Who-d a-thunk it? Restaurants raise prices or add fees to compensate for government-mandated wage increases?

From Mark Perry of "Carpe Diem."

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KMSP-TV FOX News in Minneapolis-St. Paul reported this story today:

STILLWATER, Minn. (KMSP) – An incremental minimum wage increase [to $8 per hour] took effect in Minnesota last Friday (August 1), and Oasis Café in Stillwater (20 miles east of St. Paul) tacked on a separate “minimum wage fee” [of 35 cents] on each bill to show guests what they’re paying for (see photo above).

In response to complaints from some customers, the restaurant post this response on its Facebook page:

With regards to why we’re charging a $0.35 fee to cover the recent $0.75 per hour increase in minimum wage…we estimate the increase in labor cost will will cost our company more than $10,000 per year…which has to be offset by an increase in revenue in order to operate profitably. Rather than increase the prices of our menu items, we chose to charge a flat fee. If the state of Minnesota would pass tip credit, like 43 other states have done, none of this would be necessary. For what it’s worth, we pay our people very well. Our dishwashers start at $10 per hour, our cooks start at $12 per hour and our servers average more than $20 per hour when you consider what they earn in tips.

MP: As economic theory would predict, employers will take steps to counteract government-mandated increases in labor costs. Those steps might include: reducing hours, reducing staffing levels, reducing future hiring, reducing non-monetary forms of compensation like free or reduced costs for uniforms, meals, or merchandise, and/or increasing prices or adding “minimum wage fees.” Anecdotal evidence from Minnesota restaurant owners and managers suggests that many restaurants raised menu prices on August 1 to counteract the higher state minimum wage of $8 per hour (the first incremental increase on the way to $9.50 per hour in 2016).

Prediction: In response to “minimum wage fees” and higher menu prices, won’t many customers simply reduce their tips to waitresses and waiters to protest the higher prices, which could completely counteract the $0.75 per hour minimum wage increase? Or many customers may just not eat at restaurants as often, which will reduce the demand for restaurant workers, leading to reductions in either hours or jobs, or both. In any case, it’s not clear that most minimum wage workers will actually gain net benefits from a government-mandated wage increase."