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How Do I Prepare My Restaurant To Sell Amongst Mandatory Minimum Wage Hikes?

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Comments & Replies: 1     Views: 1378     Posted By: Joe Ranieri  Joe Ranieri, Business Broker: LA, Orange County Areas

A point of back ground, back in 2016, California Governor Jerry Brown signed into law an increase to the state minimum wage from $10 to $15 per hour. The increase is gradual and goes up about a dollar a year and maxes out at $15 an hour in 2022. Here is some advice in handling this new increase.

Topics: Buying A Business, Selling A Business     Tags: buying a business, for sale by owner, selling a business



This is a topic many small business owners are having with themselves these days. A point of back ground, back in 2016, California Governor Jerry Brown signed into law an increase to the state minimum wage from $10 to $15 per hour. The increase is gradual and goes up about a dollar a year and maxes out at $15 an hour in 2022. Here is some advice in handling this new increase.

This is a topic many business owners are having with themselves, and major franchises, such as McDonalds, are reported to already be preparing for $15 an hour minimum wage in California by installing ordering kiosks in their stores. A point of back ground, back in 2016, California Governor Jerry Brown signed into law an increase to the state minimum wage from $10 to $15 per hour. The increase is gradual and goes up about a dollar a year and maxes out at $15 an hour in 2022. Many business owners are concerned about dealing with a 50% increase in labor costs over such a short period of time, and not only will they be paying $15 minimum wage, but many workers, such as employees who have been with the company for a while and supervisors make a few dollars over minimum wage, and so they will be making $17, $18 or $19 dollars an hour. The minimum wage hikes coincide with record low unemployment, so business owners will be fighting amongst each other for good labor, increasing wages even more.

1. Audit Expenses - Focus on two things which you can control, food costs and labor. With regards to labor, look for sales peaks/declines during the day and staff accordingly, appropriate staffing will improve profitability - gone are the days when an owner can have employees standing around or having 2 employees doing the same job when one will do. As a past business owner, I've seen employees dealing in food, waste an unbelievable amount, and so an owner should be very focused on lowering food costs.

2. Research laws/regulations on tips regarding servers/staff - Make sure as a restaurant owner you are up to speed on the latest and upcoming laws regarding tip pooling/tip sharing and how it impacts minimum wage amongst servers. Some restaurant owners have been talking about including a service charge in lieu of tips, this is somethings one should investigate and see if it works in their personal market.

3. Hire smart - There's an old saying, "Slow to hire, fast to fire." An owner who pays more for labor should expect more from the employee. An owner should really analyze the qualifications of a recent hire, but if they find that they are not working out, be tough and send them on their way.

4. Upgrade technology - If it is affordable, consider automation or introducing kiosks. Computer tablets have never been more affordable and are great ways to lower costs by having customers order from them. According to a USA Today article published June 7, 2018 there are advantages to ordering kiosks vs ordering at the counter, "What we are finding is when people dwell more, they tend to select more," McDonald's CEO Steve Easterbrook told CNBC Monday. "So there is a little bit of an average check boost that comes with it." An owner should also invest in monitoring cameras in their store and have them be viewable remotely from either a laptop at home or their smartphone. Monitoring cameras goes back to controlling food costs because of internal theft.

5. Increase Prices - This is tricky, because an owner always wants to build their business, but if it's possible analyze where there is a possibility of increasing prices on food items. This can be accomplished smoothly with the role out of a new menu board or new menus.


  Helpful Resources To Assist In Selling And Buying California Businesses
William Park, Business Broker - Southern California

Highest Volume Broker in California, Simply Check our HUNDREDS of Listings! Over 25 Associates, Speaking Dozen Languages, Helping Buyers and Sellers of Small Business since 1982, Centrally Located between Los Angeles and Orange Counties, while Riverside & San Bernardino Counties are Very Accessible.

Steve Zimmerman: Restaurant Broker Specialist

Steve founded Restaurant Realty in 1996. He has personally sold/leased over 900 restaurants, bars & clubs, & completed over 3000 valuations. The author of "Restaurant Dealmaker - An Insider's Trade Secrets For Buying a Restaurant, Bar or Club" available on Amazon. Reach Steve direct at 415-945-9701.

Prabhjot Randhawa, Broker: SF Bay Area, Northern Central Valley

I'm a Business Advisor at Liberty Business Advisors of San Fransisco. I have over 20 years of experience in all phases of entrepreneurship. During the past 15 years my concentration has been in business of mergers and consulting. I have owned and operated over 10 businesses.

Jeff Sacher, Business Broker - North Bay Restaurant, Retail Specialist

Jeff is a leader in business brokering in the North Bay. Since joining Santa Rosa Business And Commercial in 1999 he has assisted Buyers and Sellers in over 200 business sales and acquisitions. Jeff provides other services for his clients as well. Reach Jeff and his team at 707-888-4972.

Ryan Clark, Business Broker, Southern California

The Veld Group provides a refreshing approach to Business Brokerage, Mergers & Acquisitions and Business Consulting and Valuations. From Your Street to Wall Street, we cater to Main Street Businesses as well as more complex Strategic Firms and Start-Ups. Phone Ryan at 310-652-8353.

Michael Floorman, Business Broker, BTI, San Francisco Bay Area

Business Team, San Jose (Campbell) located in the Pruneyard Towers at Bascom and Hamilton. Established in 1981 Business Team with over 6600 sales to date has 1000 business listings to choose from, paid Google advertising. We offer highly trained and experienced professionals.

Mani Singh, Business Broker, Southern California

I have successfully represented clients sell & acquire multitude of businesses ranging from Gas Stations, Liquor Stores, Markets, Super Markets, Smoke Shops, Postal Stores, Restaurants, General Retail, Auto and Construction related. Phone me for assistance with selling or buying at 951-296-7646 Cell

Mike Brewer: Liquor License Brokers, ABC Consulting Services

Liquor license brokerage and consulting services. We provide: Alcohol License Transfers Application Consulting & Processing, Liquor License Purchases & Sales, City Zoning Permits & Land Use Entitlements, Public Convenience or Necessity Findings and Letters. Phone Mike Brewer direct at 800-437-1100.


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