- October 26, 2020
- Posted by: FLORES
- Categories: Accounting, COVID-19 Q&A, Human Resources
So as we head into Q4 of 2020 we starting the planning process of budgeting for the upcoming year. We are still dealing with the impacts of COVID19 and 2020 business loss but many of our clients are anxiously looking forward to a hopefully brighter 2021. As we enter the budgeting process we wanted to remind everyone of one key important factor, especially in the restaurant industry and that is the upcoming minimum wage increase.
San Diego’s Minimum Wage Set to Increase
In San Diego, CA minimum wage is set to increase to $14 per hour starting January 1st. In fact, many counties and cities across CA are set to increase.
The CA government has not made any moves to postponing or pausing the next set of wage increases even though many businesses are still struggling to survive this pandemic.
That being said it is more crucial than ever that the budgeting process and expected labor expense increases are accounted for accordingly. Here are some tips on how to help ensure your budget process is complete and not leaving you vulnerable to unexpected surprises this upcoming year.
Tips for Budgeting Process
1. Run a minimum wage impact report. Determine what your labor costs are currently and expected sales volumes and then increase the base labor wage and labor burden accordingly to your minimum wage increases.
2. Determine how your company can absorb the labor increases and still meet budgeted profit margins. These considerations could include all of the following tactics:
– Increase pricing
– Decrease staffing
– Consider adding a surcharge to your guest tickets.
– Cut expenses elsewhere in your operations.
3. After considering and weighing all of the above you must communicate and strategize a plan to execute action items needed to sustain operations given your new budget.
If you need assistance with the budgeting process or help understanding what these new minimum wage increases will mean to your bottom line give us a call today. The FLORES team is ready to work with you to write a proper budget and strategize an operations plan that ensures your company’s success heading into 2021.