Abstract
ABSTRACTThe purpose of this article was to examine the effect that higher wages and health care benefits have on costs and prices in limited-service restaurants. In order to compensate for higher wages, prices would have to increase between 4 and 25% and/or product size would have to be scaled back between 12 and 70%. With tax credits that are available in the next few years, the Affordable Care Act will have a minimal effect on limited-service restaurants with fewer than 25 full-time equivalent employees. The extent to which higher wages and more benefits will help ameliorate turnover must be balanced with the cost of turnover and the potential effect on sales.
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