The minimum wage conversation has been front and center in the national spotlight ever since the 2020 election. While there are legitimate arguments to be made on either side, there is no doubt that independent restaurants will be some of the businesses hit hardest by a national minimum wage hike.
If the $15 wage increase eventually comes to fruition, here are 10 ways your restaurant can help mitigate the extra operations costs to stay afloat in a low-margin industry.
Tips have long acted as a means of providing livable wages for a restaurant staff, while keeping operating costs realistic for ownership.
Include the option to tip, even if you’re not a full-service restaurant. In the past, tips were expected if a customer had been wait upon, but that norm has shifted. Now, many over-the-counter and to-go restaurants also prompt customers to leave a tip. The majority of customers today recognize that leaving a tip signals their support for the restaurant as a whole, not just the person waiting on them.
Because the concept of tipping has evolved and changed in recent years, it helps to let customers know exactly where their tip money goes. This is especially important for automatic gratuities. If you plan to pass off more costs to the customer, always try and put a human face to the reasoning behind it.
Let them know it goes to pay the cooks a living wage, or helps keep your doors open after the minimum wage hike. Customers want to support their favorite restaurants, so you need to let them know how they have with their tips.
Reduce tech spend
This past year was marked by upheaval for restaurants and bars. COVID flipped everything on its head. As restaurants and vendors raced to meet these new challenges, they ushered in a technological revolution and changed dining forever.
To cut operating costs, reevaluate your tech services and subscriptions. You may find that the costly POS service, once essential to running the front end of your restaurant, has become less important. Or you may find it easier to ditch your big clunky website, as well as its hosting fees, for a simpler landing page designed for mobile use and contactless dining.
Hosting your own online ordering can also help in this regard by cutting out commissions for third-party delivery services.
When budgets grow tight, marketing and design are often some of the first costs to get cut. Rather than giving up on such an essential part of the business, why not bring it in house? Template design services have made it easier than ever to ditch the expensive agencies and pull your marketing in-house.
Optimize your menus
The days of large family-style menus may be over. In order to cut costs during COVID, restaurants streamlined their menus, featuring their core, high-margin items. This tactic also works for offsetting rising operational costs.
Once you’ve simplified your menu and revisited your selection, make sure your menu is doing all it can with simple menu psychology tricks. Little tricks like removing dollar signs, or putting high-seller items in the middle of the menu or the top of a section, can actually lead to more sales.
Setting out separate dessert and cocktail menus can also bring in some fast cash by drawing your customers’ attention to high-margin items.
Increase menu prices
This is the most straightforward and time-tested way to pass added expenses onto the customers. 71 percent of restaurants have reported raising prices across their menu at some point.
Depending on your type of restaurant, this can work to varying degrees. If you operate a beloved, local restaurant, customers will in most scenarios be happy to pay a little extra if it means you stay open. You need to be careful, though, because they won’t foot the full bill.
Take the time to review your employee schedule and make sure it’s optimized. A raised minimum wage means downtime costs you even more, so you need to make sure your employees hours are maximized.
If your restaurant experiences large periods of downtime, consider changing your hours to better reflect customer behaviors.
If you will be required to pay your employees more, take the time during the hiring process to find ones worthy of the investment. Try to find employees who can fill multiple roles and will stick around. And with the higher wages, employees may feel incentivized to stick around longer, limiting turnover and increasing the importance of training resources.
An increased focus on hiring now could save you big down the road.
Work with your distributors
Where you can, renegotiate contracts better suited for your new operational costs. Where you can’t, explore other possible vendors.
Be warned, though, that your distributors may be feeling the crunch from a minimum wage hike, as well. Giving you a better deal simply may not be in the cards.
Lean on signage
With employee time at a premium, cut down on that time being spent explaining policies to customers with comprehensive signage. This is especially important during these days of heightened safety precautions and policies.
An initial investment in table tents, sandwich boards, posters, flyers, digital displays, social media marketing, etc. to display your dine-in policies and expectations could save your staff valuable time.
If you want to customize your menu or signage, menu template services make it easy to pick a design you like, personalize it for your restaurant, and then print or publish it online in minutes.
Decrease your seating
Limiting capacity also means limiting potential sales, but in the COVID era, packed dining rooms may not be on the table (sorry for the bad pun) for a while anyhow. By decreasing your tables, you won’t have as much need for waitstaff.
With so many restaurants increasing their takeout business this past year, this could very well be a viable strategy. You have to walk a very fine line, though, because generally the number of available seats corresponds directly with your potential earning power. Continuing to emphasize takeout is a great way to minimize lost revenue from downsizing seating capacity.
Rather than hiring another employee, you can always offer an internship position for someone looking to learn the industry ropes. In the right situation, they can gain valuable experience while taking some tasks of your plate at no (or considerably less) cost.
Unpaid internships are, in general, a somewhat thorny situation. To do them ethically, you’d need to make sure they are getting valuable experience in marketing, operations, cooking, whatever in return for their time. An unpaid dishwasher internship wouldn’t work for obvious reasons.