By Robert Banker, Director of Sales (SMARTtill®), APG Cash Drawer
Retailers and restaurants are looking for ways to cope with rising labor costs, which are being fueled by minimum wage hikes in different cities and states as well as competition for workers as unemployment dips below 4.5 percent.
Labor costs are one of the biggest expenses for retailers and food service companies, and while it’s hard to argue with the need to pay a living wage, some businesses that already operate on thin margins really struggle to absorb added costs.
Some restaurants in San Diego are addressing the issue by tacking on a 3 percent surcharge to customers’ checks. The tactic could backfire if customers, who already are expected to leave tips of as much as 20 percent, resent having to pay the surcharge and servers may start see a cutback in tips California is on a schedule of incremental minimum wage increases that will bring the rate to $15 an hour by 2022, but San Diego has accelerated its own wage increase schedule. In certain states, wage hikes have pushed workers to look for jobs out of state where generous tips outweigh a higher minimum wage.
Passing on increased costs is nothing new. But this isn’t the only solution to increasing wage costs. Retailers and restaurateurs should consider other options, including technology and data analytics to supplant the burden of rising labor rates. Here are some suggestions...