Minimum Wages Are Rising, and Restaurant Diners Are Footing the Bill
As minimum wages rise in states across the U.S., consumers are picking up the cost.
But instead of hiking menu prices, restaurants in a number of states are turning the additional wage costs into surcharges, according to the Wall Street Journal. In Arizona, California, Colorado, and New York, they can range from 3% to 4%.
Restaurants are choosing to add the surcharges because they say raising prices makes consumers want to trade down—ordering a sandwich instead of an entree, or skipping desert, the Journal reports. And for a business with razor-thin margins, that can make a huge difference.
“It’s the emerging new norm,” Sharokina Shams, spokeswoman for the California Restaurant Association, told the Journal. She said California restaurants will add a surcharge to adjust to the state’s minimum wage policy, which is expected to rise annually until it reaches $15 an hour by 2023.