Tackling Minimum Wage Hikes: The Role of Restaurant Technology

Last September, California passed law AB 1228, which increased the minimum hourly wage by 25 percent for 557,000 of the state's estimated 726,600 fast food employees. Effective April 1, this law raised the minimum wage from $16 to $20 per hour for employees at quick service restaurants with more than 60 national locations.

For restaurant leaders, it is crucial to evaluate the impact of this change. Let’s explore the issue and discuss strategies to address it for your business.

‍Negative Impact on Fast-Food Chains

California's recent increase of the minimum wage for fast-food workers to $20 has already led to a surge in restaurant prices and lower customer foot traffic in the state, according to a recent study published by Placer.ai. The study reveals that several fast-food chains in California have experienced a decrease in foot traffic since the minimum wage hike took effect. In fact, during April through May, foot traffic to fast-food restaurants in California was below the national average for seven out of eight weeks, Placer.ai reported. Quick-service burger chains were particularly affected.

In recent months, several other states have followed suit with their own minimum wage increases, aiming to improve the livelihoods of fast-food workers nationwide. The impact of these minimum wage hikes includes higher labor costs for restaurants as a whole, potentially leading to increased menu prices and operational challenges.

Positive Impact for Casual Dining Brands

However, the study also shows some positive impacts for casual dining brands such as our partners Olive Garden and Chili's Grill & Bar, as their restaurants in California outperformed the chains' respective national averages in foot traffic year-over-year in April. Despite the challenges posed by higher labor costs, the strategic move to value bundled deals and pay at the table restaurant technology like Ziosk, has helped make casual dining competitive in price to fast food chains, while enhancing operational efficiency.

The Role of Restaurant Technology and Guest Feedback

As the study highlights, wage increases are reshaping the restaurant industry, prompting the need for innovative solutions to enhance productivity and customer satisfaction. Investing in technology like Ziosk is a smart move.

Ziosk is a proven leader in restaurant technology and the trusted partner for some of the nation’s largest full-service restaurant brands. We’ve specialized in restaurant operations for over a decade. One main feature that sets us apart is our customizable survey engine, which garners a response rate of over 30%, providing real-time guest feedback. This system helps identify top performers and enables managers to offer coaching for service improvements.

Encouraging servers to solicit feedback from guests not only boosts staff retention by rewarding top performers but also provides valuable insights into brand perception. These insights can be leveraged to develop effective customer retention strategies that drive loyalty and repeat business.

Another way to address the challenge posed by rising minimum wages is through Ziosk's pay-at-the-table solution, which enhances server productivity and increases table turns. By leveraging Ziosk's platform for streamlined ordering and contactless payments, servers can focus more on the guest experience.

As discussed by Ziosk founder Jack Baum in a recent Ziosk Decoded LinkedIn video, this increased efficiency allows servers to handle more tables and provide better service, ultimately offsetting the impact of minimum wage increases on restaurant operations and profitability.

As more states continue to implement minimum wage increases, integrating restaurant technology like Ziosk can be instrumental. By optimizing operations and leveraging guest insights, restaurants can mitigate the financial strain caused by higher labor costs while simultaneously improving guest experience.

To find out more about how Ziosk can help improve your bottom line and address labor cost issues, book a demo.