What Minimum Wage Increases Mean for Your Food Business
January 1, 2019 marked minimum wage increases in states and cities across the country. Some of these increases are based on inflation, some are regularly yearly hikes by state governments, and others, like New York City’s contentious new wage increase, are the result of the “Fight for 15” movement. The minimum wage is often purported to be the entrepreneur and business owner’s worst enemy. But what do these increases actually mean for your food business?
Minimum Wage Increase = Increased Payroll Costs
As this restaurant owner in San Diego points out, minimum wage increases can hit both ways: more expensive employees and more expensive suppliers or vendors. With margins as small as they are in the food industry, a cost increase like this can be hugely difficult. Whether you’re running a food truck or a cookie company, minimum wage is likely the most you can afford to pay employees. So is there any upside?
Better Wages, Better Employees
With unemployment at 4% nationally, it’s not a great time to find great help. Increasing wages can help with employee work satisfaction, hopefully decreasing turnover. Not having to constantly train employees may allow business owners to focus on other aspects of the business. As this brewing business owner describes, well-paid employees perform better than those at lower wages. If quality service is a component of your business model, this matters.
Business owners grappling with minimum wage increases may need to get creative. Improved scheduling can reduce labor costs, but if you’re only employing a few people, this may not apply. Utilize a method like unit costing to recalculate your costs under the minimum wage increase. This will tell you what you’ll need to charge for your product, and market research can tell you whether this is viable. If increasing prices isn’t an option, it’s time to cut costs. And for a comprehensive list of wage increases across the country, click here.
Increasing minimum wage doesn’t have to spell disaster for your food business. With smart cost-cutting strategies and a focus on quality, you can actually be more profitable than before!