Technology, increased productivity help local restaurateurs deal with higher minimum wage

Local restaurateurs agree the passage of a Florida Constitutional amendment raising the minimum wage to $15 an hour over six years will impact their operations significantly.

But there are two widely differing viewpoints on how that impact will play out.

J.T. Corrales, director of business development for the Crabby Bill’s family of restaurants, said restaurants will either have to change the way they do business or raise prices to make up for the higher cost of labor.

“Businesses, in particularly the restaurant industry, operate on a small margin. You can’t just absorb the increase and do nothing. You either pass the cost off to the consumer, which raises prices, or you change the way you operate your business. If you don’t do one or the other, you will go out of business,” Corrales said.

Businesses have to make a return, agreed James Lanza, founder of Ciccio’s Restaurant Group, which is opening On The Fly, a food hall on 4th Street in St. Petersburg. Paying workers more can increase their productivity and limit price hikes while also sharing industry wealth, he said.

“Capitalism needs to take care of the workers. I hope that is the end result of all this. It can’t just benefit the owners and the shareholders. It’s got to take care of the workers. Workers have got to make money. There’s got to be a balance,” Lanza said.

Related: Florida Tiger Bay Clubs host debate on raising the minimum wage

Amendment 2, which would raise the state’s minimum hourly wage incrementally from $8.56 this year to $15 in September 2026, garnered 60.8 percent of the vote in favor of the measure, with 100 percent of Florida’s precincts reporting, according to Politico.

Passage of the measure did not surprise the St. Petersburg Area Chamber of Commerce.

“All of us running Chambers knew this one had enough early popular support to win. While we are excited to know our residents will be paid more for their work, we wonder how our businesses will absorb the extra expenses. You may find prices for all of us go up as they pass along these new expenses or businesses may just create less jobs. The structure for raising it a little each year will certainly help, but in the long term may affect our overall cost of living here in the burg, putting those making minimum wage back into the same situation,” said a statement from Chris Steinocher, president and CEO of the Chamber.

The measure puts jobs at risk and businesses in jeopardy of closing, the Florida Restaurant and Lodging Association said in a statement Wednesday.

https://t.co/haJ2HWjMFX pic.twitter.com/YgbVwgCH7O

— FL Restaurant & Lodging Association (@FRLAnews) November 4, 2020

Corrales, who is a representative of the FRLA’s group Amendment 2 Hurts You, said the measure changes the landscape for how restaurants conduct business.

J.T. Corrales, director of business development for Crabby Bill’s, at a press conference in St.Petersburg in October.

“Back of the house people are already paid above the minimum wage. They have skills so the market will naturally raise their wage,” Corrales said. “Where it changes is for tipped employees, bartenders and servers. It doubles what they are currently paid. Some businesses are charging service fees to offset the costs and pay all their employees equally, but then servers are not as incentivized to give good service.”

Corrales said more restaurants might replace servers with technology. For instance, Jake’s Coastal Cantina, a Tex-Mex Crabby Bill’s concept in Indian Rocks Beach, is using Toast, a contactless order and pay point-of-sales platform that lets diners at the quick-serve restaurant order and pay on their own.

“Instead of having servers working stations, you end up having food runners and drink runners,” he said, adding those runners can handle more than twice the number of tables as a server. There’s a similar concept for full-service restaurants that would allow Crabby Bill’s to save money, but the company doesn’t want to go that way, he said.

Ciccio Restaurant Group started looking for new ways to pay employees at its full-service concepts as a result of the Covid-19 pandemic, Lanza said.

James Lanza, founder of Ciccio Restaurant Group, at On The Fly at 4447 4th St. N.

“A lot of our kitchen employees make over $15. Our tipped employees do not make $15, but we’ve started experimenting at our full-service restaurants. With Covid, we started paying our full-service servers more per hour, and going with less staff, and everyone is working way harder because they are making more per hour,” Lanza said. “We think in the long run with our people making more money they’ll be more productive, and we’ll have much better product in the end.”

He said higher pay will also help the CRG restaurants attract higher-quality employees. They’re also happier and have more money to spend, which is good for the economy, he said.

“The only issue is we are going to have to raise our prices eventually to cover the increased cost of labor. Everyone will make more money, but they’ll also spend more money at restaurants,” Lanza said. “Unless, and this is a big question, unless our people work that much harder that we can go with less people. Any business has to make a return. They either have to raise their prices or have more productivity. I personally think we’re going to get more productivity that will absorb a lot of the cost increase we would have to do otherwise.”

CRG is not alone. An organization called Businesses for a Fair Minimum Wage said more than 160 Florida business owners signed a statement of support for Amendment 2.