Navigating the "New-Wage" Landscape

Navigating the “New-Wage” landscape

            New York City’s minimum wage for quick-service restaurant employees is $10.50 / hour, soon to be $15 / hour when new legislation takes effect.  The California state legislature has created and the Governor has signed a bill gradually raising the state minimum wage to an eventual $15 / hour as well.  Several cities around the nation have also raised the minimum hourly wage within their geographic limits so what are food service operators to do?

            Although a down-tick in gas prices has boosted some businesses the restaurant industry doesn’t usually see a significant increase when this happens as it usually realizes a sales downturn when gas prices rapidly rise or even spike.  Those same gas (and oil) price increases raise the cost of products consumed by restaurants in service to their guests.  To the point, even when there are drops in the cost of production for restaurants there is always another business cost challenge waiting around the corner.

            Our point-of-view includes the perspective that restaurant owner / operators have always been late adopters of any type of technology regardless if it’s actually new or not.  I personally know operators who still use hand-written kitchen and guest checks!  C’mon man, its 2016, not 1916 so let’s develop a game plan before the last tick in the fourth quarter.  Owner / operators still have some options but they’ll need to develop a new game plan to meet rising costs.

            First, let’s review some options that don’t require new technology or equipment purchases.  As an owner you want to grow your business which may require the ability to step away from daily operations to focus on additional sales and marketing efforts.  Since there are an equal number of hours in a day for everyone an owner / operator may need to add another layer of supervision.  Perhaps there is a long-term hourly staff person who could step into the role of a supervisor with some training and elevated to a salaried position to ease the burden of another person at the hourly wage level.  This would be a different scenario for each operator so an owner must evaluate their current manpower needs versus payroll budget.

            Should spreading the man-hours around by adding a salaried supervisor may not be feasible perhaps some low-tech food production equipment may save some time?  Low temperature cooking has been around since before the Sous Vide craze and depending upon your menu there may be an application you only need plug-in and walk away.  Roasting many types of meat, beef, chicken or pork, may be performed overnight with a slow-roasting oven.  Prepare and season your meat of choice, place it in the slow-roaster, set the cooking time and holding time then turn off the lights, lock the door and when you return the next morning it’s fully cooked and ready for service or further preparation.

            An application for the front of the house could be using a POS system instead of hand written guest checks.  My contacts in the POS world suggest an owner could realize a 5% to 10% cost savings by switching to a POS system with remote bar and kitchen printers over the course of its first year of use.  Hand written checks always take longer to record, there could be a mistake and if a special preparation is necessary the server may need to verbally explain it to the kitchen staff slowing both service and preparation time.  Should you believe a review of your current operations in order to discover opportunities to drop more to your bottom line please contact us to learn how we may support you with new industry challenges.