New rules for servers worrying restaurant owners

The article below from the Glens Falls Post-Star showed up in my feed. Glens Falls is a small resort town in the Adirondack mountains in NY. Very heavy summer traffic. The rest of the year is sporadic. Foliage in the fall, some ski traffic in the winter and that’s about it.

The article is focusing on the increase in minimum wage for tipped employees in NY. A 50% increase up to $7.50/hr will take effect by December 31, 2015. In the article they interview a few local restaurant owners for feedback. For the most part:

  • They all expect to increase prices
  • Some expect to cut staff or not backfill a server position if someone leaves
  • They feel the customer will be affected in one way or another whether it’s a price increase, less staff so potentially slower service, or both

Another point raised a few times in the article is that they are so seasonal they aren’t sure how that will play into the whole situation. I guess we’ll find out in about a year.

With these increases more than likely coming everywhere sooner or later do you feel that the owners in the article are correct in their assumptions or are they way off base? Thoughts?

The full article is copied below:

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Area restaurateurs are still trying to calculate the impact of a minimum wage rule for tipped employees that will go into effect Dec. 31.

They know it’s not going to be good.

“New York State just keeps getting worse and worse and worse as a place to do business,” said Paul Bricoccoli, co-owner of the Bullpen Tavern on Glen Street in Glens Falls, the Talk of the Town restaurant in Glens Falls and the Horseshoe Inn Bar & Grill in Saratoga Springs. Among them, the operations employ around 60 tipped workers during the peak summer tourism months, Bricoccoli said.

“This is a crippling thing for us,” he said. “You’re going to see mass bankruptcy of restaurants, in my opinion.”

Bricoccoli said he’s not sure how he and his business partners will absorb the additional costs, but he suspects higher prices, reduced staff or fewer hours for existing staff will be on the table.

“I know what we pay and what we have to match,” he said. “We’re going to have to make some serious decisions on how we do business.”

Chris Mozal, owner of the Docksider Restaurant on Glen Lake Road in Queensbury, is equally concerned. She said she’s not sure what her options might be, since she doesn’t want to cut staff or hours.

“We’re a lakeside restaurant, and probably 75 percent of our business is in the summer, so we do have to maintain a full staff,” Mozal said. “I don’t want to sacrifice our service with taking people away.”

In the summer months, the Docksider has about 40 employees, three-quarters of whom are tipped workers, Mozal said.

Donna Sutton, co-owner of Sutton’s Marketplace and Cafe on Route 9 in Queensbury, is also considering her options.

“We might have to raise our prices, certainly,” she said. “We haven’t raised our prices in two years, so we really don’t want to start that now.”

Sutton, who guessed a price increase of 10 percent or more is possible, is worried about the impact that could have on customers’ willingness to dine out — or even tip generously.

A change in cost structure wasn’t part of Gary Patton’s business plan, as he was opening Superior Cantina in Glens Falls — the same week state Labor Commissioner Mario J. Musolino issued the new minimum wage order.

“All restaurants, and any service business, is going to have to raise their prices,” Patton said. “I understand people need to make a good wage, and I’m all for that, but I think it needs to be more incremental — done over a longer amount of time.”

Patton launched his restaurant with around 20 employees, mostly tipped workers, in order to ensure strong service right out of the gate. But with a new wage structure coming, he’s thinking he might cut back by 2016.

“If someone were to leave, I would consider not replacing them and try to do the same amount of work with fewer people,” he said. “As we get closer, we’ll see where we’re at and try to make it to where it doesn’t affect our customers. But the bottom line is it’s going to wind up affecting them in some way.”

The New York State Restaurant Association, which vehemently opposed the change in minimum wage for tipped workers, said the new rule “will, without a doubt, have far-reaching effects on the industry and its employees.”

The association suggested restaurants might consider paying all employees the full minimum wage and eliminating the tipping system completely.

“It’s troubling that (Musolino) ignored legislative precedent and the pleas of nearly 1,000 hospitality industry representatives who asked him for a moderate increase phased in over time,” said Restaurant Association President and CEO Melissa Fleischut, in a prepared statement. “By rubber-stamping an extreme, unprecedented 50 percent increase, it becomes hard to believe New York is really ‘open for business.’”

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