Just over one-quarter of greater New York fast-food joints would close if they had to pay their workers a $15-an-hour minimum wage, a survey of restaurant owners found. The restaurants wouldn’t be able to maintain a profitability with labor costs that high.
That’s according a survey released Thursday of 924 state restaurants, half from the New York City metropolitan area. The survey was conducted by the Employment Policies Institute, a business-backed nonprofit group that opposes a higher minimum wage.
The problem for the restaurants, most of which are privately owned and merely rent out the corporate brand, is that they have slim profit margins. Thus, they cannot absorb the higher labor costs from an increase in the minimum wage without offsetting it elsewhere. Most would raise prices but would need further offsets because higher prices would depress sales.
“Nearly two-thirds of respondents to this question reported a [profit] margin of 2 percent or less; over 80 percent of respondents reported a profit margin of 4 percent or less. These low, single-digit profit margins, which are typical for the fast-food industry, explain why business owners in the state report considering a series of offsetting measures to adapt to a $15 minimum wage,” the survey reported.
Almost half of fast-food restaurant owners in the state, 48 percent, said they would be “very likely” and another 35 percent “somewhat likely” to reduce employee hours or staffing levels in response to a minimum wage that high. Only 9 percent said it would not affect their staffing and hiring decisions.
For owners in the greater New York City area, 53 percent said they would be “very likely” to reduce employee hours or staffing levels. Another 34 percent would be “somewhat likely.” Only 8 percent said a raise would not hurt them.
In addition, 27 percent of those New York City managers said they would be very likely to close down completely. Another 23 percent would be somewhat likely to do that. About a third, 34 percent, said they would continue operating as normal.
The survey was conducted in response to statements by New York City Mayor Bill de Blasio that the city should adopt $15 as its minimum wage, following other cities such as San Francisco and SeaTac. The Los Angeles City Council approved a $15 minimum in a vote Wednesday.
