Consider This to Manage Minimum Wage Increase

Restaurant

Prepare for the Minimum Wage Increase – Consider This

The minimum wage is increasing in many States, including Florida. A number of States have already implemented increased wages, including Washington and California. Independent restaurants and national chains operating across the US have tested many changes to manage these costs increases. The overwhelming theme for those that have managed the changes successfully is to PLAN, PLAN and PLAN again.

Informing Restaurant Owners

Florida Restaurant and Lodging Association has partnered with Charles Musgrove, host of the Answers That Count podcast, to provide informative content and tools to assist restaurant owners and operators in making the most informed decisions about managing these costs increases. We will interview industry leaders from Washington to Florida to discuss what has worked and what has not worked. We will explore many tools that should be considered.

‘Consider This’ Topics

Topics include:
  • Pros and Cons of Service Charge Model vs. Tip Model
  • FICA Tip Credit
  • Commission Model for Compensating Wait Staff and Bartenders
  • 7(i) Exemption of Overtime for Commission Paid Employees
  • Technology Tools Now and Future

Counter Service or Full Service?

In a recent podcast with owner/operator John Horne of the Anna Maria Oyster Bar in Bradenton, FL, John talks about the results his restaurant experienced going from a counter service to full service. His restaurant increased revenue 71%, improved profit percentage and increased total compensation paid. At the time he changed to full service, he moved from a no-tip model to a tipped model, which increased total pay to the wait staff from $10 per hour to over $30 average hourly pay, including tips.

See the discussion at 22:10 of the podcast where John describes his real-life example of increasing revenue by 71% over two years.

This experience should be considered when making drastic changes like going from full-service to a counter service model. Even though costs may decrease in the transition, revenue loss may result in a decrease in bottom line profits. Careful planning is necessary.

Plan for the Coming Changes!

The constant warning from all of these industry leaders is to plan for changes and to model how to manage the cost increases. A plan A, B and C is needed, including detailed financial models and compliant compensation plans. And, make sure that you have competent financial and legal consultants on your team and engaged in the planning process.