Foodservice margins have declined from 9.6 per cent in 1990 to to 4.2 per cent in 2013 and 90 per cent of ORHMA members surveyed are concerned about the impact of Ontario Retirement Pension Plan changes.
Tony Elenis and Leslie Smejkal of the ORHMA have written The Hon. Mitzie Hunter, Associate Minister of Finance, expressing concerns about the impact of an ORPP on the province's hospitality industry.
In the letter, they note that the Canadian foodservice industry has been pressured with skyrocketing food costs, escalating utility bills and, with the proposed ORPP changes, a 1.9 per cent increase in labour costs.
The following is the text of the letter:
Dear The Honourable Mitzie Hunter,
Please know we understand that your government is
concerned about the retirement needs of a 21st century workforce. We
also appreciate that your preferred option is still CPP enhancement, something
your government has been advocating since 2010.
We thank you for the opportunity to have
participated and contributed to your consultations on the Ontario Retirement
Pension Plan design. Please find attached the Ontario Restaurant Hotel and
Motel Association’s response to your Ontario Retirement Pension Plan: Key
ORHMA has heard from its membership and we are concerned
about the impact of the implementation of an Ontario Retirement Pension Plan
(ORPP) will have on Ontario’s
hospitality industry. It is not about revenue growth in the foodservice
industry anymore, it’s about the pressures on the expense lines.
Recent years brought significant increases to specific cost
categories that just happened to be the highest foodservice expenditures. Food
Commodities have skyrocketed and with this category making up an average of 35 per cent
of total expenses it’s been a challenge.
The cost from utilities continues to escalate hammering
foodservice operators in an industry that ranks first in the highest energy
intense category. Conservation programs do help but incentives applied to
demand peak times are useless as the industry operates at full throttle during
the Breakfast and Dinner periods.
Consumer confidence and disposable income stimulate the
economy more than many initiatives including governments issuing bonds. This
simple economic case can be applied to the foodservice industry. Support for
profit growth in the industry will result in investment, capital improvements
and job growth benefiting the overall economy including government revenues.
ORHMA remains concerned about the unintentional
consequences a 1.9% increase to an industry operating at 33 per cent labour costs is a
significant new cost to absorb. There will be further restraining of hiring
younger workers and while the government aims for the well being of Ontarians
there will be unintentional consequences to employee benefits. Our members have
told us that this will lead to trimming health benefit plans such as
prescription drug and dental plans as these are typically managed and accounted
less than one profit and lost statement department line.
Please do not get us wrong- a pension plan is good for
society and it brings benefits later on. Our concern is that the hospitality
industry has not recovered and we cannot afford your ORPP. A survey taken among
our membership overwhelmingly in the 90 per cent range illustrates the huge concerns
and fears. Many are living pay cheque to pay cheque to make ends meet. We call
for improved dialogue with the Federal government to achieve a win -win
Thank you for your time and consideration. ORHMA will
continue to participate in dialogue on this mater with you and your team at the
Ministry of Finance.
Tony Elenis, president and CEO, ORHMA
Smejkal, vice-president, government relations,