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Red Robin eliminates bus boys as restaurants combat minimum wage hikes

01/09/2018

Summary

Since minimum wage increases took effect early last year in January, many industries have struggled to keep up with the rising costs of labor. Red Robin, a popular destination on the burger-and-beer chain, decided to eliminate bus boys at 570 restaurant locations, a move that expected to save the company an estimated $8 million over the course of the next year. 

Key Points

  • Chain restaurants are often unable to combat an increase in the cost of labor with an increase in prices, forcing them to look to alternative ways to do more with less, often resulting in job cuts
  • The minimum wage hike was passed on behalf of unions and employees, but eventually those very employees are now facing job cuts in order to stabilize costs
  • One of the losses of the minimum wage hike has been a hollowing out of entry-level opportunities, which creates increased challenges for youth in the labor market

Discussion Questions

  1. How can companies balance the increasing price of labor and costs?
  2. Do you think that Red Robin's decision to fire bus boys will stabilize costs or lead to greater problems among employees?

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