* 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.