Midtown merchants react to new minimum wage
Increase sends shock waves through small business community
Employees prepare burgers behind Johnny Prassoulis, owner of Holy Chuck Burgers, at the Yonge and St. Clair location
The Ontario government has scheduled a minimum wage increase starting in January, but small businesses in North Toronto are already bracing for effects associated with the hike.
Ontario’s minimum wage currently sits at $11.40 an hour, with a previously scheduled raise to $11.60 an hour to kick in Oct. 1. By January 2018, the wage will increase to $14 an hour and to $15 in 2019.
Johnny Prassoulis, the owner of Holy Chuck Burgers at Yonge Street and St. Clair Avenue, said the seemingly nominal increase will send shock waves through small businesses.
“Payroll, rent, and food costs are your three biggest expenses,” Prassoulis said. “The concern is the bottom line, at the end of the day: are you able to afford it?”
Holy Chuck ages, butchers and grinds all of its meats fresh, in front of the customer, daily; a practice Prassoulis is not ready to skimp on. A lot of prep and staff hours go into his product, so cutting jobs isn’t a favourable option for him.
“The biggest challenge in this business is finding good staff,” said Prassoulis, who employs 12 people, all hourly. “Now there will be others who are already working for $14 an hour and making the same as those on minimum wage. They’ll have to be compensated, too, in some way.”
The damage is not insignificant to the six-year-old restaurant.
“It’s probably going to cost an extra $30,000 a year,” he said.
Payroll is just one hurdle small businesses will have to navigate as minimum wage goes up. Some say rent in North Toronto neighbourhoods is already too high, and reallocating funds for payroll will take away from those monthly payments.
“Someone like Longo’s wouldn’t be as affected by it … but we’re a family business,” Connie Strazerri of Harvest Wagon said. “We already pay $80,000 a month in rent on 5,000 square feet.”
Harvest Wagon is a Summerhill grocer that’s been in the area since 1977, run by generations of the DiMarco family, priding itself on quality over quantity to a clientele that expects top-notch produce.
“My grandfather [owner Tony DiMarco] and father go down to the [Ontario Food] Terminal at 4:30 a.m. every day to literally pick through the produce,” she said.
For many small businesses, raising prices is a double-edged sword — how can they achieve their fiscal goals without alienating customers? Most, like Prassoulis and Strazerri, shy away from it.
“Customers are asking what we’re going to do. Staff is asking how we’re going to make payroll happen every two weeks for 60 employees,” Strazerri said. “We’ll have to figure something out, because it’s not going to work this way in the most expensive part of the city.”
John Kiru, executive director of the Toronto Association of Business Improvement Areas (TABIA), said he’s also witnessed “extreme anxiety” around the issue. By raising the minimum wage 32 per cent in 18 months, Kiru said small businesses are especially susceptible to unintended consequences, including job cuts.
For some, raising prices to counterbalance the increase was the only move. True North Climbing, a rock climbing gym in the Downsview Park Sports Centre, has decided to raise both prices and employees’ wages ahead of the Jan. 1 start date.
“I don’t know how you can support yourself on $11.40 an hour,” gym owner John Gross said.
Gross, who is raising his prices between four and 10 per cent, said paying his 40 staff members more money was the right thing to do. He introduced whole new wage scales, so that everyone will benefit from the increase.
“Someone asked me why I’d wait [for the increase date], and I had no answer to that, so I decided to do it Oct. 1,” Gross said.
Gross alerted his customers of the price increases about a month in advance, giving them an opportunity to renew their memberships at the old price before Oct. 1. So far, he said he’s received a lot of support.
“If [the government] had phased it in more gradually, maybe it would’ve been easier to deal with,” Gross said. “In the end, we’re getting to the same place. Maybe they thought for a lot of wage earners, this was urgent.”