,’” he said.

Customers come in for a comfort meal, such as a steak.

Downtown patios will entice them on warmer days, he added.

Franchises have it harder than mom and pop outlets, Ibrahim said, because of franchise fees and advertising expenses.

In essence, “the good news is that business is growing and restaurant operators want to add more jobs,” said Restaurants Canada president and CEO Garth Whyte.

The bad news?

“Their operating costs are growing at an even faster pace.”

Combined with labour shortages, namely in western provinces, it “creates a very challenging business environment,” said Whyte.

The survey covered the second quarter of 2014, or April through June, with results representing more than 8,000 restaurants, bars, caterers and other foodservice operations.


Twitter: @kellyroche6

Costs could close doors:

Higher operating costs are affecting restaurant owners nationwide.

“Everybody will have to deal with it differently,” said Restaurants Canada’s Ontario vice-president James Rilett.

“Some may be profitable enough to make up the difference, and just realize fewer profits, and some will have to raise prices to make up for it.

Paltry weather resulted in a “tough” first quarter, and Rilett acknowledges doors may be closing for some establishments “but it would be hard to predict how many that would be. Definitely, everybody will have to absorb it in some way or the other,” he said.

One way to mitigate?

Put those premium credit cards away.

“When people use Interac, it costs the company very little,” said Rilett.

“We have the lowest debit card fees in the world, so if anyone wants to help out a restaurant, the best thing you can do is use a debit card or cash.”

Credit card merchant fees range, and the more status your card conveys, the more it’s hurting owners.

That ‘premium’ credit card companies are giving to customers “is coming directly off the backs of the merchants,” said Rilett.

“Merchants can’t discriminate on which card they take,” he added.

“If you take MasterCard, then you have to take all MasterCards.”


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