NY owners, what are your thoughts/plans to deal with minimum wage increase? What are people charging for a 16" Cheese Pie? I’m at 12.75 looking to raise. Thoughts…
Is the owner guaranteed $15 per hour too?
Same issue here in CA. The fear of how this is going to play out is crazy. How much will your good employees expect to get then? So many more questions arise then answers for me. My employees are worried as well, especially the full time ones.
So long as it applies to everyone we will be fine. We pay higher wages and have higher prices than our competition already. The market will adjust for employees as will pricing. If you currently pay bottom dollar in your market and have lower prices it will be harder for you than if you are already a bit above the market in those areas.
Personally, I am fine with it. All of our competitors pay less than we do and I would love to see them struggle with the higher prices. They would have to raise more than we would to cover it and that would be good!
My greater concern would be how it changes driver wages. Assuming that there would still be tipped minimum of some kind I think we would looking at very careful enforcement of tip reporting. Not a huge concern, but as an establishment with no seating we do not actually have to do all the hoop jumping at this time. We report the CC tips (which is most of them) and the drivers report the rest themselves when they file taxes. If we had to be certain that reported tips brought pay to $15 per hour we might have to require cash tip reporting each night as well.
It looks like it will affect me as they are increasing it every year. I will have to raise prices everytime the minimum wage goes up.
I don’t believe that this action will create jobs, it will eliminate them.
As long as people are willing to pay more money for your product , things will be ok.
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Assume wages are 25% and a store does $1,000,000 to make the math easy and the wage increase amounts to a 10% bump in wage costs:
You go from 250K to 275K in wages. Just to get the 25K back you need to raise prices 2.5% 25,000/1,000,000 = 2.5%)… on a $12.50 pizza that comes to about 30 cents. If you are trying to hold the 25% cost factor you would need to raise prices by $1.20.
If there was a similar pass through from suppliers on some other costs that might increase that a bit but we are not talking about huge increases to cover cost.
This is not a huge scary thing.
I would not underestimate the effects of an increase of the minimum wage , especially from 7.25 to 15 an hour. The people who now make 10,12, or even 15 an hour are not going to be happy if they don’t also get an increase. Our suppliers will have to raise prices as their payrolls also increase. Your worker’s comp insurance will increase because of higher wages. I think it is fair to say most everybody will have to see an increase while employers raise wages to keep their current employees happy. If I am making $15 an hour now as an assistant manager or shift runner I would want to see an increase to keep me happy. It is a bad idea!
This is a big problem.
I’m wondering how lower volume stores & areas with higher wages will survive as I think they will get hit the hardest.
Yup… if you are paying $7.25 an hour and it goes to $15 you are going to be in a world of hurt. Even 17 years ago when we opened we could not pay that little. We start cooks at $10 and bump to $11 after a month or so when they get fast enough to keep up. But since nobody in town pays minimum wage here I do not see the increase of $1.00 somewhere else changing wages here at all. It won’t until an increase takes it up to where we already are.
That was my point above; if your wages and prices are already higher than the shops around you, your competitor will be in worse shape than you are. On the other hand, if you are the low cost, low wage shop in your market it is going to be tough.
I pay my inside help up to 17 an hour depending on length of service and abilities. That is not what my problem will be. I pay my drivers, which is 2/3 of my employees, 7.25 per hour. With tips, they are the highest paid employees in the store. If their wages were to jump to 15 an hour, that would put a hurt on me. There are many, many jobs that are not even close to being worth 15 an hour, and delivering pizza is one of them.
Yeah it’s really not that bad overall. Prices on a lot of domestic goods will go up. Produce, groceries, restaurants, etc. In SF, you can actually add a tax to your orders to help pay for it. Not sure if the rest of Cali does it yet or not. I’m more concerned about the cost of cheese staying low as it is!
Here in California we have to pay tipped employees $15 so the driver will be making $15 + Tips. I am starting to look at menu price increasing to the equivalent of $11.50 an hour since it will be 2+ years till that is required. So hopefully I can stay without raising prices for a year or so. Not looking forward to charging $12 for a 10" cheese pizza. but it could be reality soon. Luckily since the beginning of the year our sales are up 30% we haven’t had to increase our prices when minimum wage went to $10.
That is just crazy. Is it the same for waitstaff in full service restaurants?
I’m also in California and yes Bodega it’s the min wage across the board regardless of if you’re a bartender/server/delivery driver/dishwasher/etc. Can’t believe I’m saying this, but I like what Oregon is doing with their min wage now. They’ve made it into a 3-tiered increase by region. People in higher density, more affluent areas will see the min wage increase by $2.25 more per hour than those of say a small town, less dense areas. This is how it should be. Big dense cities in Cali like SF, LA, San Jose, and San Diego can handle a higher min wage easier than smaller cities like Sacramento, Fresno, and Bakersfield not to mention all the small towns/rural areas. SF used to do their city/county min wage increase based on CPI% increase, I miss that and quite frankly as an economist, it made a lot more sense than a flat increase.
