Thinking Out Loud About Oasis Cafe Minimum Wage Fee (Involves an attempt at math)

Oasis ReceiptThe Minnesota state minimum wage for small businesses increased from $5.25 to $6.50 on August 1, right?  If the owners of the Oasis Cafe have put a 35 cent surcharge on each ticket or table, they must calculate that a server averages about 3.5 tables an hour, which is about the equivalent of $1.25 (3.5 X .35 = $1.23).

If 3.5 tables per hour sounds right then the numbers seem to add up.  However, do restaurants employ severs at a small cafe at a level that only cover an average of 3.5 tables per hour at the end of the day?

Let’s bump it up and say the sever averages 4 tables a day, a very modest increase.  The surcharge then brings in $1.40 an hour.  Not a big difference.  That’s 17 cents.  For each 8 hour shift, that’s $1.36.  Nothing, right?  It’s still almost $500 per year per worker above the cost of the wage increase, however.

But let’s say the average is more like 6 tables an hour.  Six times .35 is an extra $2.10 per hour coming in, less the $1.25, that’s 85 cents more to the business.  Times 8 for the 8 hour shift and that’s $6.80.   Say the restaurant has two shifts and now that becomes $13.60.  Let’s suppose the restaurant is open only 6 days a week and closed for major holidays…let’s say open 300 days a year…that adds up to more than $4000 to the restaurant per worker per year, right?!

Check my math.  (Seriously.)  I’m not sure I am correct.  It seems correct.  Plus the business has more than one server, I presume.  Maybe each server does only 3 to 4 tables per hour on average, but if they turn 5 or 6 or more, well…  (Any restaurant people out there?)

I’m curious, too, about other margins.  The pictures of Oasis bills I have seen online are modest — this isn’t Manny’s — but say we’re at $20 on an average, how much of that might a business like this expect to net?  If the price of eggs goes up, for example, or the price of coffee…what happens?

Price increases are sticky for a reason.  They tend to retain profits.  If the price of eggs goes up for a year or so and the market adjusts to the new higher price of omelettes, if the price of eggs goes down the price of omelettes isn’t likely to go down without an external factor (a competitor, for example).

My point is price increases are not new.  The problem here is the idea that government is involved.  We can debate the merits or problems with that.  But to make it appear that the increase will kill the business and therefore the fee is required is ludicrous.  When put into context with other increases, I think that point is clear.  In fact this minimum wage protest — if that is what it is — appears to be a money maker!  Now, if the wage increase applied to Restaurant A and not Restaurant B, then you have a problem.  That is not the case.

Your two cents?

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One thought on “Thinking Out Loud About Oasis Cafe Minimum Wage Fee (Involves an attempt at math)

  1. Pingback: The Oasis Cafe Minimum Wage “Controversy” | A Little Tour in Yellow

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