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3 Ways to Deal With Minimum Wage Increases

Minimum-wage laws continue to shift, with California set to raise its statewide rate to $15 an hour and New York on track to do the same. Several other states have similar plans in the works.

The restaurant and retail industries are the ones most affected by rises in the minimum wage. In fact, the restaurant and food service business is by far the single biggest employer of those who make close to the minimum wage, accounting for nearly 25 percent of all near-minimum employees aged 18 to 30, a Pew Research study found.

How are restaurants dealing with these changes?

No more tipping?

“Irrational, outdated, ineffective, confusing, prone to abuse and sometimes discriminatory.”

That’s how New York Times restaurant critic described tipping in 2013. Some restaurants have done away with the practice, instead raising overall menu prices by 20 to 40 percent. High-end restaurants, like The Modern, run by New York restaurateur Danny Meyer, might be in a better position to experiment. Meyer has claimed the no-tipping policy has boosted profits, increased employee morale, reduced turnover and ultimately bettered his product.

But some establishments have tried doing away with tips and struggled, citing financial difficulties. Tipping can equalize wages for all staff, meaning back-of-house workers get a boost, but front-of-house servers might perceive a decrease in income, causing them to leave for work at a restaurant with tips.

As an alternative, some restaurants are trying a “minimum wage charge” on customers’ bills or other ways of compensating for higher costs.

Publicity and communication

Meyer admitted the no-tipping rule at The Modern succeeded in part due to the publicity he enjoyed ahead of the policy change. A media campaign surrounding a no-tipping adjustment can not only educate consumers, it can create momentum for people to try a restaurant that’s seen as doing something new and daring.

Customers are aware of news of minimum wage increases, but they might not realize how that translates to their lives and spending habits. Being upfront with consumers — on menus, on receipts, on signs — about an establishment’s commitment to paying its workers a higher wage could make patrons feel like there’s a tangible reason for price increases and it could even tap in to their sense of social responsibility.


Some restaurateurs have tinkered with the time they open and close, sometimes keeping an establishment closed an extra hour or two if sales during those periods prove to be low.

Solutions like Sling can help managers better analyze how they’re using their staff and where to trim costs by not over-scheduling employees during slow hours. Scheduling platforms like Sling are also favored by workers, who can more easily request changes and communicate internally with managers.

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This content is for informational purposes and is not intended as legal, tax, HR, or any other professional advice. Please contact an attorney or other professional for specific advice.

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