LANSING, Mich. (Michigan News Source) – It’s been a hard couple of years for Michigan restaurants. COVID-19 hit them hard with lockdowns and mandates, resulting in one in six restaurants closing during the pandemic. Gov. Whitmer shut down Michigan restaurants on March 16, 2020 and most of them stayed on lockdown through June 8th, re-opening with restrictions. Then again in November, indoor dining was shut down again for most restaurants until the end of January of 2021 and even then, dining was only open to a limited capacity.

Restaurants had to get creative if they wanted to survive including offering heated outdoor spaces, carry-out and delivery options through DoorDash, Grubhub, or Uber Eats.

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Then came the economic downturn and labor shortages, causing more challenges to the restaurant industry. Supply chain issues, labor shortages, product shortages and the rising cost of everything from food costs to rent to utilities piled on top of their already fragile business operations.

With a recession predicted for 2023, by many bankers, economists and business leaders, Michigan restaurants will need to brace for more hard times ahead.

In August of this year, a survey was done by the Michigan Restaurant & Lodging Association and 91% of operators said their operating costs are higher than in 2019. 90% said they are also less profitable than 2019. That same survey reported that 93% of the restaurants had job openings they couldn’t fill. Those job openings have resulted in short-staffed restaurants, limited hours and closings during the week that weren’t on the menu before.

Even Denny’s isn’t the restaurant it used to be anymore with guaranteed 24-hour operations. Staffing a restaurant for that long is just not an easy task anymore. Denny’s new CEO Kelli Valade talked with Nation’s Restaurant News recently and said, “The 24/7 model has been tough, though we keep opening more restaurants every day.”  She also said that the chain has reopened 870 of their 1,400 diners to 24-hours again.

As restaurants try to survive in a post-Covid and economically troubled world, many operators in Michigan are also wondering if the latest changes in Michigan’s minimum wage are also going to hurt them. The $9.87 per hour minimum wage increased to $10.10 on January 1st. Tipped employees minimum wages went from $3.75 per hour to $3.84 per hour.

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But another increase could be coming this soon.

If a court case in the Michigan Court of Appeals is decided a certain way, minimum wage could jump to $13.03 an hour and wages for tipped employees could go to $11.73 an hour for 2023.

The Michigan Restaurant & Lodging Association did a survey of 307 restaurant and hotel operators at 2,000 locations to ask them how they would balance increased wage costs and 91% said they would have to increase their prices, with another 58% saying they would have even more staff layoffs.

With high prices and limited staff already a problem in Michigan restaurants, this is not good news.

The Michigan Chamber of Commerce says, “If left to stand, the Court of Claims ruling could force many Michigan businesses to make significant changes to their paid time off policies and procedures – even those who offer generous benefits today. The same is true for wages. Although it is worth noting that many employers are currently paying entry-level wages above and beyond $12 an hour, it is highly expected that the change would create a new ‘floor’ and push up wages for all hourly employees. It is also expected that an overnight elimination of the tip credit, which is a 156% labor cost inflation, will put the restaurant industry into a tailspin.”

The Court of Appeals decision is expected by the 1st of February.