Colorado Restaurants Feeling Pinch After Minimum Wage Increase

DENVER (CBS4) - Many restaurant chains in Colorado say the new minimum wage is hurting their bottom line.

They say they're making big changes to try and stay in business.

Colorado's new minimum wage increased on Jan. 1 from $9.30 to $10.20 per hour.

Some restaurants say they're laying off workers, while others are raising prices.

Meanwhile other owners are letting customers place their orders from kiosks or tablets right at their table.

The president and CEO of the Colorado Restaurant Association says the wage increase is also creating an unintended imbalance among workers.

"Restaurants typically make a very slim profit margins, roughly three to six percent. What this increase does each year is creating a greater disparity between the front of the house and the back of the house," said Sonia Riggs. "What that means is typically servers with their tips tend to be the highest paid people in a restaurant. As this increase is happening each year, the folks already making above minimum wage, like the cooks and the dishwashers, are not required to get a raise at all and the folks that are highest paid people in the restaurant, like the servers, are getting a forced raise."

The minimum wage will go up .90 each year until it hits $12/hour in 2020.

Riggs also said, "Often times restaurants are forced to increase their prices, they're getting an additional raise on top of that as they increase those menu prices, and tips are based on a percentage of the bill."

After 2020, the minimum wage will be adjusted based on cost of living increases.