Later this year, the minimum wage in Minnesota is going up to 10 dollars an hour for high-grossing businesses and 8.15 for businesses that bring in less than $500,000 annually, and the minimum wage in Minneapolis is set to rise to 11.75 for small businesses and 12.25 an hour for businesses with over 100 employees. The majority of our local restaurants and food producers tend to be smaller, one-outlet operations, so they may have to adjust more than larger corporations. Just how will rising minimum wage affect the food industry, and is there anything MN certified food managers can do about it?
The New Minimum Wage and MN Certified Food Managers
If you’ve ever calculated food and labor cost, you know the profit margin in the food industry is already razor-thin, in some cases as low as pennies on the gross dollar. Under the circumstances, how is it possible for MN certified food managers to retain the same amount of staff yet still continue to make a profit?
Some theorize that with a rising minimum wage, the general populace will have more money to spend on luxuries such as eating out. If this theory holds true, then many restaurants could see extra revenue due to increased business or have the option of raising their prices. While it would take time to see if this theory holds out, it will be interesting to monitor if Minnesota restaurants will see an uptick in business due to the higher minimum wage rate.
Restaurateurs in areas with a higher than average minimum wage have suggested implementing a tip credit as an option for offsetting labor costs. A tip credit essentially involves a lower hourly wage than the minimum for workers who receive tips as a portion of their income. If their tips don’t raise their income per hour to equal or exceed Minnesota’s minimum wage, their employer would be required to compensate them to ensure they made the state-required wage per hour for their shift.
Finally, many larger restaurants see automation as a way to control labor costs. Using touchscreen kiosks or screens at individual tables allows them to reduce labor by cutting jobs. As technology becomes more advanced and cheaper to acquire, we may see some form of automation trickle down to lower-volume businesses. We don’t see this as an ideal solution, as we feel a thriving food industry should involve human staff wherever possible.
Does your MN certified food managers have a strategy for dealing with rising minimum wage?
