The minimum wage increase is creating an unintended consequence for small businesses and is forcing one restaurant owner to potentially hike its prices.
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Rudy’s and Moomie’s Café in Emeryville, California is considering raising its $13 cheeseburger to a new price of $20 because the new law may cut into their profit margins.
“If we continue to go up and up and up and your cheeseburger that was thirteen dollars today is twenty dollars in two years, I am not sure how that translates into our revenue on a monthly basis,” Rudy’s Café owner Doug Smith told FOX Business’ Robert Gray.
The Congressional Budget Office and other studies have found that a higher minimum wage will lead to layoffs and fewer hours. It is a juggling act for small businesses owners and hitting restaurants particularly hard because of their narrow profit margins. Tipped employees in California cannot make less than the minimum wage as in most other states.
The Bay Area city of Emeryville, California, has the nation’s highest minimum wage at $16.30 an hour, more than twice the federal number and a few bucks higher than the state’s $15.00 rate. It also has one of the highest costs of living in the Bay Area where the median rent for a one-bedroom apartment is $2,840 and homes sell for more than half a million dollars.
FOX Business' Robert Gray contributed to this story.