On July 1, more wage hikes are coming in D.C., Maryland, Illinois, and Oregon. Are you ready?
The average restaurant operates on a 3.1% net income margin and runs labor at 33% of sales. Given that wages will increase by 35% by 2019 in NY (with 22 other states not far behind), labor could account for 44% of sales and margins could drop to -8.4% in less than two years.
For hospitality businesses to thrive, brands need to become far more labor-efficient - and technology is the key.
As a business, you can take steps to deal with rising labor costs while maintaining productivity and efficiency.
Below, we’ve compiled our best tips for preparing your business for a minimum wage increase.
Assess Your Current Expenses
Above, we calculated what the estimated percentage of sales that labor will account for and projected margins by 2019. However, each business is different, and thus will react differently to the rising minimum wage.
Take a hard look at the current financial condition of your company. From here, you can assess smartly whether you need to raise prices, cut full-time staff, adjust the way you schedule your team, or change your food service sourcing options.
Update Your Tech
By implementing automation, you’ll be able to reduce certain needs usually handled by personnel. Automating certain aspects of your work frees up your schedule to do other things.
Harri's workforce management platform, TeamLive, includes a new feature called Livewire for real-time performance management. Livewire integrates with most major POS systems to provide real-time sales, labor, and performance analysis.
It's one way that our clients are able to streamline their processes using tech and view sales and labor side-by-side in real time.
Streamline Your Sourcing & Hiring
Bringing on the right employees will become even more crucial as the minimum wage increases. Short-Cycle Turnover, which is when employees leave a position in the first 90 days of a new job, can cost you thousands of dollars - that’s just one more expense you don’t need!
Look for candidates with a strong, solid background in the role you’re hiring for and a great personality that helps customers want to come back again and again. A personality-powered sourcing platform like Harri can help you get a great sense for candidates, flag them based on ability, and interview them with ease - all from one convenient mobile-first platform.
Most Importantly...Don’t Panic!
Minimum wage increases can be stressful, but with the right planning, you’ll be able to predict the effect it will have on your business (and it WILL have one) and take action in advance. Rather than making drastic changes out of fear, like immediately jacking up prices and cutting operations, explore the ways in which you can make creative but calculated changes.