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Back Yard Burgers

 

New York Restaurants Served Increased Labor Costs by Gov. Cuomo

Rochester, New York – Governor Cuomo’s mandatory $15 wage increase for fast food workers may have some unintended consequences. According to Back Yard Burgers CEO Dave McDougall, efficient labor scheduling and belt tightening may not be enough to keep wage hikes from affecting customers’ wallets.

“You’ve got to protect your margins and maintain a viable business; it needs to be profitable,” McDougall said during an interview with the National Restaurant Association.

New York State’s Wage Board also decided to raise the minimum wage for tipped employees to $7.25, previously set at $5.00. Top that off with the costs restaurant owners are paying towards the Affordable Care Act, and restaurant owners, like McDougall, are thinking twice about opening new locations within New York’s borders.

“Raising the minimum wage to $15 an hour will add fairness to our economy and bring dignity and respect to 2.2 million people, many of whom have been forced to live in poverty for too long,” Cuomo told workers during a speech in New York City.

The raise in minimum wages for fast food workers will only target chains that operate more than 30 locations across the country. Most estimates suggest that the hike will affect 116 national fast food brands.

The full $15 wage increase for fast food workers won’t take place until 2018, allowing owners some time to adjust their business practices. With similar wage increases in Los Angeles and Seattle, New York restaurant owners will have some examples to look to in the next two years.

Raising prices, laying off workers, and using technology to lower labor costs are all options on the table for New York fast food restaurant owners. Other restaurants, like Back Yard Burgers, which currently operates and franchises 63 locations in 14 states, may avoid opening new locations in New York altogether.

Some experts estimate that while a large amount of individuals may be laid off with a $10.10 minimum wage increase, many more out from under the poverty line. However, experts haven’t come to a consensus when it comes to raising the minimum wage to $15.

The outcome of state minimum wage hikes will place a large role in the battle for minimum wage increases at a federal level. With the Republicans currently controlling both the House and Senate, business owners like McDougall won’t have to worry about an increase until after the 2016 elections this November.

With Congressional approval ratings sitting at 14% according to Gallup, a massive power swing in favor of the Democratic Party may be in the works. Minimum wage increases will be sure to follow.

One thing is for certain: business owners in New York and the rest of the U.S. will be watching this year’s election cycle with great interest. Meanwhile, New York restaurant owners will have some big decisions to make.