“Hypothetical and questionable”? No need to get insulting words there, Stranger. These numbers came straight from one of their employees who worked the dinner shift every night. He knows exactly how many customers he serves on average, as anyone in a tip-based profession would. I did my homework.
Excellent point on the lunch crowd, but remember that they cut the waitstaff for the slow periods, trying to keep the number of meals/waiter reasonably consistent. Three or four servers for dinner – one or two for lunch.
I forgot about the dishwasher. Another good point.
I already covered the cooks in the OP. They get well over minimum wage already.
So perhaps instead of a dime per hour plus taxes (my original 15 cent number), it’s closer to 20 cents cost increase.
Precisely! I have no objection to raising prices, but I do object to blaming a $1.00 per entree price on the minimum wage increase.
One of them hasn’t. The other just switched to a la carte pricing, taking the soup/salad off the entree without changing the prices. In other words, they did the equivalent of a $2.00 or so increase last summer, and then added another $1.00 in January. I think it’s a clear case of “raise the prices to what the market will bear and shift the bad will to the employees.”
Of course labor has some effect on cost, but it depends on the industry and the connection between demand for the product and for labour. In most cases labor is NOT a direct cost; if you think it is you’re unclear on what “direct cost” means. A direct cost is a cost directly attributable to the manufacture or provision of the product itself. If you make cars, the cost of the engine is a direct cost; if the engine costs X, and you make Y cars, you’re out X times Y. The wages of the guys on the line are not direct costs; they have to be paid the same on Tuesday as they were on Monday, even if they made fewer cars.
In the case of a baseball team, there’s no direct connection at all between labour costs and price. You don’t have to hire more ballplayers if demand goes up. The only direct cost, really, is printing the ticket, which is trivial.
In the case of a restaurant -in the case of most businesses, actually - the cost of labour is mostly indirect. For the most part the restaurant will have essentially the same level of staffing at most realistic levels of demand. It’s a little bit direct because a restaurant can vary the number of waitstaff on shift, but you aren’t going to be able to make it exactly proportional.
In some businesses, “labour” could be a direct cost, such as piecework or consulting. For instance, suppose you ran a hair solon and paid the stylists by the job, rather than by the hour. That would be a direct cost.
He wasn’t being insulting, InvisibleWombat, he was simply pointing out that your hypothetical numbers (and they are hypothetical, because they don’t come from more than the suppositions of a single employee who isn’t in a position to know the totality of the business) didn’t cover the whole of the situation, that is, the potential for income over the course of a whole day.
For those who don’t know, the single greatest portion of cost in a restaurant is labor. It’s not grossly larger than other costs; usually you want to keep the labor dollar down to somewhere around one-third of your total costs, but depending upon your business, it may go higher. But it is simply absurd to think of the labor dollar as split solely among waitstaff. If the waitstaff wages are increased, so are the wages of every person in the restaurant, but an appropriate amount, to keep the same ratio/balance among emplyees.
Having said that, it is pretty much a rule of thumb approach that isn’t being particularly worried about accuracy that would dictate a $1 per entree price increase. After all, for a $6 salad that is quite a lot, compared to the $15 salmon almondine.
Are you sure you heard him right, because six four-person tables is a lot for a waiter? Some experienced waiters might be given that many tables in a pinch, but it’s not a regular occurrence. Also, an average if 3-4 people seems high. Not to mention that not everyone orders and entree, or leaves in one hour.
In the pure accounting sense, assembly line labor probably isn’t a direct cost, but we treat anyone that injects value into a product as direct labor for accounting purposes (this means line workers). Everyone else is an indirect expense. When it comes to stopping production, we do a “short work week” (send the direct labor home) but as often as not keep the indirect labor on board. I imagine that in a restaurant, one could argue that the cookstaff is a direct expense (or argue that it’s not), but I can’t imagine a scenario where serving staff would be a direct cost.
I’m having trouble understanding how the restaurant is generating bad will towards the restaurant employees by crediting the price increases to the minimum wage. Minimum wages are imposed by governments, i.e., the people, i.e., the restaurant patrons themselves. Okay, maybe they’re not all smart enough to realize that, but how about this? If it’s a cheap restaurant to begin with, a good portion are probably at minimum wage or close to it anyway, and can’t they appreciate that their wages are also influenced by the minimum wage? If it’s not just a greasy spoon, then, you have people that don’t struggle to eat at a restaurant, and so then a lousy dollar for an entrée is nothing, really. If they’re complaining about a friggin’ dollar, they probably should be saving their money rather than eating out and blaming you for the price of their dinner – are you sure that’s not the case?