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What have wage hikes cost restaurants? For most, a 3% to 9% jump in labor expenses

One in six have seen their personnel costs spike by as much as 12%, according to new research.
Photograph: Shutterstock

Roughly two-thirds of the restaurants in areas where the minimum wage was raised have seen their labor costs jump between 3% and 9%, and another 16% have experienced a jump of 9% to 12%, according to new research.

The upswing hasn’t come solely from bringing employees’ wages up to the new minimum, reveals the data, which came from a survey by technology supplier Harri of operators running more than 4,000 restaurants. The research revealed that 82% of restaurants have raised the pay of employees already earning more than the mandated minimum rate, a move intended to keep the wages of choice employees above what they’d get if they were just hired. For three out of five of those employees who are already earning more than the minimum wage, the raises were in the range of 5% to 15%.

The results of the Harri study were revealed by a representative of Bloomberg Intelligence, the financial-analysis side of the media company, at the annual State of the Industry conference of the New York City Hospitality Alliance.

Among the other information that was shared with attendees:

Because of increases in labor costs, 73% of restaurants have raised prices—46% by up to 5% and 37% by 5% to 10%.

Spiking labor costs have forced 9% of operators to close a branch.

Almost three out of five (59%) restaurants have cut staff hours, and 31% have eliminated positions.

The Hospitality Alliance represents restaurants, bars and hotels in the five boroughs of New York City. Look for more takeaways from the group’s annual meeting in tomorrow’s newsletter.

Correction:An earlier version of this story erroneously suggested the cited increases in labor costs were across all areas of the country. In fact, they only applied in areas that have seen an increase in the minimum wage.

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