Susannah Koteen may be the owner of Lido Harlem Restaurant but on a busy Monday afternoon, she finds herself trying to supervise her 15-person staff while taking reservations over the phone—Koteen says keeping up with the business has become tough over the past few months and it’s all due to the minimum wage rise in the city.
As a result of restaurants being required to pay their employees based on the increase labor guidelines, Koteen notes that cutting back hours, increasing menu prices and making sure no one works overtime are just three of the steps she has taken to keep her business solvent.
“I’ve had to cut back hours while also being careful not to give anyone more than 40 hours a week”, she adds.
Located on a busy corner in Harlem, Lido’s has been an economically thriving and stable business in the area for 9 years now. Offering a wide selection of pasta and brunch items on the weekends, customers have rated the cuisine as a neighborhood spot, according to Yelp reviews.
However, small businesses like Lidos will have to do their best to keep their business from losing its personal touch with its customers.
“You are making things so expensive for businesses that you risk having iPads on tables instead of having that human interaction”, says Koteen
However, the fears of owners like Koteen are misplaced, says James Parrot, director of economic and fiscal policies at the New Schools’ Center for New York City Affairs. Studies suggest the rise of minimum wage has rather made dining businesses grow despite the fears of shuttering restaurants. Parrot along with research assistant Lina Moe took a look at employment and restaurant earnings over the entire period of New York City’s minimum wage increase. In the report, they found strong economic growth between 2013 to 2018 in the restaurant industry which included higher job growth and restaurant performance.
“There has been vast improvement more than before. The minimum wage has expanded the pool of consumers and given people purchasing power specifically in eating out,” he adds. “Things will go out of fashion and restaurants will have to adapt to not only rising wages but also competition,” Parrot tells NYC Biz News.
In recent years, with vast amount of pressure on restaurant owners to keep their business up to quality standards, automation has made its way into places like Panera Bread, Applebee’s and even more recently McDonalds who plan to invest in a new speeder drive thru. As a result of all this, some have argued that businesses have had to use robotic technology and eliminate human workers because of the $15 minimum wage increase fight that began back in 2012.
“At this point as a business owner you’re doing what you can to stay open,” said Koteen.
Currently, tip minimum wage employees are required to be paid the minimum wage by combining cash wages with tip allowance. Tipped food services workers as of December 31, 2018 are paid $10 an hour and will be kept the same well into December 31st, 2021. Following, employers are expected to give their workers credit for tips at maximum of $5.00 per hour. On the other hand, Kotten believes that there is so much red tape with this method.
“Before the wage was $7.50 an hour to $8 and hour now its $10 an hour. It has grown so much since I have been in business,” she adds.
Meanwhile, non-tip employees such as line cooks, dishwashers and cashiers must be paid $15 an hour.
“The issue is if you have all the wages go up you now have people demanding more and you have to be fair,” says Koteen. “Already my servers make well over $24-$25 an hour with tips.”
In recent years, small businesses have been affected by high rent prices, new regulations and most importantly costs involving their employees. Due to these factors, businesses have closed and are now being replaced with big chain stores and restaurants. As a result, more business owners feel neglected.
“New York City is an unfriendly place for small businesses, and I think they take us for granted”, added Koteen. “You are now seeing more empty store fronts because owners can’t keep up”.
For Susannah Koteen, she hopes that leaders will take a better look at how small businesses make an impact for people in the community. Koteen is expected to open another smaller restaurant in New York City. She also explains that running a business in a city like this has caused both businesses and residents to flee. However, she stresses that opening a new operation will not be easy due to things like obtaining an alcohol license which takes about four to six months on top of following wage laws.