Increases in minimum wage can drive business owners to try to make up for the increased cost by cutting back on labor. This is often a bad idea, chances are the number of staff is already close to the minimum amount needed to effectively run the business. If increased wage costs need to be recovered, prime costs should be considered first.
- Many restaurant owners think the solution to rising minimum wages is to cut labor.
- There are not enough labor controls any restaurant owner can put in place to limit the impact of increasing minimum wages on the business
- In short, you need to understand, calculate and then attack your prime cost.
“Many restaurant owners think the solution to rising minimum wages is to cut labor.”