A restaurant owner decided to pay $5 above minimum wage, here’s what happened next

“Pretty fascinating, right?” 

Eric Mason, a restaurant owner and operator, asked me that question rhetorically as he explained why he pays employees at his Chick-Fil-A branch in Sacramento a $17-per-hour minimum wage.  

June marks a full year since Mason ushered in this new pay scale, which stands $5 above California’s minimum hourly wage for an employer with over 26 workers (Mason says he employs 60). So, he is well placed to reflect on how the wage has affected his business. 

Raising the minimum wage is one of the most controversial topics among restaurant owners and workers alike. Critics say higher wages would mean employers would have to cut costs, meaning workers would get fewer hours or get fired all together.  

Mason’s story is the counter narrative. In our conversation he shares why the past year has been an unequivocal success for his branch. “It’s definitely been the right number,” Mason says. In fact, so far Mason says increasing wages has helped him cut costs: Before, the franchise was hiring roughly 12 employees a month. With employee retention increasing, that number has shrunk closer to three employees a month, leading to significantly lower onboarding costs. 

Here are some of the highlights he shared on why he bet on this new minimum wage and the effect it has had on his business. Some of the quotes have been lightly edited for clarity.

The Hustle: Why did you raise wages voluntarily?

Eric Mason: We just were struggling with getting the right people in our restaurant and it just never felt good to me. It was always two steps forward, four steps backwards. And then the sustainability, the retention. There was low retention, high turnover, and it just seemed like every season in the journey was just a real learning experience for me. 

TH: Why $17? What made you think that was the magic number? 

EM: I looked up Sacramento and I looked up the living wage calculator... So, the living wage calculator kind of gave me a base, and I know our minimum wage will go up to $15 per hour by 2022, in the state of California. I wanted a number that was that attracting the right talent, to attract the right people in my community, people that lived in my area. So we chose $17 per hour and we committed to it… and it’s definitely been the right number.

[Editor’s note: MIT’s living wage calculator pegs Sacramento’s living wage at $12.32 per hour for one adult]

TH: How have your retention rates fared after implementing this living wage?

EM: If you can get above 70 or 80 percent, you’re doing really well. And what we’re seeing is we’re trending very positively towards those numbers, which has been unbelievable because not only have we been getting more of a team member that’s an expert, our costs have gone down in terms of training — which is a lot of hours, training — and also startup costs. 

TH: The last thing that you mentioned was “startup costs.” Could you breakdown what that means in your field?

EM: Before this, I was hiring probably 10-15 people a month. So that’s two sets of pants, two sets of shirts, a belt. And we allocate probably between eight and 12 hours just to onboard someone.

Twelve [employees] a month times whatever those hard [startup] costs are, over a 12-month period; that’s substantial, versus hiring two to three new employees, and they’re sustainable, they’re on board, they’re really loving the culture. It just cuts down on our costs right away.  

TH: What do you think about critics who say raising wages will only force you to cut other costs, hurting workers in the long run? 

EM: We’re investing in our people. We’re spending more time with them. We’re hiring on average a better quality — a more invested person, a breadwinner. And we’re investing more into the front side, to get them on board and get them comfortable with the products, to get them used to and more comfortable with the speed. And then they’re in turn happier and more satisfied, and then it feeds into all our growth. 

Chick-Fil-A is growing by a record pace, and so they’re able to keep up, versus the old way where I’m hiring people that aren’t as invested, and they’re just kind of coming and going out as fast as they can because it’s way too complicated and complex. 

TH: You’ve been quoted as saying your minimum wage rise is a step toward building a culture for the long term. Can you explain that motivation and what else you’re doing to accomplish that goal? 

EM: A lot of folks may have multiple jobs, folks that are trying to live on their own and support themselves. So, by offering them a living wage, hopefully people don’t have to spend 60, 70, 80 hours a week trying to make ends meet. Working a 40-hour job is very refreshing to a lot of our folks that have been hired in the last months.

[And then there’s] the communication. We work really hard to communicate with our staff, making sure we have a monthly newsletter. We send out daily messages, we send out schedules at a minimum — we really work hard at it — two weeks ahead of time, so that folks can plan around their work. We have amazing team member get-togethers… There are a lot of things we try to do to help people to be better individuals and being the best version of themselves.

Do you have a story to share about the lessons you’ve learned from restaurant work? Share your thoughts in the comments below.