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The 2 Best Ways Your Restaurant Can Combat Minimum Wage Increases in Minnesota

Aug 13, 2015 | Restaurant POS, Weekly Articles

What Could the Minimum Wage Increase, in Minnesota, Cost Your Restaurant Business?

Heard about a minimum wage increase in Minnesota? Of course you have!

The minimum wage increase in MN took effect in August 2014 and this increase could potentially have a huge impact on labor costs and your business.

We imagine you are looking at many options to help offset this, so we figured we’d share some good advice, along with some tips and tricks, to help eliminate this financial stress to your restaurant business.

How it all works

Minnesota has implemented a minimum wage increase for ALL employers.

As of August 2014, minimum wage has been increased to the following:

  • Large employers: $8.00 per hour starting on August 1, 2014; $9.00 on August 1, 2015; and $9.50 on August 1, 2016.
  • Small employers: $6.50 per hour starting on August 1, 2014; $7.25 on August 1, 2015; and $7.75 on August 1, 2016.
  • Training wage (for employees ages 18 and 19 for the first 90 consecutive days of employment): $6.50 starting on August 1, 2014; $7.25 on August 1, 2015; and $7.75 on August 1, 2016.

Two other wage tiers are created:

  • Youth wage (workers under 18): $6.50 starting on August 1, 2014; $7.25 on August 1, 2015; and $7.75 on August 1, 2016.
  • Hotel or resort workers under an Exchange Visitor non-immigrant visa for summer work who receive a lodging or food benefit: $7.25 starting on August 1, 2014; $7.50 on August 1, 2015; and $7.75 on August 1, 2016.

(Statistics provided by: www.mnbudgetproject.org )

What does this mean for your restaurant business?

Restaurants often pay their employees a base wage and along with the tips they receive.

This results in a loss in profit for the business as you are now paying your employees more without any additional revenue. This can be debilitating when it comes to the cost of doing business, especially for restaurants.

Fortunately there are a few things you can do to offset some of these costs.

Two solutions to help offset the cost of running a restaurant business

  1. Invest in technology. Many point-of-sale systems, including Restaurant Manager, track labor costs down to the hour. If you have not already, this is the perfect time to implement this functionality on your point-of-sale system. The data that a POS platform provides will  help your restaurant and bar make better decisions on how to bring in more revenue. Better business decisions such attracting new customers by providing targeted discounts, and utilizing your employees at the times you need them, thus increasing efficiency.
  2. Increase your prices. Consider changing your menu pricing, to reflect the cost increase to your business. This is not ideal, charging your restaurant customers more for food and drinks, but it is necessary. Every menu item price can be easily adjusted inside your POS software system, using Restaurant Manager.  You can also see trends, with your new POS technology, that will tell you, as a restaurant general manager and owner, what items you should strategically price adjust. A new POS platform will also give you guidance on your best selling menu items, high-margin menu items, drinks, etc, so you can ultimately make any menu changes strategically.

Start your journey towards success

Our team of POS experts will help you find a solution perfectly tailored to your needs.