Restaurant math
The figures below are from an analysis by the New York City Hospitality Alliance, the industry group representing the city’s restaurants and nightlife venues. They model a representative full-service restaurant and are illustrative — not the books of any single business. The scenario assumes a fully phased-in $30 hourly minimum wage paired with elimination of the tip credit.
Note: this analysis comes from information restaurants provided to the New York City Hospitality Alliance; it is not independent research.
Modeled cost structure as a share of revenue, today vs. under the proposal.
Under the proposal, labor would rise from 35% to 59% of revenue, and the modeled bottom line shifts from a 5% profit to a 19% loss. Total modeled costs equal 119% of revenue; the bar is rescaled so all segments fit, with the loss shown in red.
Modeled for an illustrative restaurant with $2 million in annual revenue.
For an illustrative restaurant generating $2 million in annual revenue, the modeled $100,000 profit becomes a roughly $380,000 loss — a $480,000 change in the bottom line.
What it would take to absorb the $480,000
Each card shows what it would take to close the modeled gap using a single approach. None is a real plan. Selling 77 more entrees a day, or raising every check by nearly a quarter, shows how big the gap is, not something an operator would actually do. In practice a restaurant would combine several of these, and many could not close the gap at all.
Daily and annual additional orders required if the gap is offset by volume alone.
Generating $480,000 in additional annual revenue would require selling, each day:
These totals represent the additional orders required to fully offset the modeled $480,000 gap at the listed price points. They assume the demand is there to be captured — they do not account for changes in consumer demand, seating and kitchen capacity limits, or the added staffing and supply costs of serving that many more covers.
Required check size if the gap is offset by prices alone.
If the gap is offset through menu prices alone, the same dinner check would rise about 24% — before sales tax and tip.
In the James Beard Foundation 2026 Independent Restaurant Industry Report, operators that raised menu prices by more than 10% in 2025 were the most likely to report lower profits.
Adjustments that could be used in combination to offset the modeled cost increase.
The analysis identifies the following potential responses, used alone or in combination:
Restaurants and other eating places, year-over-year change.
The estimates presented in this report are derived from a representative full-service restaurant model informed by Alliance member survey data, publicly available wage data and typical staffing structures observed across New York City. The model is intended to illustrate the potential scale and direction of labor cost impacts associated with the proposed policy.
The model reflects a representative single-location, full-service restaurant and is designed to approximate common staffing patterns across both casual and higher-service establishments. Staffing levels are derived from aggregated survey responses from Alliance members and reflect average reported headcount by role.
Average weekly hours are calculated using weighted averages based on the number of employees reported within each role. This approach ensures that restaurants with larger staffing levels have proportionally greater influence on estimated hours worked, producing a more accurate representation of actual labor distribution and utilization across participating restaurants.
The modeled restaurant reflects an estimated labor cost ratio of approximately 35% of annual revenue, consistent with common operating benchmarks for full-service restaurants.
Wage data is based on publicly available New York City job postings, including sources such as Culinary Agents, and reflects median or typical compensation levels by role. For tipped front-of-house positions – including servers, bartenders, bussers, barbacks, food runners and captains – baseline wages are standardized to reflect typical employer-paid base wages under the current tip credit system. This approach ensures consistency across comparable roles and isolates the direct impact of requiring employers to pay the full minimum wage.
For certain roles where direct wage data was not available, such as food runners and expeditors, wages were estimated using comparable positions based on typical industry compensation structures.
The analysis incorporates a wage compression model to reflect likely employer responses to a substantial increase in the minimum wage. Under this approach, all workers currently earning below the modeled wage floor are raised to at least $30 per hour, with additional adjustments applied to select roles to partially preserve pay differentiation based on skill, responsibility, hiring and retention considerations.
The modeled scenario uses the legislation's higher wage schedule benchmark, reaching $30 per hour, in order to illustrate the potential long-term labor cost impacts associated with a fully phased-in policy environment and the eventual elimination of the tip credit. While many independent restaurants may initially fall under the lower wage schedule applicable to smaller employers, the analysis is intended to model the broader directional impacts of the proposal as wage requirements continue increasing over time.
Under the model, tipped front-of-house positions are raised directly to the proposed minimum wage without additional compression adjustments. Non-tipped front-of-house roles receive modest upward adjustments above the new wage floor to preserve limited differentiation. Back-of-house hourly positions preserve a portion of existing wage differentials relative to entry-level kitchen roles, reflecting the expectation that restaurants would seek to maintain some distinction between positions requiring different levels of skill, experience and responsibility. Management roles receive more limited upward adjustments reflecting indirect wage pressure rather than full preservation of existing wage ladders.
This approach is intended to reflect a more realistic employer response to compression pressures than a scenario in which all affected positions converge uniformly at the minimum wage.
Total labor costs are calculated based on staffing levels, weekly hours, wage rates and staffing composition, and are annualized to estimate full-year impacts. The analysis incorporates an estimated 12% labor burden to account for payroll taxes, workers' compensation, unemployment insurance and other wage-linked costs.
This analysis focuses on employer-paid labor costs and does not account for tip income received by workers. Overtime is not explicitly modeled, although some roles may exceed 40 hours per week in practice; as a result, actual labor costs may be higher than those reflected here. Certain multi-unit or administrative roles, such as human resources or corporate management, are not included, as these costs are typically distributed across multiple locations rather than borne entirely at the individual restaurant level.
This model is intended to illustrate the potential scale and direction of labor cost impacts under the proposed policy. Actual outcomes will vary based on individual restaurant size, concept, revenue, staffing structure and operating conditions.
Sources: New York City Hospitality Alliance member surveys; Culinary Agents wage benchmarks; James Beard Foundation 2026 Independent Restaurant Industry Report; New York State Department of Labor, Current Employment Statistics for restaurants and other eating places in New York City.