Happy New Year, amid rising costs

If your Twin Cities restaurant is located outside of the City of Minneapolis, and you're paying anyone in your organization at minimum wage, please know that the old rate of $9.65/hour has increased as of 1/1/2019 to $9.86/hour. This is a wage increase of 2%, and this increase should be a factor in your restaurant's decision to increase menu prices, for at least some menu items, in order to offset this increase in costs.

If your restaurant is located in Minneapolis, the minimum wage will increase again on 7/1/2019, the first date of the State's fiscal year, and again you should consider raising menu prices to accommodate this increase in labor costs. The Minneapolis Minimum Wage (MMW) will increase to $11.00/hour (a 7% increase) for small employers (less than 100 employees, on average) and $12.25/hour (an increase of 9%) for large employers.

Most likely, this wage increase will affect up to half of your restaurant's employees, and will have a direct effect on your bottom line. There are 2 primary levers to adjust to keep the same amount of profit: Reducing costs (reducing the # of staff, reducing staff hours, creating efficiencies within the operation) and raising revenue (increasing menu prices, implementing service charges).

We have seen restaurants cross the threshold of implementing Service Charges, most are between 3% and 5%, and most are located within the cities of Minneapolis and St. Paul.