Minimum Wage Mandates are Significantly Impacting Restaurants and Hospitality Industry
Harri, a leading workplace management solution for restaurants, reveals 43 percent of operators eliminated jobs in response to wage inflation; Nearly two-thirds reduced employee hours.
NEW YORK, NY (April 10, 2019) – Harri, the next-generation software solution that helps hospitality businesses build, manage and engage their teams today released its 2019 Hospitality and Food Service Wage Inflation Survey. These survey results represent a wide range of restaurant operators from approximately 4,000 restaurants and over 112,000 employees across the U.S.
Central to the report is analyzing the impact that new minimum wage increase legislation, enacted by states across the U.S., is having on the restaurant industry, and how operators responded to these new laws. Of operators that underwent minimum wage hikes:
- 45 percent experienced labor costs rise from three to nine percent;
- Over one-quarter (26 percent) saw labor increase from nine to 15 percent; and
- 12 percent had labor costs increase by more than 15 percent.
“Restaurants and hospitality organizations across the country are facing unprecedented challenges in maintaining the economic integrity of their business. Since nearly 50 percent of states imposed changes to the minimum wage policy on January 1st, 2019, markets like New York have been driven into a recession-like environment,” said Luke Fryer, Founder and CEO, Harri. “These findings reveal an alarming industry snapshot as many operators are forced to make lose-lose decisions, including reducing employee hours and even eliminating jobs altogether. Ironically, the legislation that was intended to improve employee conditions in the hospitality industry is having a direct, adverse effect.”
To combat increased in labor costs, the report found that:
- Almost two-thirds (64 percent) reduced employee hours
- 43 percent eliminated jobs
- Nine percent closed locations
- 71 percent of operators raised menu prices
- Almost half (46 percent) reworked food and beverage offerings to reduce costs
- 87 percent granted wage increase to non-minimum wage employees to maintain the delta between minimum wage-earning employees and the rest of their workforce
- 23 percent did not make any changes
“In a people centric-industry that so heavily relies on its employees to drive sales and customer satisfaction, wage inflation pressures are forcing operators to make harmful, short-sighted decisions to offset rising labor costs,” said Luke Fryer, Founder and CEO, Harri. “Whilst we’re an advocate of a steady and incremental rise in the minimum wage, it needs to be at a velocity that enables operators to take the right approach and adjust strategically. Instead, the unstoppable onslaught of employee-related challenges are only making our mission more critical than ever to deliver operators tangible, comprehensive solutions to discover labor cost-efficiency, fuel profitability, and drive business performance through employee performance.”
Harri is a complete labor solution for restaurant brands to build, manage and engage their teams.
Based in New York City, Harri works with notable hospitality brands including Radisson Hotel Group, CAVA, McDonalds, Burger King, ThinkFoodGroup, and more.
Harri offers a next-generation software technology platform that helps hospitality businesses build, manage, and engage their teams. With more than 30 modules, the platform provides solutions for talent acquisition, employer branding, applicant tracking, scheduling, time & attendance, communications, compliance, and analytics. With 800,000 job seekers and 10,000 employers, Harri is a best in class solution that helps solve the labor-related challenges that plague the hospitality industry.