- Chain CEOs say that higher minimum wages – across the US or on a state level – could mean higher menu prices.
- Kura Sushi, The Cheesecake Factory, and Texas Roadhouse have all raised menu prices in response to local minimum wage legislation.
- “Ultimately in any business, the customer pays for everything,” Waffle House CEO Walt Ehmer said. “We don’t have any other source of revenue other than the customer.”
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Restaurant CEOs are admitting their businesses can handle a higher minimum wage. But, they warn, it also could mean rising menu prices.
“Ultimately in any business, the customer pays for everything,” Waffle House CEO Walt Ehmer told Business Insider. “We don’t have any other source of revenue other than the customer. So, we have to be careful how we treat our customers and we don’t stick it to them with giant price increases.”
Ehmer said that, as states raise minimum wages, Waffle House is prepared to deal with a $US15 federal minimum wage. However, he said he hopes that a federal wage hike comes in stages, so that the chain does not have to send menu prices skyrocketing.
The federal minimum wage is in the spotlight following the election of Joe Biden. Biden campaigned on the promise of a $US15 minimum wage. While the divided government will make it more difficult for the president-elect to pass regulation around higher pay on a federal level, states passing their own legislation are making minimum wage an increasingly hot topic of conversation.
Potbelly’s chief financial officer Steven Cirulis recently told the Wall Street Journal the sandwich chain would consider raising menu prices in the long term. Higher federal minimum wage would “certainly” impact Potbelly, Cirulis said.
Raising menu prices is, at this point, a tried-and-true response to minimum wage regulation for many restaurant chains. Executives at Kura Sushi,The Cheesecake Factory, and Texas Roadhouse all said in recent calls with investors that, when states and cities raised minimum wage, the chains responded by raising menu prices.
“I would say there is a short-term shock,” Texas Roadhouse CEO Wayne Taylor told investors in late October. “And then long term, there’s an adjustment, both on our side and the guest side.”
Workers rights groups have criticised restaurant industry executives for past reluctance to raise minimum wages, when CEOs often make hundreds times more than the average worker at the chain. At McDonald’s, for example, CEO compensation was almost 2,000 times as much as the average worker in 2019, topping $US18 million.