Windsor Regional Hospital’s three Tim Hortons are annually losing $265,000 in taxpayers’ money partly because employees get paid nearly triple what the average coffee server makes.

The hospital has owned and operated three Tim Hortons cafes for 15 years, which are funded by provincial health-care dollars. It pays Tim Hortons eight per cent of total sales to have the franchise on location.

Overall, food services, including Tim Hortons, at the hospital are losing $600,000 each year.

"So that’s $600,000 that’s being taken away from our frontline health care," Windsor Regional Hospital CEO David Musyj said.

Musyj said that money could be used to hire five nurses on an annual basis.

Two of the hospital’s coffee shops are in the red, he added.

"In one we are making a little bit of money, $6,000, that’s in the lobby of our Metropolitan Campus and one of the reasons we are making a little bit of money in the lobby is the fact we were able to negotiate a lower wage rate with our union," Musyj said.

Tim Hortons employees at Windsor Regional are paid more than $26 an hour, but employees at the kiosk in main lobby of met campus make slightly less than $20 per hour. According to Musyj, those hourly rates are the "loaded wages," which include the cost of benefits.

One local Tim Hortons manager told CBC News the starting wage for a server is minimum wage, which is $10.25 in Ontario.

That could vary slightly between restaurants, according to company spokesperson David Morelli.

Union won't budge

CAW Local 2458 chair Ken Durocher, who represents over 450 service workers at Windsor Regional, said his union lost a few jobs in the past, but never experienced wage concessions.

"We wouldn’t accept a lower wage just to keep the cafeteria open," Durocher said.

Instead, he said cutting the hours of the cafeteria’s operation would be a better option.

New hires are amazed at their starting wage when they start, Durocher said.

"We know as a union that probably can’t continue with the wages and we hope we always can find a solution to keep the cafeteria open every time. They would probably close the Tim Hortons first if they had to in the lobby downstairs," Durocher said, adding the hospital’s cafeteria employs 30-40 people.

Although they're losing money, Musyj said the three Tim Hortons provide a service for patients, families and staff.

"The last thing we want to have is our staff being on a break, a code to be called and they’re at a local restaurant and not in the hospital. It’s a struggle that all hospitals go through," Musyj said.

If you’re not a hospital in a large metropolitan area like downtown Toronto, Musyj predicts all hospitals are in the same boat.

Volunteers cannot be added to lower costs if it leads in unionized employees being laid off, Musyj added.

Hospital says hands are tied

Musyj said his hospital will likely continue to lose money because his hands are tied.

"Our collective agreements provide that we’re not allowed to lay anybody off if we contract out the service. So we can add additional services to a contracted company, but that cannot result in a layoff to existing staff or it’s prohibited. So we are stuck, it’s either all or nothing. So we either provide the service and lose the money or we provide none," Musyj said.

Musyj said he foresees cuts coming to the service sector at the hospital.

"If you went to a private Tim Hortons, or one on a street corner, you can probably hire two, if not three individuals at that wage rate to provide that service. Unfortunately the scales are tipped in a way that will result in reductions," Musyj said.

Durocher said he expects the next round of contract negotiations to be a tough battle and doesn’t expect much of a raise, if any at all.

The University of Windsor also employs unionized Tim Hortons workers with an average wage of $19 an hour. The university’s coffee shop breaks even.

A similar situation is happening in a hospital in St. John’s, Newfoundland after its Tim Hortons lost over $250,000 last year. Partly because employees who serve coffee are being paid $20 per hour. Including benefits, the employees there make approximately $28 an hour.