Saturday, January 21, 2017

Restaurateurs adjust to spiking labor costs

The pain from minimum-wage hikes has been acute for restaurateurs in areas that recently raised the pay floor. Now they’re exploring ways of coping—providing models for colleagues who are facing similar increases in their areas.

Here’s how the sharp rise in costs has affected several operators and what they’re doing in response.
Ark Restaurants, the New York City-based multi-concept operator of about 42 restaurants up and down the East Coast, said its labor costs soared by $2 million in 2016 specifically because of the increase in some areas’ minimum wage.

“We did not think we had that much elasticity to raise prices,” CEO Michael Weinstein told Wall Street. Instead, the company is passing along the costs to customers in a more subtle way.

The bars inside Ark’s restaurants had not been charging sales tax, preferring to eat Uncle Sam’s fees rather than take the time to compute the tax and then count out the coins customers were due in change. Now the establishments are starting to add on the tax, a task made easier because 90% of the bar tabs are now paid with credit card, so no cash is handled.
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