New York State has increased the minimum labor hourly wages from 1st January 2025. The wages have been increased to $16.50 in New York City, Long Island, and Westchester County and $15.50 in all other cities. The New York minimum wage has been increased by $0.50 compared to previous rates in all cities. Moreover, the wages are different for tipped and non-tipped employees as restaurants are eligible for tip credit. It has also been decided that the New York minimum wage will increase by an additional $0.50 in 2026 and each year after that (although the rate is not decided).  

So, as a restaurant owner in New York City, what can you do to facilitate the rising labor costs while maintaining the bottom line? Let’s discuss some smart steps you can take to counter the New York minimum wage increase, now and in the future.    

The Real Cost to Your Restaurant  

The increase in minimum wages directly affects labor costs. However, some indirect costs also affect your business. These are -  

• Payroll Taxes - As wages rise, so do your obligations for Social Security and Medicare. These additional costs must be factored into your financial planning. Even a modest wage hike can significantly increase your quarterly tax burden. Smart owners are using automated payroll software to stay compliant and avoid costly penalties.

• Balancing Salaries - You need to keep a pay difference between different positions and experience levels. Therefore, as wages increase, you must also increase the pay of salaried employees to make up for the difference.  

Smart Moves NY Restaurant Owners Are Making  

Here are some steps you can take to ensure profitability and revenue despite the increase in New York’s minimum wage.  

Relook Pricing Strategies  

You must adjust your menu prices to counter the wage increase. Evaluate whether you want to increase the prices of all items at once by a certain percentage or only certain items. For this, try to analyze sales reports and identify the most sold items, items sold on particular days, etc.      

Enhance Employee Retention

The restaurant industry has one of the highest turnover rates, averaging between 75% and 85% annually, with quick-service restaurants often exceeding 100%. The workforce that receives daily/ hourly wages tends to switch jobs frequently. Therefore, employee retention is critical to reducing operational costs related to training and hiring. Moreover, long-time workers are more familiar with regular customers, enabling them to provide personalized services, which leads to customer retention.    

Utilize Reports

Modern restaurant management platforms provide diverse reports that offer deep insights for cost reduction and profitability improvement. For instance, a labor report helps you optimize staff schedules by recognizing peak times. Advanced analytics also help analyze employee productivity, most sold items, and more.  

Adopt Menu Engineering

Menu engineering is the process of achieving quality and profitability by strategically designing menus. A menu design is critical to drive ordering decisions and boost sales. To design the perfect menu, you must analyze historical data and menu performance. Moreover, you can adopt menu psychology for the right item placement, images, and prices.  

Be Proactive

It is always better to be prepared for any upcoming changes. Drafting a good strategy ensures that every time there is a minimum wage increase, you have a template that can be implemented with minor modifications. Moreover, you must always be up to date with the latest directives and amendments to be ready when any change happens.  

Check your Ingredient Costs Regularly

Ingredient costs are a major component of a restaurant’s operational expenses. Although you would never want to acquire average-quality ingredients, try to get them from local sources that offer the best quality ingredients at lower prices.      

Enhance Customer Experience  

The best way to handle the wage increase is to increase revenue. However, higher revenue is not possible without improving customer experience. Only when you offer a delightful dining experience will customers be willing to adjust to the price increase. You must ask for customer feedback about services and staff. Also, reduce ordering, payment, and waiting time through new-age tools.    

Join a Community

There are various organizations (local, state, or national) that support restaurants when they need help. You can be a part of such communities to get additional support and resources until you address the New York minimum wage increase.  

Invest in Technology

The advanced restaurant management platforms available today automate most restaurant operations, like order management, scheduling, and payments, optimizing productivity and reducing labor costs. Although an initial investment is required, these tools prove to be cost-effective in the long run.  

Overcome Increasing Labor Costs With NOVA  

NOVA is an AI-native platform that helps restaurants reduce labor costs, optimize menu management, and increase profitability. Let’s check out how NOVA can help you accommodate the increasing wages.  

Custom Reporting

NOVA platform offers pre-built reports for labor management, sales, and more. Reports, like labor costs, employee productivity, sales by time, and sales by item, help reduce labor costs and increase revenues. You can also customize the reports to get actionable insights.  

AI-Native Marketing

NOVA enables you to run AI-driven marketing campaigns and create loyalty programs based on customer preferences, peak hours, most-consumed items, and more. Moreover, you can offer gift cards and discounts based on AI recommendations.  

Comprehensive Solution

NOVA is an all-in-one platform that offers both front-of-house and back-of-house functions, including POS, kitchen display systems, handhelds, online ordering, loyalty programs, advanced analytics, and workforce scheduling. Consequently, it can automate most tasks, like order management, floor management, and inventory tracking, reducing the total labor requirement.  

Faster Onboarding

NOVA platform’s user interface is built on an image-first approach, designed specifically for the younger generation. The interactive user interface helps in cutting training costs and facilitates instant onboarding.  

Menu Management

The NOVA platform enables you to design menus as per your business requirements. The AI-native solution helps you identify the best-selling items and update menu pricing in real-time according to the dynamic requirements.

Workforce Scheduling

The NOVA platform lets you track employee hours and manage shifts for an efficient payroll process. You can also optimize scheduling with advanced reports to minimize labor costs.  

Launch a High-Converting Restaurant Webstore

NOVA makes it easy to build a branded, high-converting restaurant online ordering platform that syncs seamlessly with your POS and inventory. You can launch a mobile-optimized webstore in minutes to accept direct orders, reducing reliance on third-party delivery apps. With AI-powered upselling and customizable promotions, your webstore helps boost average order value while freeing up front-of-house staff.

Dynamic Pricing and Promotions

With NOVA’s dynamic pricing tools, you can automatically adjust menu prices based on demand, time of day, or day of the week. This helps protect your margins during peak labor cost periods while keeping your restaurant competitive. Built-in promotions and targeted discounts encourage customer loyalty and fill tables during slower hours, driving consistent revenue without extra manual work.

Smart Inventory and Waste Management

NOVA’s real-time inventory tracking and waste management features help you control costs at the ingredient level. Automated stock alerts and detailed waste reports make it easy to identify patterns, reduce spoilage, and fine-tune purchasing. By optimizing inventory, you can offset rising labor expenses and keep your menu profitable without sacrificing quality.

Conclusion

The rise in New York’s minimum wage will continue to increase in subsequent years. Therefore, you must plan your approach accordingly. You must rethink your pricing strategies to accommodate the rising wages. Moreover, improving customer and employee satisfaction may go a long way towards boosting revenues and decreasing turnover costs. Investing in the right technological tools now will also help you automate restaurant management and cut labor costs.  

If you’re looking to reduce labor costs and increase sales, book a free demo of NOVA now.  

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