Restaurant industry sees rising wages with improving economy

Wages are rising at some of the nation’s biggest restaurant chains with a tightening labor market.

Since retail and restaurant workers make up the two biggest categories of employees in greater Orlando, it could mean an increase in earnings for some of the area’s lowest-paid workers.

While politicians battled in 2016 to pass a law to raise the national minimum wage of $7.25 an hour, business owners and leaders say wages are going up naturally. Florida’s minimum wage recently increased to $8.10 hourly.

“Labor costs are going up in just about every market we operate in,” said Shake Shack CEO Randy Garutti during a presentation at the ICR Conference in Orlando on Tuesday.

More than 1 in 8 employees in the Orlando area works at retailers and restaurants in a region where the local median wage is less than $12 an hour, according to data from the U.S. Bureau of Labor Statistics.

But key restaurant industry executives said they are expecting to raise wages in 2017, a sign of an improving economy and fewer unemployed workers.

Retail and restaurant leaders have been struggling to keep labor costs down over the last few years while still attracting quality workers. Wal-Mart boosted its wage floor to $9 an hour a year ago. Companies such as IKEA have been boosting benefits to attract workers.

“Labor and wages are some of the biggest concerns right now for businesses, especially restaurants and retail,” said Thomas Ryan, founder and CEO of ICR, a restaurant consultant hosting this week’s conference in Orlando.

However, Ryan said many retailers and restaurants were pleased that efforts failed to raise the minimum for salaried workers to $47,476 from $23,660. Otherwise, salaried workers that earned less than $47,476 would have had to be paid overtime.

That rule from the Obama Administration would have affected about 4.6 million Americans, but was put on hold by a federal judge in November. Republican leaders have opposed the change.

Fast casual chain Chipotle expects to raise starting wages to about $11.50 an hour, on average, nationwide.

“Labor inflation has been an issue throughout the industry,” said Chipotle chief financial officer John Hartung.

Chipotle has 29 restaurants in the Central Florida.

Hartung said the Mexican dining chain increased prices by about 5 percent in the past two years, but may also start passing on some price hikes to customers in select markets on some menu items.

Orlando’s unemployment rate was 4.4 percent in November. The national unemployment rate is 4.9 percent.

Darden Restaurant CEO Gene Lee said in a call with investors in December wages are going up at a rate of about 3.5 percent a year at his restaurants.

However, he thinks that could be a positive for Olive Garden, LongHorn Steakhouse and other restaurants at the Orlando-based company.

“I’m optimistic that this wage inflation that we’re seeing is going to turn into discretionary income and some of it’s going to end up back in our restaurants,” he said.