It's an interesting discussion. In my particular case a raise in tipped minimum wage would terrify me. Our goal is to grow our business (and profit margin) to the point that we can pay all of our cooks a minimum of $15 an hour. It's not altruism, it's what is necessary to attract and retain reliable cooks that can prepare food consistently and not lose their shit when getting slammed. Other's have alluded to it here, but it boils down to that BoH employee making himself VALUABLE. That value drives our desire to bring their wages up.

There is always the persistent nagging fear that business could decline, an equipment failure could eat into cashflow ect ect. March was the best month we have ever had. On the first payroll of April we paid out a $2 an hour bonus for each hour worked in March to our back of house employees. In April we purchased a new 5 ton RTU and upgraded our draft tower to 21 taps (glycol). If the BoH staff had a permanent $2 increase in hourly wage the net effect would not have been good. If time proves out that we can sustain the increase permanently we will go that direction.

Our FoH staff starts at $4.95 (illinois tipped minimum wage) and tops out at $7. This week was our second best gross sales week ever. One of our bartenders told me tonight that she averaged around $300 per shift in tips for her last three shifts this week. She works 38-40 hours a week at $6 base wage. That's $29+ an hour (not factoring her tips in from her other shifts she worked). The current average hourly tip rate across the FoH staff falls at around $19.50 an hour (+base wage) (which is an increase from $16ish in 2012 and $17ish in 2013).

I have raised our prices before (our last remodel in march 2013) and not an eyelash was batted by customers. But that increase corresponded with a dramatic upgrade to the building and amenities. The increase was completely acceptable and tolerated because the value was readily apparent.

Damn near any "study" on what the cost of a wage increase to an employer would be ignores the additional cost of employer payroll taxes and the increase cost of sales tax and at a higher price.

With regard to the food service industry in particular, the highly variable cost of product is also largely ignored. Have you noticed an increase in chicken, pork and beef prices lately? My price from distribution for a case of bacon jumped from $70 to $104 in two weeks. A significant portion of the industry could not sustain the double whammy of forced increased labor costs and protein costs. You are probably already seeing it at the grocery. Prepare yourselves. The current US cattle herd is at the smallest since 1951. The effect has been largely delayed as herds were culled through 2013 due to poor weather conditions (drought), poor grazing and high feed prices. A protein price skyrocket is near.

Anyone who would argue that a flat price increase with no perceived increase in value will not negatively impact gross sales either has limited experience on this side of a business or is in a business providing a specialized service to clients where the cost is less an issue then the quality product/service they are receiving. That said, higher prices at McDonald's might drive people to actually eat decent food instead of the chickenishstuffs and meatishstuffs that McD's slings.

I don't need the government to mandate wages to me. The labor pool and desire to attract/retain VALUABLE employees is naturally putting upward pressure on my wages.

I would surmise that a significant portion of increased minimum wages wouldn't be spent on increased consumption but on servicing debt.

I don't care to speculate on the impact on other minimum wage industries but knowing my own business metrics I can factually say that my prices would have to increase significantly because consumption from my customer base would decline and I would not suddenly gain minimum wage customers. My profit margin would decrease or evaporate, my ability for future capital investment would stagnate and the natural market driven upward wage pressure would stall.