Minimum Wage Hikes Could Mean Costlier Restaurant Meals: Bar Rescue Host Jon Taffer

By Chloe Aiello

Nationwide minimum wage hikes mean consumers should expect to see price hikes on food and beverages, too, "Bar Rescue" host Jon Taffer told Cheddar.

"I'm guessing that we're going to see a good 4 to 7 percent increase over the next year," Taffer said.

Beginning Jan. 1, 21 states and Washington D.C. either raised or will raise their minimum wage rates to accommodate cost of living increases, according to the National Conference of State Legislatures. Workers in industries like retail and food service may be celebrating strides in the "Fight for Fifteen," as one mobilizing group is formally known, but Taffer argued the hikes could prove ruinous to businesses, especially low margin restaurants and bars.

"With each revenue dollar, we can spend approximately 28 to 30 percent on payroll. If our cost per hour goes up 20 or 30 percent, we can't allow our payroll costs to go up ... We are not profitable at those numbers," Taffer said.

He speculated wage hikes would be reflected in higher costs for food and beverage as well as in an increased emphasis on more cost-effective items on menus.

"There's a whole science of menu engineering where I can steer your eye and steer your preferences to buy menu items that are inherently more profitable for me," Taffer said.

Taffer also argued that the government shutdown is undermining consumer confidence, which could also impact restaurants.

"Even middle America ー their income is up, unemployment is down, retail sales are up, but yet people are so concerned when they hear about the stock market. And then the attitude in Washington I think has a major effect on consumer confidence and our ability to spend and takes risks and go out into a spend environment," Taffer said.

For full interview click here.

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