Issue #1 – Labour Costs
In the labour-intensive restaurant industry, more than 34 cents of every dollar in sales goes directly to employee wages and benefits. No other industry provides more first-job experience and on-the-job training for young workers. Minimum wage increases that have soared much faster than other economic indicators means restaurateurs are faced with some of the highest labour costs in the country.
New Brunswick foodservice operators need relief from large minimum wage increases, and action should be taken to provide relief to employers. To recognize the cost of training new employees, a training differential – a lower wage rate recognizing the significant cost of hiring inexperienced employees – should be introduced. A tip differential should also be introduced on a go-forward basis. This lower wage rate recognizes the significant income earned by liquor servers from tips. Ontario and Quebec have had a tip differential for years, and both Alberta and British Columbia introduced a tip differential in 2011.
Issue #2 – New Brunswick Drug Program
It is a laudable goal for government to introduce a catastrophic drug plan for those who are prescribed drugs costing far beyond their ability to pay. However, this must be done in a manner that does not inflict a new cost burden on employers at a time when they are struggling with a soft economy and economic downturn. Restaurants Canada is concerned the suggestion for an employer contribution to the plan will be a cost burden many can’t afford. It could also make it harder to attract investment to New Brunswick, because it would become the only jurisdiction in Canada to force employers to contribute to a provincial drug plan.
Many foodservice businesses in the province already choose to provide healthcare plans to full-time employees. The demographics of the industry make the expansion of coverage to all employees nearly impossible because a majority of industry employees are youth (under 25 years of age), work part-time and are transient in nature. Expanding provincial coverage to part-time employees will be cost-prohibitive, and an administrative nightmare to track and manage. It is estimated that the new provincial plan could cost the average establishment over $2,500 and the industry as a whole approximately $4.3 million. The costs associated with the drug plan premium and administrative burden could simply push many restaurants over the edge and force them to cut employees, benefits or hours.
Issue #3 – Lower Licensee Liquor Costs
The restaurant industry is one of the Alcool New Brunswick Liquor’s largest customers. And yet, the industry is not offered wholesale pricing. As a result, our guests must pay unreasonably high prices for alcohol, which increases off-premise binge drinking. Liquor laws need to be further modernized and should include a wholesale liquor discount for licensees. Wholesale pricing would allow bar and licensed restaurant operators to competitively price their products and revitalize slumping sales. Both Nova Scotia and P.E.I. have introduced wholesale pricing programs for licensees. Licensees deliver value-added benefits to the economy – taxes, jobs and business spending – that simply don’t accrue when beer, wine or spirits are consumed at home. A vibrant bar and restaurant scene also attracts tourism and business travellers, delivering even more economic benefits to the province.
Issue #4 – Labour Shortage
Over the coming years, the restaurant industry will be short workers. New Brunswick needs to develop incentives to encourage work and immigration policies that align with labour market needs for all skill levels.