AURORA | When the calendar flipped to 2017, businesses across Colorado began grappling with the first wave of wage increases, a measure approved by voters last fall.
For tipped employees, that meant a $.99 an hour raise from the old minimum of $5.29 an hour.
At A-Town Pizza on Iliff Avenue in Aurora, owner Will Harris said the wage hike is a big issue for him, but he isn’t sure yet exactly how he will cope with it.
“We’ll say ignorance is bliss on this one right now,” Harris said with a laugh.
Price hikes at his two locations — one at East Quincy Avenue and South Buckley Road, the other at East Iliff Avenue and South Havana Street — aren’t a great option in the ultra-competitive pizza game, Harris said.
Other restaurants — including the hamburger chain Good Times Burgers & Frozen Custard — have already announced price hikes aimed at offsetting the increased wages, and industry leaders say figuring how to tackle the voter-mandated wage hikes is going to be a big issue for restaurant owners going forward.
“They’re raising rates, they’re redistributing work areas, they’re removing positions in some cases,” said Carolyn Livingston, a spokeswoman for the Colorado Restaurant Association.
Over the next four years, the tipped minimum wage will climb to $8.98 an hour. And Livingston said that jump is the huge concern in the restaurant business, particularly for owners already carefully watching profit margins.
“Many of our folks are primarily concerned with the tipped minimum wage,” she said.
Restaurants generally operate on a profit margin of between 3 and 6 percent, she said, which doesn’t give them a lot of wiggle room to increase wages.
Raising prices and, literally, passing the buck on to consumers is an option, but Livingston said it’s not always feasible — and never popular.
“You can only raise prices so much before people stop coming,” she said.
The association is in the process of surveying restaurant owners to determine how they are handling the increased wages.
When the group conducted a similar survey in 2015, most of the restaurateurs who replied — 89 percent — said they would respond to a minimum wage hike by increasing their prices.
At Good Times, president and CEO Boyd Hoback said in a statement announcing the company’s most-recent sales figures that price hikes are coming.
“We plan on small price increases during our second quarter to offset the increased Colorado minimum wage,” he said in the statement.
The company didn’t say how much their prices would be going up, nor if they had other plans to tackle the rising wages at their quick-service Good Times locations or their sitdown Bad Daddy’s Burger restaurants. Company officials did not return a call for comment.
But, again, not all restaurants believe they can cope with a price hike.
At A-Town, Harris said price hikes just aren’t a good option. He said he raised prices once before and it caused a dip in sales that largely negated any increase in profits, so he is reluctant to try that again.
“That dollar is too sticky at Quincy and Buckley, that dollar is too sticky at Iliff and Havana,” he said.
For now, Harris said he is going to ask his 50 to 60 employees at the two locations to “work faster” to help offset the wage hike. But he isn’t sure going forward if he will have to try other ideas, like the lamented price hike, or perhaps shifting some employee responsibilities.
“Talk about a pickle,” he said.