January kicked off minimum wage hikes in 21 states, and experts say rising labor costs are making it difficult for some restaurants to keep their doors open.
January kicked off minimum wage hikes in 21 states, and experts say rising labor costs are making it difficult for some restaurants to keep their doors open.
Some 65 cities across the country implemented wage increases earlier this month. Cities in Colorado, Washington and California have some of the highest minimum wages in the United States.
According to the Economic Policy Institute, Tukwila, Washington, had the highest minimum wage for non-tipped workers in January, at $21.10. Other cities with the highest minimum wage this year include Seattle, at $20.76; West Hollywood, California, at $19.65; Denver at $18.81; and San Francisco at $18.67.
Jot Condie, CEO of the California Restaurant Association, said that for many restaurants, significant cost increases are unsustainable.
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“It’s no coincidence that restaurants in cities with extremely high minimum wages have struggled to survive and the rate of restaurant closures in those cities far exceeds, you know, the closure rates in d “other parts of the state,” he said. .
Some restaurateurs say they are in competition with other hourly wages in their area. (Kennedy Hayes/Fox News/Fox News)
Condie said restaurants 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 about 33 cents of every dollar in sales, according to the National Restaurant Association.
Some Denver restaurateurs are still figuring out how balance their budgets so they can keep loyal customers and happy staff.
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Joshua Miller is an employee at Sarpino’s Pizzeria in Westminster, a northwest suburb of Denver. Miller said he started out delivering pizza and enjoyed the time spent learning cooking skills. He added that earning a salary above the minimum wage helps him earn a living amid the crisis. the rising cost of living.
“Minimum wage helps me pay my rent. Gas prices.” » Miller said.
Samar Sawaged is the owner of the Sarpino franchise and said she pays all of her employees above minimum wage. Sawaged said many companies like his offer salaries higher than minimum wage.
Experts say that for many restaurants, significant cost increases are unsustainable. (Kennedy Hayes/Fox News/Fox News)
“Our big challenge here is other pizzerias,” she said. “People are fighting for higher and higher hourly wages.”
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Sawaged said it is finding additional ways to help its employees financially with bonus opportunities.
Chi Lee is the owner of Chi’s Express, a Chinese restaurant in Denver. Lee said the restaurant has fewer than 10 employees, which helps it balance its budget.
Experts say some restaurants are choosing to cut hours or staff to make ends meet. (Kennedy Hayes/Fox News/Fox News)
“Because we have a small operation, a small menu, as you can see,” Lee said, “that’s why our costs, our food costs will be reduced a little bit.”
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Lee said they had adjusted for inflation by raising their price of combined meals.
It takes about 12 employees to generate $1 million in sales at a restaurant, but it only takes about four employees at a clothing store to generate the same amount, according to the National Restaurant Industry.
