By the end of 2019, all employees in New York City must be paid at least $15 per hour. This includes tipped employees too. Restaurants must pay a tipped employee a base rate of $10 per hour, and make up the difference between tips and the minimum wage requirements For instance if an employee makes $3 in tips per hour, you are responsible for their base $10 and additional $2 to reach the hourly minimum wage.
Unsurprisingly, restaurants across the city are scrambling to come up with the funds to comply. Some restaurants are changing around schedules and raising prices, while others are cutting staffers and changing up menus to reduce cost — different restaurants are responding differently.
How Are Restaurants Dealing With the Minimum Wage Increase?
The most popular adjustment to restaurant business operations is increasing menu prices. According to a survey conducted by the New York City Hospitality Alliance, 90% of full-service restaurants would raise prices to help combat raised wages. Interestingly enough, this hardly covers the cost of paying staff. Due to the rising costs of labor, this is necessary. The agriculture and food distribution industries are also impacted by rising wages. Meaning that you will be paying more for your food because your farmers and distributors need to pay their employees more to produce it—it’s a ripple effect.
Employee-related changes, such as reduction of hours and elimination of jobs, are the second most common ways full-service restaurants are dealing with the wage hike. In this respect, the minimum wage increase is paradoxical. It is intended to benefit employees, but some restaurant owners and operators say employees take home less money due to decreased hours. Likewise, employees must work harder because there are fewer staffers per shift. This not only negatively impacts employees, but it can also negatively impact your restaurant’s service.
Restaurants throughout the city are also cutting maintenance and nonessential costs whenever possible. This means spending less on things like candles and optimizing your use of resources. Although this has a nominal impact on yourself, your employees, and your diners, the impact is not substantial enough to cover the costs of increased pay.
The only way to respond to the wage increase is to plan and ease into it. Various restaurants, like Root & Bone and King in the West Village, have braced for impact. Over the past year, they have gradually budgeted in higher pay. Higher minimum wage is inevitable, but it is not here yet. You can slowly remodel your business and readjust your budget to make this shift less jarring. Ultimately, paying your employees fairly is a positive change for the industry and society as a whole.