Minimum wage increases pose a major challenge to the restaurant industry in blue states

Minimum wage hikes began in January in 21 states, and experts say rising labor costs are making it difficult for some restaurants to keep their doors open.

About 65 cities across the country implemented wage increases at the beginning of the month. Cities in Colorado, Washington, and California have some of the highest minimum wages in the United States

According to the Economic Policy Institute, Tukwila, Washington, had the highest minimum wage for non-tipped workers as of January at $21.10. Some other cities with the highest minimum wages this year include Seattle at $20.76; West Hollywood, CA $19.65; Denver at $18.81; and San Francisco at $18.67.

For many restaurants, large cost increases are not sustainable, said Jot Conde, CEO of the California Restaurant Association.

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“It’s no coincidence that restaurants in those cities where you see these very high minimum wages are struggling to survive, and the rate of restaurant closures in those cities far exceeds, you know, the closing rates in other parts of the state,” he said. .

Conde said Restaurants Pre-tax profit margins are also low, with some ranging between 3% and 5%, leaving little room for error..

Food and labor costs are restaurants’ largest expenses, each consuming approximately 33 cents of every dollar in sales, according to the National Restaurant Association.

Some Denver restaurateurs are still figuring out how to do it Balance their budgets So they can keep the customers coming and the employees happy.

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Joshua Miller is an employee at Sarpino’s Pizzeria in Westminster, a northwest suburb of Denver. Miller said he started out delivering pizza and enjoyed his time learning kitchen skills. He added that receiving a wage higher than the minimum helps him earn a living amid the crisis High costs of living.

“Minimum wage helps me pay my rent and gas prices.” Miller said.

Samar Sawajed is a Sarbino franchise owner, and she said she pays all of her employees above minimum wage. Sawajid said that many companies like hers offer salaries higher than the minimum wage.

“Our big challenge here is other pizza places,” she said. “People are fighting over hourly wages to get more and more.”

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Sawajed said she is finding additional ways to help her employees financially through bonus opportunities.

Chi Li owns Chi’s Express, a Chinese restaurant in Denver. Lee said the restaurant has fewer than 10 employees, which helps him balance his budget.

“Because we have a small operation, a small menu, as you can see, that’s why our costs and our food costs will come down a little bit,” Lee said.

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He told me they had Adjusted for inflation By raising them Packaged meal prices.

It takes about 12 employees to generate $1 million in sales at a restaurant, but it only takes about four employees at a clothing store to generate the same amount, according to the national restaurant industry.