Restaurateurs hit by minimum wage hike hope to absorb higher costs

 

One association said foreign workers previously paid RM1,200 will now get RM300 more, which some members would not be able to afford. (Bernama pic)

PETALING JAYA: While the new minimum wage of RM1,500, which comes into effect today will increase operational costs, several restaurateurs agree that customers should not bear the brunt in the form of price increases.

Although he said the minimum wage increase will apply tremendous pressure on his business, chef Yogesh Upadhyay of FLOUR Restaurant said he will try his best to manage the overall increase that he will incur as a result.“We are going to try and absorb this, but we don’t know for how long. It is going to be difficult.”

Yogesh, who said food prices are “hitting the ceiling”, noted that profit margins have been slim since the start of the Covid-19 pandemic, adding that his business has yet to see any positive effect after the reopening of borders on April 1.

Another restaurateur who will not increase his prices is David Chin, the owner of Cafe-Bistrot David.

While he already has to deal with the increased cost of ingredients, which he said has shot up “drastically” of late, Chin said he will have no problem with the minimum wage hike as all his staff were already earning more than RM1,500.

“We have always believed in paying higher than industry standards to all our staff as we believe that it’s the team that drives the business to thrive,” he said. “To us, price adjustments should be directly related to the cost of ingredients.”

Highlighting the rising cost of living and inflation, Shankar R Santhiram, who owns and runs the Fire Grill restaurant, said the minimum wage increase is “absolutely necessary”.

Stating that he will not be raising prices as all of his staff are already being paid above the new minimum wage, Shankar stressed that workers deserve to get paid a fair wage for their labour.

Malaysian Indian restaurants in a ‘difficult spot’

The new minimum wage, which kicks in nationwide today, will see wages rising from the RM1,100 (or RM1,200 in 57 major towns and cities), which has been in place since Jan 1, 2020.

While the 25-35% salary hike has been welcomed by those earning lower than the new rate and also labour unions for addressing the rising cost of living, numerous business groups say it is too drastic and might hinder economic growth post-Covid-19.

Among those who consider the hike too steep include the Malaysian Indian Restaurant Owners Association (Primas), which has warned that the increased minimum wage might see some of its 1,500 members being forced to close shop.

Pointing out that his members refrained from raising prices despite the increased cost of raw materials and a downturn in business during the Covid-19 pandemic, Primas president J Suresh said not all restaurants may be able to afford this added cost.

Suresh, who said foreign workers who were previously paid RM1,200 will now get RM300 more, asked customers to ponder the fate of a restaurant that has 10 foreign workers.

“Their costs will shoot up by RM3,000 — this is a steep rise. Not all restaurants can afford to pay this, so they will be forced to increase their prices,” he said.

“The minimum wage increase will put us in a difficult spot. We cannot go on absorbing the increasing costs.”

He said the association will leave it to the restaurants to decide, adding that it will be good if they can sustain themselves without increasing the prices.

“But we’ll also understand if they decide to increase prices due to the new minimum wage.” - FMT