* A new survey of restaurant owners shows they’ve raised prices after an increase in the tipped minimum wage. Crain’s…
The Illinois Restaurant Association, which advocates on behalf of restaurants and the hospitality sector, surveyed 305 full-service restaurant operators in Chicago asking about the actions taken in response to the increase in the minimum tipped wage on July 1, 2024, when it went from $9.48 to $11.02 per hour for industry workers.
The survey says that 84% of operators raised menu prices in the past year and that 97% expect to raise menu prices this year after the new minimum wage for tipped workers went to $12.62. Wages will continue to increase each year until it hits Chicago’s minimum wage, which is currently $16.20.
In an emailed statement, Mayor Brandon Johnson’s office said that the Illinois Restaurant Association is “not an impartial research firm” and that it’s actively attempting to repeal the ordinance. The statement added that the data should be “heavily scrutinized” and that the office has not yet seen the survey.
“Even if we were to take the premise at face value, external factors like inflation, tariffs, rising insurance costs, and persistently high interest rates likely play a larger role than incremental wage growth for the lowest paid service workers,” the statement read.
While the mayor is right about other factors in play and about low-paid service workers, wages are a big part of the cost base.
The survey results are here.
From the association: “This was an online survey of 305 full service restaurants in Chicago fielded July 1-24, 2025 by the Illinois Restaurant Association. 95% of survey respondents are independent operators (49% are single unit independents and 46% are multi-unit independents). 81% of survey respondents have fewer than 100 employees (21% have less than 20, 35% have 20-49, 25% have 50-99).”
* From the press release…
The tip credit is being phased out over five years until the employer-paid tip wage matches the city’s minimum wage, which is currently $16.20. Currently, most restaurant operators in Chicago use the tip credit to pay employees. Under this compensation model, restaurant owners pay a portion of the tipped employee’s hourly minimum wage, with the rest made up by tips to equal at least the full city-mandated minimum wage. If employees do not make at least the hourly minimum wage with combined base wage and tips, restaurants are required by law to pay the difference to ensure that every tipped restaurant worker makes at least minimum wage.
Following the first increase—from $9.48 to $11.02 per hour on July 1, 2024—restaurant operators scrambled to stay afloat and were forced to make changes that impacted the dining experience for consumers across the city:
• 84% raised menu prices
• 69% cut employee hours
• 62% reduced staffing levels
• 51% postponed hiring
The latest increase—from $11.02 to $12.62 per hour on July 1, 2025—is expected to trigger even more severe changes for employees and consumers as local restaurant owners are already facing significant economic and regulatory challenges trying to make ends meet. Operators are anticipating difficult decisions ahead:
• 97% expect to raise menu prices
• 91% are likely to cut employee hours
• 87% believe they will halt new hiring
• 84% predict having to eliminate jobs
Additionally, according to the survey, a majority of restauranteurs believe they are likely to delay expansions, install labor-replacing equipment, add automatic service charges, reduce hours of operation, cut employee benefits, or close their doors additional days. Alarmingly, 34% say they may permanently close a restaurant. Consumers will undoubtedly feel the impact of higher menu prices, reduced hours of operation, less staff, and increased wait times as businesses struggle to manage increased labor costs.
* Back to the survey…
• 72% of respondents said their customer traffic during the last 12 months is lower than it would normally be. Only 4% said their customer traffic is higher than normal.
• 48% of respondents said their restaurant was not profitable during the last 12 months, while 84% said their profitability is lower than it would normally be.
• 46% of respondents said their restaurant took on additional debt during the last 12 months.
- DuPage Saint - Tuesday, Sep 2, 25 @ 12:26 pm:
Taxes go up utilities go up insurance goes up wages go up. Owners are dealing with real issues not magic beans of government money. Of course the costs of goods go up
- City Zen - Tuesday, Sep 2, 25 @ 12:33 pm:
==“Even if we were to take the premise at face value, external factors==
OK, but you don’t control those external factors. You do control the one that is having a negative impact.
==69% cut employee hours; 62% reduced staffing levels==
More free time for everyone, just not in the way they intended.
