Tipped workers in Chicago will see their hourly pay jump to $16.60 by 2028 — a move that restaurant owners say could force menu price hikes, closures, or layoffs.
On Wednesday, Chicago City Council failed to override the mayor’s veto of an ordinance that would have stopped those pay raises. Now, Archer Avenue restaurant workers are looking to the future with some uncertainty.
Alderman Marty Quinn (13th) says southwest side residents are hungry for more restaurants on Archer, 63rd Street or Pulaski Road.
He has been working to increase new restaurant presence on Archer Avenue, citing food as a business anchor that drives customer traffic, increases neighborhood property values and rejuvenates community engagement.
“What I learned early on as the 13th ward alderman is that food stabilizes corridors,” he said. “We learned that when Lou Malnati’s opened at 65th and Cicero.”
“Once Malnati’s was in as part of the re-imagination of Cicero, Panda Express, Culver’s, Starbucks and Taco Bell followed,” he said.
Wednesday’s vote to override the mayor’s veto was 30-19, but the measure needed 34 votes to pass. The failed override leaves Quinn and restaurant owners looking for a compromise.
Ordinance makes up for erratic tipping
The original 2023 “One Fair Wage Ordinance” incrementally increases tipped workers’ earnings to equal the city’s current minimum wage of $16.60 per hour by July 1, 2028.
For businesses with four or more employees, the increases from the previous sub-minimum hourly rate of $9.48 will help workers make up for erratic customer tipping.
Quinn, one of the proponents of pausing the fair-wage ordinance, is not dissuaded by the mayor’s veto and stands ready to continue push-back on behalf of restaurants, he said.
“We have to support the little guys and lift them up and hear them when they say ‘Hey, we’re struggling here,’ ” Quinn said.
Council critics of the veto argue increases could force restaurant owners to avoid closures by increasing menu prices to cover higher wages, causing diners to tip less, ultimately leaving workers with less money and possibly decreasing worker and staff numbers.
“The mayor’s veto held yesterday but I introduced an ordinance calling for a two-year freeze on the tip credit at $12.62 an hour right now,” he said. “A two-year freeze would be something the Illinois Restaurant Association would support and I wanted to create the ability of the restaurant association to negotiate after the veto.”
The government should be about leveling the playing field, Quinn said.
The alderman also noted the difficulties of being a border ward that sees residents routinely leaving Chicago for easy-to-access suburban dining destinations.
“When the rules for wages are different on the other side of the street, it gives the suburbs a leg up on attracting businesses,” Quinn said.
Ciao Ragazzi owner weighs in
An Archer Avenue staple, Ciao Ragazzi Restaurant and Bar’s owners are “doubling down” on the southwest side with their purchase of an old bank property on Archer Avenue where they will open a new steak restaurant, he said.
Ciao Ragazzi owner Lupe Piazza said he’s uncertain how incremental wage increases will affect his business.
Individual restaurants have different ways of running their businesses, Piazza said.
At Ciao Ragazzi, Piazza adds a 20 percent service fee to bills for tables of four or more, he said.
Piazza worries that raising the minimum wage to $16.60 could force restaurants to eliminate tips entirely, he said.
“This is something that’s very tricky,” Piazza said. “You cannot tell a server you’re going to get the minimum wage and that’s it, no tips. “That’s not going to make good, good service in the industry anymore. They’re going to go to the table, take the order and that’s it. They’re not going to be on top of the table to ensure everything is fine.”
Consistency is key to opening a new restaurant, he said.
Ciao Ragazzi also pays the customer’s credit card fee. Changes to existing processes, such as incrementally increasing wages, will affect any size restaurant months or years later, Piazza said.
It’s unreasonable to expect restaurants to pay servers $16 an hour plus tips while back-of-house workers earn only the minimum wage, he said.
“We’re going to have to wait and see if the restaurant association will help businesses and guests,” he added. “The service? It has to stay the way it is.”
Quinn calls ordinance an ‘unfunded mandate’
A post-veto statement from the Illinois Restaurant Association expressed disappointment in the mayor’s veto of the freeze and sought further assistance from pro-restaurant city council members to continue to work to “protect restaurants and save our jobs,” said President and CEO Sam Toia.
“Although there wasn’t enough support to override the mayor’s veto, the majority of the City Council recognized the urgent need for immediate action,” he said.
Citing significant concerns with the mayor’s plan, the association hopes for a continued effort to find a solution supporting both restaurant workers, small business and the 77 communities they serve, the statement said.
“The City of Chicago has to be mindful of creating unfunded mandates on what it is that is being paid,” Alderman Quinn said. “We need to encourage that sort of growth and opportunities for restaurateurs to feel comfortable with expanding in the City of Chicago.”