Minimum wage hikes sending restaurants the way of the shopping mall?

Fox Business ^ | 2018 January 15 | Brittany De Lea

[CutePuppy]

Eighteen states raised their minimum wages at the start of 2018, but increasing labor costs are strangling the dining industry so much that restaurants could soon face the same fate as shopping malls.

"I think you're going to see thousands of restaurants close their doors," Willie Degel, "Restaurant Stakeout" host and CEO of Uncle Jack's Steakhouse, told FOX Business. "Fine dining is going to go by the wayside."

The downward cycle seems daunting to Degel and other industry insiders. As costs rise, only so much of the burden can be passed along to consumers in the form of price hikes before they decide they cannot afford the expense.

"When we increase in prices ... we see guest count go down," Degel noted. "The consumer is not willing to pay for the experience then." ..... < snip >

..... In addition to raising prices, businesses often cope with minimum wage increases by firing staff. Last week, casual dining chain Red Robin Gourmet Burgers (NASDAQ:RRGB) announced it would eliminate busboy positions at 570 restaurant locations. Degel said he got rid of busboys at his New York restaurants two years ago, and has more recently turned to staff cuts "across the board." ..... < snip >

..... Many business owners have turned to technology to both compensate for the loss of labor and to reduce expenses. Some restaurants, including Chili's and Applebee's, have already replaced servers with tableside tablets for placing orders and paying bills. ..... < snip >

..... In addition to the 18 states and 20 cities that raised their minimum wages on Jan. 1, three more states will implement a hike later this year. ..... < snip >

[gnarledmaw]

No, they dont need to eat it. The restaurants "need" to give out buckets of bread, pasta, rice, and potatoes because carbs are cheap and the diner leaves feeling full while costing the restaurant relatively little. Reducing the carbs doesnt reduce the cost of the meal by much it just makes the meal smaller.

This part of what makes Italian, Mexican, and Chinese foods so lucrative compared to offering other cuisine. High carb foods have better margins.

People still require a minimum volume to feel full and leave satisfied. For restaurants to satisfy volume they yhen need to increase protein or vegetables which raises the price which creates another type of dissatisfaction.

[central_va]

Minimum wage should be pegged to inflation and take the politics out of it.

[Alberta's Child]

As costs rise, only so much of the burden can be passed along to consumers in the form of price hikes before they decide they cannot afford the expense.

I'm trying to figure out why this simple fact can be accepted as the truth when it comes to restaurant jobs, but is not accepted by so many folks even here on FreeRepublic when it comes to manufacturing jobs?

"If a manufacturing company can't find good workers, they should just pay more!" -- common refrain here on FR.

What the statement from the article illustrates is that it's not the employer who really determines the wage scale for his employees ... it's the customer.

[itsahoot]

Unions are dead. You are fighting the last war.

Not unless the government shuts down permanently.

[Mears]

“Why go to a movie theater when you can have your own private home big screen with content streamed to it? Same for food as you say.

—

In other words,stay home.

No thanks!

Sometimes people just want to go out-——and mix with others.

.

[itsahoot]

Minimum wage should be pegged to inflation and take the politics out of it.

Inflation should be a crime in civilized societies. Getting a raise should make your life better not just a catch up deal.

I remember when the minimum wage was one dollar and we were on the gold standard, prices never changed.

I remember when they added penny coin changers to soda machines to raise the price from 5 cents to 6 cents a 20% increase. They soon found that people rarely had the correct change so they just raised the price to 10 cents and installed new coin changers. That represented a 100% increase in price but because it was only a nickel people accepted it. Now they just as easily accept price increases of 100% in most things. Anyone remember 69 cent hamburger?

[ProtectOurFreedom]

I agree...dining out at a nice restaurant is nice (far nicer than a crappy movie theater), but you don’t have to completely eliminate dining out to make a big impact on the restaurant industry.

Suppose you cut your dining out by 1/4 and ordered a gourmet meal delivered to your door. Loss of 25% of business would hit restaurants very hard. Even if people switched to 1/10 of their meals delivered, there would be a big oversupply of restaurants. They will be hit like any other retail operation.

20 years ago, who foresaw retail disappearing, people turning their private cars into taxis, and the end of the neighborhood VCR tape rental shops?

[ichabod1]

Honestly, since Obama took over I’ve gradually stopped eating out. I’ll eat the food but almost always take out. I don’t want to be around the people.

[Yosemitest]

There should be NO minimum wage !
Let the FREE MARKET set the wage !

[central_va]

In a perfect world with no immigration and no open borders there could be no artificial floor on wages. It is not a perfect world.

[Yosemitest]

A “Minimum wage” KILLS jobs !

[Yosemitest]

BUILD THE WALL !

[CutePuppy]

I'm trying to figure out why this simple fact can be accepted as the truth when it comes to restaurant jobs, but is not accepted by so many folks even here on FreeRepublic when it comes to manufacturing jobs?

"If a manufacturing company can't find good workers, they should just pay more!" — common refrain here on FR.

Yep. Enough to give you a cognitive dissonance, eh? It may be that selective attention paradox is overriding the overall economic sense.