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When you are running a restaurant, chances are you have grappled with the question of wages. Should you pay your employees minimum wage? Should you just have them rely on tips? Should you pay them MORE than minimum wage? What about if you live in a state where they are now insisting that everyone receives at least a $15-per-hour minimum wage? This higher minimum wage requirement would definitely impact how you do business. Here are some things you need to know.

What Has Already Happened

A lot of things have happened. Some of them have been good, but most of them have been bad. First of all, many restaurant managers in areas that already have a $15 minimum wage have switched their servers’ tip models from a customer-based model to a simple service charge tacked on to the final dining ticket. Under the prior tip-based system, a lot of individuals were able to go to school, raise their children, and make a fairly decent living. However, under the service charge system, many employees are now having to work 12-hour shifts and are barely making ends meet. Many restaurant managers are also relegating their employees to part-time status in order to cut costs. This can be beneficial when dealing with certain employees, however. If a worker is recently out of high school and only plans on working a few times a week, this model suits them. Some restaurants though are raising their prices in order to offset the increase in pay. While patrons may not be too happy with this practice, it may be the only way the restaurant can stay in business.

Restaurants May Need to Make Adjustments

A lot of people argue that raising the minimum wage to $15 would help more people bring home a more liveable income. However, data has already shown that higher minimum wages haven’t resulted in more take-home pay. In fact, in some recent surveys done by Upserve, many restaurant workers in places where the $15 minimum wage has already gone into effect said that they think that their tips have either decreased or stayed the same. This is because many restaurant patrons, when they think that the servers are being paid more, are tipping less. If restaurant workers want to have a higher take-home pay, adjustments in the way the business is run may need to be made.

Finding a New Balance

Of course, this shift in pay would affect franchises differently from how it would affect a single-location restaurant. Managers of a branch franchise would probably balk at their employees being paid higher wages and would want a considerable raise themselves. This could possibly mean that prices at franchise restaurants would go up higher in order to allow for a higher manager’s salary. One other unintended consequence might also be that restaurants that are classified as “sole proprietorships” might become more popular.

As far as a $15 minimum wage goes, it is definitely a mixed bag. There are a lot of pros for implementing it, but there could also be a lot of cons. It will put more money in people’s pockets, but there need to be offsets to ensure the restaurants are safe.