Study links minimum wage hike, restaurant price increases

Posted at 6:23 PM, Oct 18, 2016
and last updated 2016-10-19 08:38:27-04

SAN DIEGO - San Diegans are continuing to experience sticker shock when they sit down to eat at local restaurants, and many of the owners are blaming minimum wage hikes.

"Ultimately, something's got to give, and the increase of menu prices will have to cover the increase in minimum wage," said Johnny Faradjian, who owns Socrates Cafe in the Fashion Valley Mall food court.

In June, city of San Diego voters elected to raise minimum wage to $10.50 an hour, starting in July, to help battle the area's high cost of living. It increases to $11.50 an hour in January.

"When minimum wage goes up, our margins go down," Faradjian said.

Now, a study from startup company Homebase, which helps employers with scheduling and payroll, is calculating how much restaurant prices will go up as minimum wage rises to $15 an hour for most businesses by 2022.

The study says the average San Diegan spends about $254 a month eating out. When minimum wage hits $12 an hour, their bills will rise an extra $12 a month. When minimum wage reaches $15, they'll be spending an extra $31.20 each month at restaurants to cover the increase in labor costs.

"It's definitely pretty expensive, especially when we have to pay for rent already, and the extra taxes we pay in California; it's ridiculous how high these prices are going up," said San Diegan Moises Hernandez, who has cut back on eating out over the last two years.

Faradjian said he can't raise prices too much because of what's next door at the Fashion Valley food court -- Rubios, Sarku, Stone Oven and Panda Express.

Minimum wage next increases Jan. 1 statewide to $10.50 an hour. It will hit $12 on Jan. 1, 2019, for most businesses.