California lawmakers have approved the $15 minimum wage and other states are probably not far behind. Is your restaurant ready to adapt to this increase? Can you put together a strategy to survive and even thrive in this challenging new reality?
Laws will vary from state to state, but in California employers are not permitted to include tips as part of the employee’s wage. That means front-of-house employees will be earning tips on top of minimum wage, while back-of-the-house will receive just the $15 wage.
How can you adapt to this change?
Raise menu prices. This can be risky, but realistically, other restaurants will be doing the same. Your challenge will be getting people to continue eating out, more than it is competing with other restaurants. If you choose this route, you must ensure that diners have a consistently outstanding experience every time they visit. When they see higher prices on the menu and also on their bill at the end of the night, they are going to expect a pleasant experience – both in the areas of food and service.
Reduce waste. Most restaurants keep a pretty close eye on waste prevention, but tight margins will require you to be especially vigilant. Don’t prep more than you will use. Add daily specials that use or include excess product while it’s still fresh, to keep food cost down. Your customers shouldn’t experience smaller portion sizes because you want to save money in that area. Maintain the same portions but find ways to not have to throw out more food at the end of the shift.
Staff smarter. Study your business volume closely to know precisely when you are busy and when you are not. Understaffing and slow service will turn customers off, but at $15 an hour, you can’t afford to have idle employees. Analyze data and create a balance.
The best way to survive the minimum wage increase is to hire managers who really understand the importance of keeping your business profitable. The right restaurant manager knows how to hire people who work efficiently, so that you can get more done with fewer workers. Look for people who have the know-how and are motivated to keep costs down and keep your business profitable.
Adapting to changes in laws and regulations can present a challenge to restaurant owners. By thinking creatively and partnering with experienced restaurant recruiters, you can find the solutions you need to remain profitable – no matter what your challenge is. Contact the restaurant executive search specialists at Horizon Hospitality to learn more or find great employees.