When you mix rising labor costs, minimum wage increases and an influx in high-tech restaurant chains, you’ve got a recipe for disruption in the restaurant industry. In FSR Magazine’s latest article, What Is Rising Minimum Wage Doing To Restaurants?, we learn valuable insights into how the restaurant industry is changing its landscape to meet the demands of consumers, and the stressors of minimum wage increases across the states. See the excerpt below:
Harri’s data showed that 45 percent of operators said labor costs rose from 3 to 9 percent this past year. Twenty-six percent saw labor increase from 9 to 15 percent. Twelve percent had labor costs hike more than 15 percent. This has been a pretty universal issue lately. How do you offset labor costs to guard margins, but also not cripple your customer service?
Restaurants responded in the following ways:
71 percent raised menu prices
Let’s circle that last note for a moment. TDn2K’s recent Black Box data found that growth in average check was 3 percent, year-over-year, during March across the chain industry. The pace at which guest checks are growing has also been accelerating, year-over-year. On average, guest checks grew 3 percent since the fourth quarter of 2018. For perspective, the average was 2.4 percent for the first three quarters of last year.
Currently, this is proving an effective remedy for many restaurants. And it’s not only offsetting rising costs—it’s making up for, to a large extent, the reality that is declining guest counts.
Customers are simply willing to pay more right now, making upselling a smarter strategy than ever. Confidence is high. Some of that is actually tied to accelerating wage growth.
Restaurants are taking big measures to ensure their business stays competitive in the market and keep revenue at a steady incline. With the use of cutting edge technology like self-service kiosks for simple and efficient guest ordering , handheld point of sale tablets for staff flexibility and intuitive tableside ordering, modernized BOH management with a cloud-based Kitchen Display System, and more.