- Garfield Ridge Guy - Tuesday, Sep 2, 25 @ 12:40 pm:
It’s difficult to parse the Mayor’s statement. Prices going up are obviously an intentional effect of the wage increases, just as higher prices are obviously an intentional effect of our new federal tariff policy. Those higher prices are in exchange for trade-offs that may or may not be worthwhile, but how can we believe our electeds are doing the math on those trade-offs if they won’t accept that the trade-offs exist?
- H-W - Tuesday, Sep 2, 25 @ 12:48 pm:
=== restaurant operators scrambled to stay afloat ===
=== local restaurant owners are already facing significant economic and regulatory challenges ===
=== a majority of restauranteurs believe they are likely to delay expansions, install labor-replacing equipment, add automatic service charges, reduce hours of operation, cut employee benefits, or close their doors ===
I appreciate and understand that labor costs are significant factors influencing rate of profitability in the restaurant industry. But as clearly outlined by the statements above, it is not the waitress/waiter who is primary barrier to entry for small businesses. It is the desire to profit. Raising the cost of a meal does influence consumers choices. I look at prices too. But it is hard to convince me that poverty-wage waiters and waitresses are the primary cause of the economic uncertainties expressed herein, and that if we could only pay workers less, life would be better.
I’ll pay higher prices and continue to tip. Some customers will pay higher wages and stop tipping. But a fair wage for harder than average work seems reasonable.
- Pot calling kettle - Tuesday, Sep 2, 25 @ 12:48 pm:
How many other businesses rely on the customers to pay their employees via a voluntary system?
Maybe the city should allow restaurants to revert to the old way if they post very large, prominent signs that say: “We aren’t willing to pay our employees the minimum wage, we expect you, our customers, to do it.”
- ChicagoBars - Tuesday, Sep 2, 25 @ 12:51 pm:
Statewide leisure and hospitality employment is up a few thousand since July 2023 when first Chicago tipped wage phaseout kicked in.
Chicago (and some inner suburbs) leisure and hospitality employment employment since then? Down about 1500 total jobs in that metropolitan statistical area.
I always enjoy a good poll but unless you join President Trump in rejecting BLS data too, the jobs picture in Chicago has been clear for over a year now that main success of One Fair Wage is creating few jobs here.
- Former Downstater - Tuesday, Sep 2, 25 @ 1:05 pm:
I agree with what Pot calling kettle.
So restaurants have to raise prices to pay increased wages? Welcome to finally doing it the way every other business on the planet does it.
If you can’t paying workers a living wage without asking for help from your customers, perhaps instead of running to the government for rescue, you should adopt a business model that actually allows you to operate the way every other business does.
If you need help, perhaps reach out to restaurant owners in Europe. They seem to have no trouble paying staff with straight up asking their customers for handouts.
- Telly - Tuesday, Sep 2, 25 @ 1:06 pm:
I get why some view a survey conducted by the Restaurant Assn as biased, but @ChicagoBars is right. Employment in the hospitality sector in the Chicago region has decreased since the city ordinance went into effect. It would be interesting to see if the Illinois Dept Of Labor, or some other third-party, can show more specific hospitality employment data for within the city of Chicago limits. I think the Bureau of Labor Statistics info is regional.
- thechampaignlife - Tuesday, Sep 2, 25 @ 1:08 pm:
===it is hard to convince me that…if we could only pay workers less, life would be better===
Agreed. I would rather have fewer, better-paid workers and fewer, more-expensive dining choices if that accurately reflects the costs of providing those services at a sustainable level for workers and owners.
- TBone - Tuesday, Sep 2, 25 @ 1:12 pm:
Mayor Johnson is right asking people to be skeptical of the claims of this lobbying group based off what presumably is a survey of its members.
A few weeks ago the New Yorker extensively covered the National Restaurant Association’s efforts to fight state efforts to have tipped workers get paid full minimum wage, and there’s definite reason to doubt claims that eliminating the tip credit and paying servers minimum wage is economically harmful on the whole is suspect.
