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Restaurants & Bars

Impact of Living Wages on Restaurant Industry

Good_kind_of_fat | Sep 17, 201912:10 PM     16

I view the Boston restaurant industry as overbuilt and ripe for a major contraction. If MA were to instate a living wage requirement - $15 minimum to all employees - would many of our restaurants close shop? What strategies could they employ to keep costs down and maintain both a positive cash flow and operating profit?

This article from Eater - Jan 2018 - provides some examples of what can be done to cut cost but I'm of the opinion that there isn't enough 'room' in the P&L for many establishments in Boston. Rent alone is daunting, hours can be cut only so much. If the establishment's profit margin is <5% will they survive? https://www.eater.com/2018/1/23/16917...

Math: 10 people averaging 40 hours per week at $10/hr = $4,000 weekly. Moving to $15/hr increases cost by $2,000.

2,000 x 52 weeks = $104,000 annual cost increase.

Restaurants that gross $2M annual just lost 5% bottom line using those numbers. How many 10 person restaurants gross that much annually? I bet not many.

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