Tim Hortons franchisees are looking to offset the effects of the minimum wage increases in Ontario and Alberta by implementing price hikes on their goods, The Globe and Mail reports.
As much as we might hate to pay for a $7 iced cappuccino, increased prices may become reality as rising labour costs will make it much more difficult for Tim Hortons franchises to make the profits necessary to stay in business. John Gordon, a restaurant advisor for Pacific Management Consulting Group, says that most customers will stop coming when the prices are raised to more than 3 per cent. That being said, we may see Tim Hortons raise prices to as much as 3 per cent over the next two years, as Ontario and Alberta roll out their labour changes.
The Great White North Franchisee Association, which was created back in March to advocate for the needs of Tim Hortons franchisees, called out the parent company Restaurant Brands International Inc. (RBI) for failing to help the franchisees deal with the increasing minimum wage and other rising costs. They are urging RBI to assure that they will approve the proposed price hikes by the Tim Hortons franchisees before the labour increases come into effect. If they price hikes are approved, they would apply to Ontario, Alberta and possibly British Columbia.
The RBI did not directly confirm whether it would move forward with increasing the prices, but an email from RBI official Greg Hiltz revealed that the company is attempting "a multi-faceted approach that will likely include taking [increasing] price, examining costs and looking at operational efficiencies that will allow [franchisees] to run at lower costs.
Tensions have been increasing between Tim Hortons franchisees and RBI as the parent company has been accused of charging them too much for supplies like coffee and cups. This results in higher profits for RBI and lower profits for the franchises.
With the new increases in minimum wage, many franchisees are afraid they will be faced with even greater financial struggle and believe the only solution is to increase the prices of their products.