Restaurants Cut Employees' Hours, Jobs After Wage Hikes: Study

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Restaurants Cut Employees' Hours, Jobs After Wage Hikes: Study

04/11/2019

2019 Hospitality and Food Service Wage Inflation Survey takes a look at the impact that new minimum wage legislation, enacted by states across the U.S., is having on the restaurant industry, and how operators responded to these new laws.Software solution Harri commissioned the survey, which polled a wide range of restaurant operators from approximately 4,000 restaurants and over 112,000 employees across the U.S.

 

Minimum Wage Woes
Central to the report is analyzing the impact that new minimum wage legislation, enacted by states across the U.S., is having on the restaurant industry, and how operators responded to these new laws. Of operators that underwent minimum wage hikes: 

  • 45% experienced labor costs rise from 3 to 9%;
  • Over one-quarter (26%) saw labor increase from 9 to 15%; and
  • 12% had labor costs increase by more than 15%.

Almost 50% of U.S. states enacted changes to their minimum wage laws on Jan.1. and restaurants and hospitality organizations are facing unprecedented challenges, says Harri.  “These findings reveal an alarming industry snapshot as many operators are forced to make lose-lose decisions, including reducing employee hours and even eliminating jobs altogether. Ironically, the legislation that was intended to improve employee conditions in the hospitality industry is having a direct, adverse effect.”

To combat increased in labor costs, the report found that: 

  • Almost two-thirds (64%) reduced employee hours
  • 43% eliminated jobs
  • 9% closed locations
  • 71% of operators raised menu prices
  • Almost half (46%) reworked food and beverage offerings to reduce costs
  • 87% granted wage increase to non-minimum wage employees to maintain the delta between minimum wage-earning employees and the rest of their workforce
  • 23 percent did not make any changes

Harri is a complete labor solution for restaurant brands to build, manage and engage their teams. 

The full Wage Inflation Survey results can be viewed here: http://bit.ly/2IoxlTg