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Credit Suisse On Restaurant Labor Costs And Future Profit Losses

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Credit Suisse analysts released a restaurants note Thursday morning, highlighting their talks with many in the industry over labor concerns. These include overtime rules, rising benefits and potential changes to the political backdrop all influence potential wage hike decisions.

Based on what they know today, Credit Suisse analysts see approximately 3 percent minimum wage inflation over the next couple years. Although they believe this hike is manageable, they note this is occurring in an already tight market with rising benefit costs, as well as overtime rule changes.

The analysts have a section on how bad this labor issue could get for restaurant labor costs. Under a Hillary Clinton administration, they see 150 basis points of margin pressure and wipe out of 20 percent of store-level profits, assuming a "$10.25 wage by 2020" scenario.

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Nov 2015HSBCUpgradesBuy

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