Trouble is brewing for iconic Canadian coffee and doughnut chain Tim Hortons. It’s over Ontario’s increase to the minimum wage. The chain has become the target of a public and labor backlash in the fight against the wage increase.
Retailers warned against the minimum wage increases months ago, when the Ontario government first announced them, saying it was too much, too soon.
As of January 1, the new minimum wage in Ontario is $14 an hour, a jump from $11.60 an hour.
Since the minimum wage is mandated by law, it has to be paid. But some Tim Hortons franchise owners, who are not allowed to raise prices without the approval of parent company RBI, decided to cut back on employee benefits to make up the difference, not paying for employee breaks, charging for uniforms and making workers pay some of the cost of health and dental benefits.
Recently some employees and their supporters joined a one-day boycott of Tim Hortons locations across Ontario, accusing the company of putting profits before people. There was only limited success—apparently most consumers were still unwilling to give up that coffee—but the message was clear to the parent company, especially from labor leaders like Chris Buckley, the president of the Ontario Federation of Labour.
"RBI has the muscle to reverse this and I'm giving them an opportunity to reverse what's taken place. If they choose not to, we will ramp up the pressure across the province of Ontario," said Buckley.
The franchise operators say the minimum wage increase will cost them close to a quarter of a million dollars for each location. Since then, there have been some price increases allowed by the parent company.
However other small business are also complaining. Some restaurant owners say their employees now take home more pay than they do.
As a result, more retailers are trimming benefits or raising prices, with even the provincial government nudging them towards at least considering price hikes.