Comparing a full service restaurant with a fast food restaurant isn’t meaningful unless the serving staff cost can be sorted out of overall costs for the full service restaurant. On the other hand, what makes the comparison with fast food workers meaningful is that ostensibly both workers are paid approximately the same median income. For example wait staff median hourly wage is $9.06 and fast food worker median hourly wage is $8.91, a difference of only fifteen cents per hour. (US Dept. of Labor Maine) It should be noted that the server rate of $9.06 includes an amount for gratuities paid by the customer.
How wait staff workers in Maine are paid is very different than how fast food workers are paid. Wait staff is currently paid $3.75 per hour with a $7.50 total hourly wage guarantee. The employer must make up the difference of another $3.75 if tip income doesn’t bring the total hourly income up to $7.50. Wait staff in a popular restaurant will earn much more than $3.75 from tips. In some extreme cases the hourly rate is estimated to be as high as $45. If the wait staff is not required to pool their gratuities, gratuity earnings can be mostly unknown to the restaurateur who then must make up the difference to bring the hourly rate up to $7.50. That may be more common than not.
Which customers pay pay gratuities and how much they pay is very enlightening,based purely on anecdotal information from experienced wait staff. Some customers leave no gratuities. Some consistently leave ten percent and some leave an overly generous twenty percent. The average gratuity is reported to be fifteen percent. Why is that relevant? It is relevant because it debunks the claim that tips assure good service by the wait staff as some restaurateurs claim.
The fairest way for customers to pay for wait staff service is for that service to be reflected in the price of the meal. Under the new minimum wage rule, restaurateurs will raise meal prices to make up for the difference they pay wait staff now, from the $7.50 per hour guarantee to the new $12 hourly rate.
Now, compare the median $9.06 per hour rate for a full service restaurant to $8.91 per hour median rate for a fast food worker. Under the new minimum wage rule both will be paid $12 per hour. The increase for the server will be $2.94 and $3.09 for the fast food worker.
At today’s prices, a sandwich meal in a full service restaurant can amount to an average of $15 (Ruby Tuesday beef or turkey burger, $10, that may or may not include potatoes, plus cost of a beverage and 15 percent gratuity). In a fast food restaurant an approximate same amount of food as a meal, can cost approximately $8. (Arby's steak or turkey sandwich meal, $8, that includes potatoes and beverage) Of course there are economies of scale I am disregarding, but this comparison would indicate that the full service restaurant charges $7 or $8 per meal for wait person services. A wait person will spend approximately 5 minutes to take an order and less than 5 minutes to deliver the meal. At $7 to take the order and deliver the meal the service time cost to the customer is 1/6th of $7, or $1.17 leaving $5.83 for the restaurant to pay the hourly rate for the server. To put that in perspective, with slightly more than two customers per hour the restaurateur would have accumulated the new minimum wage hourly rate amount.
Based on these arbitrary calculations, this analysis shows that restaurant servers could earn less under the new minimum wage rule, and fast food workers will earn more. Servers will ostensibly earn less because gratuities will be included in the price of the meal and not be paid directly to the server by the customer. Few customers will add a gratuity under the new minimum wage rule.
The calculations also indicate that the new minimum wage rule will cost fast food entrepreneurs more and full service entrepreneurs less, because the customer cost of gratuities can be built into the price for the meal and it can be shown that they likely already are. For example the full service restaurateur could charge between ten percent and twenty percent more and the bottom line cost of the meal to the customer would not change under the new minimum wage rule.