There really is a wolf this time
It’s commonplace for the industry to predict dire consequences if any number of new responsibilities or costs are foisted on the business by government. “If ____ (fill in the blank with any significant burden, from Obamacare to the ADA) should happen, you’re going to see whole legions of restaurants going out of business.”
This time, it may not be crying wolf. Labor costs are increasing in such big jumps that the body blow is real. Add the wallop of healthcare costs, blend in such additional benefit-related expenses as paid sick leave, and finish off the finance department’s nightmare with the reclassification of managers as employees entitled to overtime.
And did we mention the whole dilemma about how to handle tipping when laws and litigation have turned that mode of compensation into a minefield?
This time around, plenty of restaurants will throw in the napkin—not because they can no longer be profitable, but because the business is just too difficult. Operators of long-successful restaurants sitting on valuable pieces of real estate will cash in and quit the grind.