January triggered minimum wage hikes in 21 states, and experts say rising labor costs are making it harder for some restaurants to keep their doors open.
January triggered minimum wage hikes in 21 states, and experts say rising labor costs are making it harder for some restaurants to keep their doors open.
About 65 cities across the country initiated wage increases at the beginning of the month. Cities in Colorado, Washington, and California have some of the highest minimum wages in the US
According to the Economic Policy Institute, Tukwila, Wash., had the highest minimum wage for non-tipped workers as of January at $21.10. Some of the other cities with the highest minimum wages this year include Seattle at $20.76; West Hollywood, Calif., $19.65; Denver $18.81; and San Francisco at $18.67.
Jot Condie, executive director of the California Restaurant Association, said that for many restaurants, significant cost increases are not sustainable.
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“It’s not a coincidence that the restaurants in those cities where you see these super-high minimum wages have been struggling to survive, and the rate of restaurant closings in those cities far exceeds, you know, the closing rates in other parts of the state,” he said. .
Condie said restaurants they also have low pre-tax profit margins, some between 3% and 5%, leaving little room for error.
Food and labor costs are the largest expenses for restaurants, each accounting for roughly 33 cents of every dollar in sales, according to the National Restaurant Association.
Some Denver restaurant owners are still figuring out how balance your budgets so that clients would come and the staff would be satisfied.
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Joshua Miller is an employee at Sarpino’s Pizzeria in Westminster, a northwest suburb of Denver. Miller said he got his start in pizza delivery and enjoyed the time he spent learning skills in the kitchen. He added that earning above the minimum wage helps him earn a living in the middle increasing cost of living.
Experts say that for many restaurants, significant cost increases are not sustainable.
“Minimum wage helps with my rent. Fuel prices.” Miller said.
Samar Sawaged is the owner of Sarpin’s franchise and said she pays all her employees above minimum wage. Sawaged said many companies like hers offer wages higher than minimum wage.
“Our big challenge here is other pizzerias,” she said. “People are fighting over hourly wages to get more and more.”
Experts say some restaurants are choosing to cut back hours or cut staff to make ends meet. (Kennedy Hayes/Fox News)
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Sawaged said it is finding additional ways to help its employees financially with bonus opportunities.
Chi Lee owns Chi’s Express, a Chinese restaurant in Denver. Lee said the restaurant has fewer than 10 employees and that helps him balance his budget.
“Because we have a small operation, a small menu, as you can see,” Lee said, “so that’s why our costs, our food costs are going to be a little bit lower.”
Experts say some restaurants are choosing to cut back hours or cut staff to make ends meet. (Kennedy Hayes/Fox News)
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Lee said they did adjusted for inflation by raising theirs combined meal prices.
It takes about 12 employees to generate $1 million in sales at a restaurant, but it only takes four employees at a clothing store to generate the same amount, according to National Restaurant Industry.