To combat this in SF, you’ll see smaller restaurants and in my case I open less hours. I’m 750 sq ft and open 5pm-10pm M-F then all day weekends 11am-10pm. I have a small FOH with 5 two-top tables and 6 bar seats plus two four top tables in my patio and train FOH people to be able to handle the entire FOH by his or herself so just one person works the front. That person is a cashier, phone order taker, online order recipient, bartender, server, and busser all in one. They make great money but they work their asses off for it!
Setup my kitchen efficiently for work to be done in high volume and have a lot of storage. Dine-in, carryout, and delivery. I keep my delivery area small enough to where my farthest corners of the area are 10 mins roundtrip for the drivers. Keeps gas low for them and food hot for my customers all while the drivers are able to take max deliveries so long as they are routed properly and 100% accuracy on orders. On pace to gross over $650k in my 2nd year at this location and not sure if I want to open for lunch from 11am-2pm then shut down til 5pm or not but it’s a possibility.
I’d like to hire a couple of these 3rd party delivery services and rid my company of delivery drivers completely but they are still in the guinea pig stages so I’ll let them work out the kinks on that first and hope to make that switch when they are running more efficiently. Would save me auto insurance and delivery driver wages. This and automation is where we’re headed with these min wage increases and advancements in labor regulations. Gotta change with the times!
So my plan out here in Cali which is an independent socialist country is:
- Raise prices. I’m looking at around $3 per pizza by 2022. $2 for wages and $1 for everything else
- Automate. We just opened our commissary which should reduce hours over time. We will be purchasing dough dividers and rounders withing the next 2 years. More hours gone. We are also using a tray washer there which has cut 100 hours a week off of dish washing. We are in hopes of getting our online orders above the 50% mark by 2022. Right now we are at 25%. More hours gone.
- Shrink delivery areas. Ours are too big. Less time on the road. Less hours
- Increase training to make everyone more productive.
- Expect more out of people. Be quick to let people go. Less hours
- Hope some other shops close down so we can get their market share. No hours for those guys.
We are looking at an extra 75K a month in labor cost so prices increases are needed.
Our Guv Jerry Brown signed the bill and then stated that it didn’t make economic sense at the same press meeting. The legislators of the bill got paid the same day as the signing of the bill from the unions. You can look it up.
I feel sorry for you guys dealing with that.
I am in Wisconsin, so there is no serious talk about that obnoxious pay rate for unskilled workers, YET!
But, since I like to get ahead of the wave, here is what we have done. We went to a “No Tipping Allowed” environment. But we have added a 15% service charge onto every menu item including drinks, this 15% gets evenly divided amongst all employees to get my lowest paid employee to $13.00/hour, my mid-level people should see upwards of $15.00, and my more skilled people will be bouncing around that $20.00/hour area.
I followed the lead of a place named “Delta Diner” in Delta WI. but we did some modifications after discussing the plan with the crew. The Delta Diner does straight pay of set rates, and if there is in excess in that fund in collected service charges, he gives bonuses with it at the holidays.
What we are doing is rewarding our crew on production. So if we have a monster of a sales day, they all make big money, not just the front of the house.
I went to this because I had some issues with tips going to the wrong people, the scenario went like this.
Big betty is on the phone for 30 minutes taking an order for a catered event, she put all the leg-work into getting amounts and times set up,
But then the day comes when they pick up that $1,500.00 order, and little Mary Jane Wrottencrotch happens to be at the register when the customer arrives, All she does is takes payment, so she gets a $60-$70 tip for doing nothing, my cooks busted their butts getting it all cooked and out the door, they get nothing. they person who took the order gets nothing.
So this should quit the butthurt between FOH & BOH now too.
Deliver drivers, I am concerned they may try to cheat the system, so I do not know what to do with them right now, I guess I need to trust them and make it very clear that if they accept any tips, it is immediate termination, no 2nd chances. They will be getting paid mileage if they use personal vehicles, nothing extra for company vehicles
http://www.deltadiner.com/follow-up-on-comments-regarding-no-tip-policy/
Unfortunately your employees will demand even hire wages, seen it before. Productivity goes down when you’re close to paying just minimum wage, since what you thought was higher. Time to compensate again. Anytime the government controls small business is a mistake, they just took away the right of giving a good producers a merit award. Only winner is government in the form of taxes, and insurance companies with workers compensation.
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Hi Brian. Welcome to the Think Tank. I have a few miles on me. I am not worried about this. We will have to pay higher wages if other employers in our town are offering higher wages than we are… not just if the minimum goes up. Nobody around here pays minimum. I do not see having to raise wages simply because they went up somewhere 200 miles away.
When/if the minimum gets up to where we already are and beyond we will raise prices as needed. Our competitors will have to raise prices before we do and will have to raise more than we will.
Government is not the enemy and they do not intrude on our business in any sinister or unreasonable way… as long as everyone has the same rules and follows them we will be just fine. Competitors who cheat on cash reporting and pay under the table are another story.
I can almost see the $20 plain cheese medium pizza in the rearview mirror.