Still struggling with food inflation, the restaurant industry faces a new challenge

Even though few employees in the restaurant industry are paid the minimum wage today, the ARQ believes that the 7% increase on May 1, 2023, will present a real challenge for the restaurant industry, which is already struggling with food inflation.

A Domino Effect

The announced increase in the regular minimum rate (+$1.00/hour to $15.25/hour) and the tip rate (+$0.80/hour to $12.20/hour) could create a domino effect on all wages in the industry, starting with employees whose hourly wage is close to the minimum wage and who will also expect higher wages. The increase is therefore likely to have a major impact on employers’ payroll in the long run.

Nothing To Address The Inflation Cycle

It’s important to note that restaurant wages have already risen considerably over the past two years in response to the labour shortage and other factors. The significant changes in employees’ overall remuneration, coupled with rising food costs and the lasting impacts of the pandemic, are already reflected in customers’ bills as restaurant owners have been forced to raise their prices to remain profitable. Thus, the coming increase is more likely to prolong food inflation than curb it.

A Gap Between The Two Rates

The ARQ is satisfied, however, that the 20% difference between the increase to the regular minimum wage and that of employees who make tips is being maintained. This gap was a historic gain for the restaurant industry a few years ago, and a necessary one in the ARQ’s view, since tips contribute significantly to minimum wage employees’ income.