Minimum wage fixes could hurt firms: CEO

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Health- food eatery Freshii implemented a number of solutions ahead of Ontario’s minimum wage hike that the company believes will continue to make it an attractive employer as the chain looks to expand rapidly over the next two years.

“There’s been some public statements around how other brands are handling and how other brands are suggesting franchise owners handle the minimum wage increase,” said founder and CEO Matthew Corrin.

“My view is that many of those suggestions feel shortterm in nature. So, while immediate savings will be intact, I think the long-term impact on the culture potentially gets compromised.”

Corrin said that when making business decisions, he tries to imagine how an employee who received paid breaks and food discounts would feel if those were taken away.

“We really focus on how can we differentiate the value proposition of choosing to don the Freshii uniform versus putting on the McDonald’s uniform versus putting on the Tim Hortons uniform,” he said.

Restaurant Brands International Inc. — parent company of Tim Hortons — has faced criticism after some Tim Hortons f r anchise owners clawed back employee benefits to help absorb the Jan. 1 minimum wage bump to $14.

Corrin declined to comment on RBI’s public battle with its franchisees over how to offset the minimum wage, saying he didn’t know enough about what the company is doing.

At both RBI and Freshii, it’s up to franchisees to determine how much to pay their employees — so long as they follow labour laws — and what benefits they offer.

When the minimum wage hike was first announced, Corrin said Freshii held a call with its Canadian franchisees and changed a few things after gaining experience dealing with such bumps south of the border. Seattle, where Freshii operates, started to incrementally increase minimum wage in 2015, reaching $ 15 an hour for many employees on Jan. 1, 2017.

Corrin said that the company raised prices on some items in the fall and started to buy some ingredients preprepped rather than chopping them in store to allow employees to instead spend that time, for example, handing out samples to draw more customers in.

Freshii’s same- store sales are also helping to offset labour inflation, he added. Corrin anticipated the company would need that metric to grow around three to four per cent to outpace inflation, but Freshii has performed better than that.

The company released preliminary financial results Wednesday showing samestore sales grew 6.4 per cent in its fourth quarter and 5.5 per cent in its 2017 financial year. It will release full results in late February.