With the minimum wage increasing across 18 states this January, some restaurants are having a tough time keeping up with the rise in labor costs.
According to Fox Business, Red Robin Gourmet Burgers announced it will be eliminate busboys at 570 locations to save the restaurant an estimated $8 million over the next year. The Director of the Employment Policies Institution (EPI) argues that due to the increase in minimum wage, companies like Red Robin have “had to find ways to do more with less,” citing how similar franchises like Applebees and Chilli’s have cut costs by pulling back on waiters and adding tablets that allow customers to place orders to their tables.
Other sources claim that while increases in minimum wage are intended to help employees, they sometimes end up hurting them once businesses start to find ways to cut costs as a response. Sources also claim that these increases can hurt businesses by forcing them to find a way to keep the same service, which is growing increasingly expensive, while still making money. Raising menu prices for example, can lead to unsatisfied customers and a decrease in business.
Fox Business also notes the debate regarding the effects of rises in minimum wage on employees. They cite a study conducted by the EPI that claims a 10% in the minimum wage in California has resulted in a 2% decrease in employment for applicable employees. However, the Institute for Research on Labor & Employment at U.C. Berkley has found that increases in minimum wage would actually add jobs to the market in the long run. Either way, Red Robin is not the only franchise experiencing this debate.