Nearly a third (29.4%) of restaurant operators already pay $15 an hour or above, according to a survey conducted in mid-July by Restaurant Business.
So why has that pay level become so controversial?
The same survey found that many in the remaining two-thirds of employers don’t believe the traditional restaurant business model can function at that threshold. Nearly 1 in 5 operators (19.5%) said they could not remain in operation with labor costs of that scale.
A slightly smaller percentage (11.8%) indicated that they would immediately consider closing if a $15 wage was enacted. And just under a third of the industry (29.5%) believes a mandated hike to $15 “would kill the restaurant industry.”
Conversely, only 10.8% of operators say a $15 wage would be a ho-hum development because they already pay at least that much
Respondents cited two major ill effects if a $15 minimum wage is imposed, one immediate and one deferred. First, a significant majority (59.3%) said they would need to raise wages across the board to keep a differential between skilled veterans and greenhorn hires in less-demanding posts. That so-called ratcheting effect would significantly amplify the squeeze on margins.
Second, nearly 4 out of 5 restaurants (79.3%) reported they would raise menu prices to temper the impact on margins. Other research shows that prices are already jumping at a head-turning rate. What remains unknown is how consumers will react to that inflation as their pent-up demand is sated and the cost of other essentials, like gasoline, continues to rise.
A majority of the respondents (51.3%) said they’re not opposed to raising the national minimum wage. But they object to raising it all the way to $15 an hour. Only 10.8% said they regard $15 as a fair new wage limit.
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