Thursday, January 3, 2019

Minimum Wage Increase Forcing Business Owners to Change Strategies - NBC 7 San Diego

While the minimum wage increase implemented Jan. 1 is certainly good news for workers, it’s forcing San Diego business owners to consider new strategies and models to offset costs.

San Diego’s minimum wage is now $12 an hour.

It’s the third straight year the minimum has increased in accordance with a wage structure approved by voters in June 2016. State-mandated increases will bring the minimum wage up to $15 an hour in the year 2022.

“It’s not just my employees are costing more. It’s every vendor, every supplier I have. Their costs went up, too. So from everywhere, the cost went up and my staffing went up, so what do we do,” Midway District business owner Damien Devine said.

Devine has owned and operated Devine Possibilities for the last 16-years. He says overhead costs have forced him to raise menu prices over the last two years. For example, the cost of his signature sandwich – The Torpasta – has increased $2.

“Unless I change our model to where we have way fewer employees or totally fancy things up to where we can charge $20 to $30 dollars a plate, how are we going to afford that?” asked Devine.

Like many restaurant owners, Devine is considering several different strategies, all of which seem to come with a caveat.

One of which is raising menu prices again, but that obviously impacts customers. He's also considered ditching wait service and forcing customers to order at the counter, but says that would not likely impact the number of employees he needs. Ordering partially-prepared products was another idea, but that impacts quality.

Devine says adding a surcharge is not an option for his business.

“The other direction is to try and ramp up business and go for volume and get more people in, but that's also expensive, marketing and doing all those things. It's hard to have your mind on both places,” he said.

Devine is not alone. Chris Duggan, Director of Local Government Affairs with the California Restaurant Association, San Diego Chapter, released this statement:

“With California’s new $12 minimum wage in effect and scheduled to increase over the next three years, restaurants have been implementing several measures to adjust to the increased labor cost, including, adjusting menu prices, introduction of automation, adding a surcharge or increasing operational efficiencies. As the minimum wage climbs to $15 per hour by 2022, restaurateurs will closely monitor the finite amount of labor dollars available, adjusting where necessary all while continuing to provide the dining public with an exceptional experience they deserve.”



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