As Michiganders struggle to put food on the table as it is, eating out could cost 25% more next year.

Restaurant owners and experts say the new minimum wage law and paid sick leave rules, set to take effect Feb. 21, will increase operating costs for restaurants and ultimately be passed on to consumers.

But time is running out for the Legislature to intervene, which they can do during these final days of the lame duck session.

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“This is a law and the Legislature has to deal with it,” said Jarrett Skorup, VP marketing and communications at the Mackinac Center for Public Policy, in this video from the Mackinac Center posted on X. “They can change the law, so they need to figure out ways to make this more flexible on businesses.”

Grabbing a takeout meal or eating in Michigan restaurants next year will likely cost roughly 25% more under new minimum wage and paid sick leave rules set to take effect Feb. 25, according to a restaurant industry survey. Learn more: https://t.co/CrAhX8kbSo @SaveMITips #mileg pic.twitter.com/dMci2wsd2j

— Mackinac Center (@MackinacCenter) November 19, 2024

The Michigan Restaurant and Lodging Association claims it would be an “outright catastrophe” if the tip credit is lost and continues to give updates on how the legislation will impact an industry that is already struggling.

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“Restaurant operators know this is economic death for them and their restaurant, “ MRLA President and CEO Justin Winslow said, according to midmichigannow.com.

“That’s why one in five are saying they would close forever, and all the rest of them would raise prices and hope people wouldn’t march out the door,” Winslow said.

According to a separate MRLA pre-election poll of voters, more than three-quarters of respondents wanted legislative action to save restaurants and jobs, with over half saying they would dine out less if menu prices increase.

A MRLA survey from June, before the Michigan Supreme Court ruling that upheld minimum wage and paid sick leave laws, foreshadowed the economic impact of these rules. Data results included layoffs, restaurant closures, and menu price increases of 25%.

“The alternative is a pandemic-level of restaurant closure and job loss, which will decimate Michigan’s second largest private employer, wreaking havoc on Michigan’s overall economy,” proclaimed Winslow in a press release.

Those who rely on tips are crying foul too. Hundreds of bartenders and servers rallied at the Michigan Capitol in the fall to protest the new rules. Those workers are calling their representatives during the lame duck session to urge them to act.

Brooke Champt works at a restaurant in Elk Rapids and traveled to Lansing to “Save Mi Tips.” Champt has worked off and on in the service industry since 2006. She has a master’s degree in social work, but returned to serving because the money is better.

“I get to work fewer hours, enjoy more of my time with my family, and still be able to support a household,” she told Michigan Capitol Confidential.

Besides the minimum wage changes, a separate law mandates sick days for service industry workers, which pose scheduling challenges for owners and managers who need to keep the doors open.

“Restaurant owners don’t want people coming in and working while sick,” Skorup said in the video. “They want to pay employees what they are worth. They want to keep people on staff. But the question is, and this is what we look at from the economic perspective, is that saying ‘There ain’t no such thing as a free lunch.’ There’s always somebody who has to pay for it.”

Ultimately, restaurant owners and operators will bear higher costs next year – putting added strain on an industry that already operates on thin margins.

“This is not going to help for being able to make the bottom line because not only do we have this now, but we have food costs still going up,” said Tina Anganis of YaYa’s Chicken, in the video by the Mackinac Center for Public Policy.

The new rules stem from a July 31 Michigan Supreme Court ruling, which upheld two voter ballot initiatives from 2018. The decision allows for a higher minimum wage, paid sick leave requirements, and the tip credit phaseout, according to The Detroit Free Press.

On Feb. 21, the minimum wage will increase by $2 for nearly all employees, including ones who are tipped. The wage will increase each year, up to $15 per hour by 2028, until tipped workers are paid the same as other minimum wage workers in 2030.

Besides hurting the industry overall, the MRLA said many tipped workers will not like the numbers on their check. Many opponents of the law argue that tips allow them to make far more.

“Restaurant servers said, ‘we didn’t ask for this change, we don’t want this change, we’re making great money with a flexible schedule right now, please don’t change it,’” Winslow said on  midmichigannow.com. “And the voters agree.”