Dave & Buster’s CEO: Higher Minimum Wage Reduces Opportunity

As the debate over raising the minimum wage rages on, the District of Columbia on Tuesday became the latest city to approve a $15 wage hike, joining New York and California.

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However, while wages rose, a new report suggests almost half of the city’s employers at the same time reduced employee hours and executed layoffs.

During an interview with FOX Business Network’s Cavuto: Coast-to-Coast, Dave & Buster’s CEO Stephen King discussed how wage increases impact his business.

“As we look at the environment today, we talked about in our call yesterday; we’re facing 4% wage inflation that’s clearly faster than the CPI or something like that. There are pressures on our overall cost structure as a result of it,” King told host Charles Payne.

King said most of the pressure to raise wages comes from states like California and New York where the tip minimum wage has increased substantially causing Dave & Buster’s (NASDAQ:PLAY) to face close to double-digit wage inflation. Businesses struggle with how to do more with fewer workers at higher wages, and investing in automation or hiring fewer employees are risks associated with a minimum-wage increase. And that, King said, makes businesses nervous.

“Minimum wage jobs get forced out and as a result, companies look at more technology and different technologies. I think you seen across certainly groceries and airlines where self-service models are becoming much more common across those platforms.”

When it comes to providing opportunities for low-wage earners, King says restaurant businesses continue to be one of the places where a bottom wage earner can work their way up to a multi-unit operator.

“Many of our multi-unit operators, the folks that are out there running 10 restaurants or more, are folks who started as hourly employees,” King said.