From the article: “In 2023, Allegretto published a study that compared “high-road” states that have no tip credit and “low-road” states, where restaurant workers get $2.13 in base salary. In the high-road states, the poverty rate of waitstaff and bartenders was significantly lower. And restaurant jobs had not grown scarce. In fact, between 2012 and 2019, the number of businesses and the rate of employment growth in full-service restaurants were higher in these states.”
https://www.newyorker.com/magazine/2025/08/04/no-tax-on-tips-is-an-industry-plant
- ChicagoBars - Tuesday, Sep 2, 25 @ 1:21 pm:
If anyone wants to delve into tbe figures I cited above the FRED / St Louis site does a good job presenting BLS data. Just make sure to not conflate seasonally adjusted vs non-seasonally adjusted reports. And I look at the Chicago-Naperville-Arlington Heights MSA vs Chicago-Elgin MSA as former is more City of Chicago weighted.
https://fred.stlouisfed.org/series/ILLEIH
The average hospitality tipped worker wage data for full year 2024 and Q1 & Q2 should be available from BLS hopefully soon (assuming the POTUS purge there recently didn’t really disrupt that vital data).
- Suburban Mom - Tuesday, Sep 2, 25 @ 1:38 pm:
Some places we go to have switched to “no tips” and say on their menu “we pay our employees a living wage. Consequently, our prices are higher. We do not accept tips.”
Once I got over the initial sticker shock I liked it a LOT. And the service remains really good.
- Demoralized - Tuesday, Sep 2, 25 @ 1:40 pm:
People want to complain about tipping and they also want to complain about higher prices due to increased wages. If that’s you then shame on you. Where my wife is from they have a minimum wage for everyone that is a wage that is sufficient enough to live off of. It’s not a tipping culture because they pay everyone fairly. Yes, prices are higher. But people pay those prices because they understand people deserve a wage they can live on. We should do the same thing here. Pay people a living wage. Stop trying to save 50 cents on a meal because you’re too cheap to want to pay for labor.
- Leo from Dolton - Tuesday, Sep 2, 25 @ 1:43 pm:
Does this mean I can tip less? The owner is picking up the tab, increasing my cost for picking it up, and now I no longer feel for the server who used to only get $8 an hour from the owner.
- Rich Miller - Tuesday, Sep 2, 25 @ 1:46 pm:
===Does this mean I can tip less?===
…asks the guy posing as the Pope.
- Washer dryer - Tuesday, Sep 2, 25 @ 1:54 pm:
This survey and related responses do not even begin to acknowledge nuances of front of house and back of house disparity… just wait til you hear about that…
- Center Drift - Tuesday, Sep 2, 25 @ 2:41 pm:
It’s always easy for government to tell you how to spend your money and run your business when most of them have never run a business and never actually worked for a living.
- Bogey Golfer - Tuesday, Sep 2, 25 @ 2:57 pm:
In Europe it is not expected that customers tip for service. Those waitstaffs do love Americans though.
- ChrisB - Tuesday, Sep 2, 25 @ 2:59 pm:
I love a good tipping thread. It’s where we find out who has ever worked a service job and who hasn’t.
- Pot calling kettle - Tuesday, Sep 2, 25 @ 3:27 pm:
==It’s always easy for government to tell you how to spend your money and run your business when most of them have never run a business and never actually worked for a living.==
In the case of the special (much lower) wage for tipped workers, the gov’t is telling some businesses that they do not need to follow a pretty basic tenet other businesses are required to follow. The restaurants in Chicago could choose to put up “no tipping” signs, charge the appropriate price, and pay a fair wage to their workers.
- Demoralized - Tuesday, Sep 2, 25 @ 3:46 pm:
==It’s always easy for government to tell you how to spend your money==
Pay your people a living wage and the government won’t have to tell you. It’s a sad commentary that businesses have to be told to pay fair wages.
- Jibba - Tuesday, Sep 2, 25 @ 4:21 pm:
Increasing all employees to the same minimum wage will invariably mean there is a new discussion about tipping. And why not? If tips decline and waitstaff quit, then the wage will need to be increased to attract applicants, like everyone else in the capitalist system. Waitstaff are not different than any other staff.
- JS Mill - Tuesday, Sep 2, 25 @ 6:30 pm:
=It’s always easy for government to tell you how to spend your money and run your business when most of them have never run a business and never actually worked for a living.=
You have some kind of data point on this one?
Also, is that like when someone pushes up prices with tariff’s theoretically to make businesses more competitive?