Minimum wage hikes across the country are impacting restaurant businesses, forcing them to grapple with rising labor costs and find ways to stay afloat.
January saw minimum wage hikes in 21 states, and experts warn that rising labor costs are putting a strain on some restaurants, making it difficult for them to stay afloat. A total of 65 cities across the nation implemented wage increases at the start of the month. Cities in Colorado, Washington, and California are among those with the highest minimum wage s in the United States.
According to the Economic Policy Institute, Tukwila, Washington, boasts the highest minimum wage for non-tipped workers as of January, reaching $21.10. Other cities with notable minimum wage increases this year include Seattle at $20.76; West Hollywood, California, at $19.65; Denver at $18.81; and San Francisco at $18.67. Jot Condie, CEO of the California Restaurant Association, emphasizes that significant cost increases are unsustainable for many restaurants. He points out that restaurants in cities with extremely high minimum wages often struggle to survive, with closure rates significantly exceeding those in other parts of the state. Condie highlights that restaurants operate with low pre-tax profit margins, ranging from 3% to 5%, leaving little room for error. Food and labor costs constitute the biggest expenses for restaurants, accounting for roughly 33 cents of every dollar in sales, according to the National Restaurant Association. Some restaurant owners in Denver are grappling with balancing their budgets to keep customers coming in and staff satisfied. Joshua Miller, an employee at Sarpino's Pizzeria in Westminster, a northwest suburb of Denver, shares that the minimum wage helps him meet his expenses amid rising living costs. 'Minimum wage helps with my rent. Gas prices,' Miller explains. Samar Sawaged, the owner of the Sarpino's franchise, states that she pays all her employees above the minimum wage and acknowledges that many businesses like hers offer higher salaries to attract and retain workers. 'Our big challenge here is other pizza places,' she adds. 'People are fighting over hourly wages to get more and more.' Sawaged finds additional ways to support her employees financially through opportunities for bonuses. Meanwhile, Chi Lee, owner of Chi's Express, a Chinese restaurant in Denver, manages a smaller staff of less than 10 employees, which helps him maintain his budget. 'Because we have a small operation, a small menu, as you can see,' Lee explains, 'so that's why our costs, our food costs will be a little bit down.' Lee reveals that they have adapted to inflation by increasing the prices of their combo meals
Minimum Wage Restaurants Labor Costs Inflation Business Challenges
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