New overtime laws for the restaurant industry may have been delayed from going into effect, but the preparation for these laws has already brought about change in the industry, as well as much debate about what constitutes a living wage.
As a restaurateur, if these were to pass, how will you absorb this extra expense? Already existing on a razor thin margin, can you really afford it at all? In order to implement a wage increase, will you be forced to cut corners, change suppliers, or succumb to the dreaded price increase?
In our current culture of people obsessed with finding the best deal, using the word coupon as a verb, and incessantly comparing prices on their smart phones; are diners willing to pay more for a dining experience? Would they be more likely to pay more if they knew employees at their favorite restaurant were earning a livable wage?
Surprisingly, the answer may be yes.
As Millennials have come of age, and our smartphones have become a bigger and bigger part of our existence, a lot of attention has been paid to corporate social responsibility. As businesses and restaurants have built their social media platforms in an effort to reach bigger and bigger audiences, their customers are learning a lot more about them and their core values. And they prefer to see businesses acting in socially responsible ways.
However, the reality of restaurants operating in more ethical ways is that it often tends to cost more. When asked, most people will tell you that they’d prefer their favorite places ran their restaurants ethically, but in reality are those same people willing to pay more for it? It turns out, they will, and the trend is only growing. Recent trends show that Millennials care the most about corporate social responsibility, especially women, and they’re a growing part of the customer base.
While many people agreed they’d be willing to pay more, it is clear that how you go about getting them to pay more makes a difference.
A restaurant chain with restaurants in Oregon and Washington tried to offer a better wage to their employees by adding a 1% “living wage” surcharge to all bills, a plan which ultimately failed. This strategy, while well-intentioned, made for many awkward moments where uncomfortable wait staff had to explain this bill item to confused customers. Presented in that way, many diners didn’t feel like the wages of employees was the responsibility of the consumer, but of the employer.
Many people I talked to for this article, including Providence food blogger, Holly Vine, said they’d be happy to pay more for a meal out if they knew that the employees were earning a living wage, but would prefer the more European model of a no-tip situation where the bill was 20% higher, employees earned salaries, and there was no expectation of tipping. As new mom to twin boys, Holly said, “I have even more of an appreciation for food both from the point of view of not getting out to eat as much and the prep side (doing recipe development and design I buy a lot of ingredients and spend A LOT of time cooking) I better understand the value of well prepared, responsibly sourced and produced food. My favourite place raising it’s prices wouldn’t put me off eating there.”
In general, I’ve found, customers are more supportive of noticeable price increases when they’re clearly explained. Some types of price increases can happen subtly, since they are often a combination of many different factors. But if you’re making a noticeably bigger jump, especially on popular and long running items, you may get questions you need to be prepared to answer clearly. Have a plan in place and offer an explanation that is not uncomfortable to your waitstaff, who is inevitably on the front lines of customer service, and not a turn off for your regulars. Perhaps you can write a blog post, or include an announcement in with the bill.
However you decide to do it, remind yourself that well compensated employees are also an asset to your restaurant. They are more loyal, and provide a better experience for your customers. The more invested in your restaurant your diners feel, the more likely they are to turn into your most loyal regulars.