One Ottawa restaurant is changing its tip-out policy to cope with the upward pressure on salaries it says comes from the increase in Ontario’s minimum wage.
Another reacted by raising its salaries to more than the new minimum wage weeks before the increase took effect.
Servers at restaurants are often required to contribute, or tip out, to a pool for other workers who don’t get tipped.
Sean Rutherford, vice-president of Clocktower Brew Pub and Brewery Group, said servers and bartenders will have to increase what they pay into the tip pool by 1.5 per cent.
That is now a five per cent tip out for servers and six per cent of food sales for bartenders, both applying to bills greater than $100.
“It’s not astronomical,” Rutherford said.
He said the change in the tip-out policy is meant to provide more money to cooks and other back-of-house staff who were already earning $14 an hour before the minimum wage hike.
They had been seeking a similar increase to the $2.40 minimum wage workers got, from $11.60 to $14.
“We can’t do that across six restaurants with the entire heart-of-house team. We can’t increase everybody the exact same increase from minimum wage to [the $15] minimum wage in 2018,” Rutherford said.
He said kitchen staff will be eligible for raises based on performance.
Dishwashers will no longer receive tip outs, since their pay is increasing because of the new minimum wage.
Rutherford said that amounts to about a half dozen employees who work part-time and are mostly high school students getting their first experience.
He added Clocktower has already absorbed most of its increased costs through reviews of kitchen and front-of-house operations and won’t be increasing prices.
“You can’t rely on the great margins to absorb the impact of labour costs,” Rutherford said.
“Labour costs are the number one expense in the hospitality business.”
‘Protecting completely what you have’
Ivan Gedz, co-owner of Union Local 613 in Centretown, said restaurants changing their tip-out policies are protecting profits at the expense of service staff.
“You’re taking one pool of money out of one area to move it to another area so that — you being the owner or investor, whatever it might be — you’re protecting completely what you have,” Gedz said.
The Clocktower policy is less dramatic than changes in tip outs at other restaurants.
Servers at Sunset Grill, a popular Ontario chain of breakfast restaurants, reportedly had tip outs increased by 25 per cent as the minimum wage went up about 20 per cent.
Servers at Wimpy’s and East Side Mario’s also told CBC News their tip outs went up as of Jan. 1.
Gedz said he doesn’t like how many business owners have responded to the minimum wage hike.
“There’s an incredible amount of entitlement among owners,” Gedz said.
“The term itself, I think owners think they own their employees, to be honest with you. And I think that’s shining through with these comments.”
Gedz said his lowest-paid employees at Union Local 613 have been paid at least $16 an hour since November, an expense he said wasn’t a challenge to reconcile at his business.