When minimum wage goes up, menu prices also rise
Some chains plan to partially offset increases by passing them to consumers.
Supporters of a higher minimum wage applauded Gap's decision last week to increase hourly pay. While Lynn Albright, vice president of the company's Old Navy brand, told CNN that higher prices won't be needed if costs can be lowered by, for instance, reducing staff turnover, the effects of such decisions often trickle down to customers.
In the restaurant industry, some chains have already prepared to boost menu prices in response to minimum-wage changes in such large markets as California, New York and Washington. At the national level, Congress and President Obama continue to grapple with increasing the federal minimum wage; progress could bring similar hikes at eateries across the country.
Restaurants are a large low-wage employer, and industry executives have grumbled that wage increases -- combined with additional costs resulting from the Affordable Care Act -- are driving up the price of doing business.
To maintain profits, a number of chains have recently announced plans to partially offset the increases by passing them to consumers:
- Jack In The Box expects the higher minimum wage in California -- where it has about 40 percent of its restaurants -- to reduce quarterly operating margins by 0.8 percent when it rises from $8 to $9 in July, Chief Financial Officer Jerry Rebel said in an earnings call last week. The state's minimum wage will rise again, to $10, in 2016. To compensate, by 2015 Jack in the Box plans to increase menu prices either 1.4 percent just in California or a little less than 1 percent across all its restaurants. These higher prices would come in addition to any other price increases triggered by such factors as commodities costs.
- Cheesecake Factory operates about one-fifth of its restaurants in California, where it expects to sustain an additional $2 million to $3 million in costs from the state's new minimum wage. This was part of the chain's reasoning in boosting prices by 2 percent this year.
- Denny's said it will plan on "an additional modest price increase" at its California restaurants in July, affecting about a quarter of the chain's restaurants.
- BJ's Restaurants, which has about half its units in California, anticipates that a 1.7 percent menu price increase will help cover the change.
- Nathan's Famous said the state increase to $8 per hour, effective Dec. 31, 2013, amounted to a 4.6 percent average salary increase for affected employees. The company estimates that this will add 0.5 percent to the cost of sales if prices remain the same. The costs are clear, though the impact on menu prices is not.
The effect of raising the federal minimum wage to the proposed $10.10, compared to the current $7.25, would be more widespread.
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Well when they overpay the CEO types, they pass those cost onto consumers. When they waste corporate funds by borrowing to Buy at the Highs, not at the lows, they pass those cost onto consumers. When they handout Golden Parachutes to fired CEOS, they pass those costs onto consumers. But the moment the working poor and fading Middle-Class demand just a taste of the Income their increased Productivity has produced, there's a freaking problem.
Fact, when workers make more, they can buy more. The cost to pay more to workers is hardly the massive increase in consumer prices the fear-mongers continually lie about. Study after study has proven this. When workers were getting real Wage increases, the economy was booming. Now that has become a Joke to overpaid CEO types, the economy is basically on life support.
Companies have had a hard time rising prices and creating Real Revenue and profits because wages have stagnated or declined. They invest more in already SuperRich speculators as opposed to the actual company. The result, $4Trillion in fake Dollars from the FEDS and a sub par Recover.
More than menu prices, everything goes up, the greater the increase, and the more widespread it is.
In time, the increase is eaten up, so to speak in higher prices. That's called Wage inflation for the stoopids out there who don't know a jot about economics. Eventually the increase buying power disappears altogether.
You can't have increases in wages without corresponding increases in your production without incurring inflation.
For a primer in how the increase in the minimum wage works, look back to the Pre-WIN era of Gerald Ford, and 13% mortgage rates.
higher wages means higher prices for consumers? omg who would have thought? are you liberal pos website just figuring this out? business owners have been preaching this the whole time and libs called them crazy and said they were wrong.
msn your website sux
If you are raising a family on a minimum wage job you sure f'd up big time somewhere along the line or you're just dumb as a box of rocks.
Most common reasons for living in poverty:
Drug and alcohol problems ( stupid decision making)
Little education ( drop outs - stupid decision making)
Children before marriage ( stupid decision making)
Voting for a living is easier than getting your azz up and working for a living
Criminal behavior ( stupid decision making)
Lost all your money ( stupid decision making)
having more children when you couldn't afford the first one ( stupid decision making)
lost your job and unwilling to settle for something paying less
bad luck .....usually related to one of the above
They don't pass on costs to customers because the market forces them to, they do it because they're greedy ****s. You want companies to stop stealing from the rest of us? Stop buying their crap.
The increase in the minimum wage hits the people that will return that money into the economy, not in hidden offshore bank accounts. It increases payroll taxes including SSA and Medicare and will move some out of the Earned Income Credit (Republican backdoor welfare).
When I started working in 1965 the minimum wage was $1.25 per hour, in today's dollars that would be $11.40. Several of my married co-workers were raising families and the wife stayed home on that wage. Not going to happen today.
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