Why raising the minimum wage harms New York restaurants

New York restaurants suffer from a minimum wage increase of up to 15 dollars per hour. Owners have to reduce staff time and even close kitchens, as this helps to cover the additional costs of wages. Writes about it New York Post.

The Gabriela's Restaurant and Tequila Bar in the Upper West Side has delighted its visitors with fresh tacos for the last 25 years. But due to the increase in the minimum wage, the restaurant will have to close. According to the owners, this was a long and painful decision.

According to the owners of the establishment, Liz and Nat Milner, since the minimum wage of $ 15 per hour was set in New York in December, they had to reduce their staff from 60 to 45 people. They recognize that the quality of work has deteriorated, and customers have paid attention to this: they do not come as often as before, and when they come, they spend less money.

“We started by cutting off the workers who hand-made our tortillas. Of course, it would be better if we could continue to make fresh tortillas for each taco, ”said Nat Milner. "But it made sense at $ 8 an hour, but not at $ 15."

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After the dismissal of several workers, the owners also had to reduce the working hours of the remaining staff.

“I don't mind people making more money,” added Milner. - These people worked for me for 20 years. But taxes, groceries, everything is getting more expensive, and people have a little less money to spend on guacamole and tequila. ”

And such a case is not the only one. According to the results of a survey of 324 full-service restaurants conducted by the New York City Hospitality Alliance, 76,5% of them reduced their working hours, and 36,3% eliminated jobs in response to a mandatory increase in wages in the city.

“Raising the minimum wage is putting pressure on small businesses,” says Andrew Rigi, the organization's chief executive.

Philip Masoud, CEO and chef of Lebanese eateries Ilili and Ilili Box in Manhattan, said the increase in salaries forced him to reduce the working hours of his 180 employees, remove labor-intensive dishes from the menu, and shorten staff training events such as wine seminars.

This is due to the fact that the new rules require that employees receiving a tip do not spend more than 20% of their time on work not related to interacting with clients.

“I can no longer train my employees the way I want,” Masood said.

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The restaurateur agrees that “social injustice” was that wages did not match the cost of living.

However, “it is unfair to place this burden on the shoulders of the business,” Masood said. He says industry profitability has fallen from 10-15% to 8-12%.

“This has worsened our financial performance. We are a high-risk, low-return business, and we are no longer attractive to investors, ”says Masood.

Ricky Passarelli, the owner of The Original Steakhouse and Lea Wine Bar in the historic Helmsley building, says raising the minimum wage was the “main reason” he sold his shares in 10 to other restaurants.

“I would gladly raise my salary to 1000 dollars per hour if I could. But as costs increase, sales decline. There are a lot of steakhouses, and even the price of steak has grown by 50% over the past two months, ”said Passarelli.

To cope with this, large restaurateurs move to small rooms or start working with other restaurants, which also suffered from higher wages, joining together in one restaurant.