The Impact of the Minimum Wage Increase on the Restaurant Industry

Last Wednesday, a special panel representing New York State fast food workers made the recommendation to increase the minimum wage to $15.00 per hour over the course of the next several years.  While many believe that the impacts felt from this increase will only affect New York State, the real affects will be felt across the nation.

Both The National Restaurant Association and the New York State Restaurant Association were in staunch opposition to the increase and felt that it was unfair and discriminatory to single out one industry and impose an increase of the minimum wage.  While this increase is likely only the beginning of other increases for minimum wage across the country in many industries, including retail and home health care, the ruling puts significant pressure on the fast food industry.  The ruling will apply to restaurant chains that have at least thirty restaurants nationwide where customers pay before sitting down to eat, like Chipotle, McDonalds, and other fast food or fast casual dining restaurants. 

But these rising wages will also force menu prices to rise, and not just in New York State.  Brands have already begun to push their menu price increases all across the country and many industry experts warn that these increases will cause consumers to choose lower-cost but unhealthy, meal options.  It’s likely that consumers will also choose to eat-in when they can or bring items from home to work, instead of dining out for lunch or meal breaks. 

While many consider this issue a political one, it’s also turing into an important social issue.  In a recent poll by Technomic Inc., a leading research firm, it was revealed that 61% of Americans believe that treating employees well is the prevailing issue in the restaurant and fast-food industry.  So much so, that many say they would decline to give their business to a brand that was well known for treating its workers poorly.  But business owners should be warned; failure to comply with the ordered wage increases could result in significant consequences including business closure, stiff fines, and even jail time.

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