Restaurants Will Suffer From An Increased Minimum Wage

Raising the minimum wage will have severe consequences, especially for those working in the restaurant industry, investor rating service Moody’s warned on Thursday.

“A higher minimum wage represents a particular challenge for restaurants, which depend heavily on hourly workers,” William Fahy, vice president and senior credit officer for Moody’s, said in a statement. “But restaurant operators will have a tough time passing higher labor costs onto customers without negatively impacting traffic.”

The increased cost of labor will likely cause higher costs to customers, which as Fahy noted, would be bad for restaurants trying to maintain profits. The restaurant industry tends to have a low profit margin, so a decrease in the flow of customers could be severe. Restaurants could also cut hours or the number of employees they have while relying more on computers to service customers. Some restaurants may even be forced to close.