Every afternoon at 4 p.m., each of Rosa Mexicano’s four Manhattan locations used to have a pre-shift staff meeting. “That meeting created a really nice family atmosphere,” says Chris Westcott, Rosa Mexicano’s president and CEO. “It created energy and synergy, and people were pumped going into the shift.”

But as of last month, the meeting doesn’t happen anymore. Now, start times for shifts are staggered through the evening, and employees receive a document with the day’s updates when they arrive.

It’s one sacrifice the Mexican chain has made to help offset the additional $600,000 that Governor Andrew Cuomo’s minimum wage increases will cost them this year. The changes — announced on November 10, 2015 as part of a gradual growth — brought wages up to about their cap on December 31, representing a minimum wage hike from $13 to $15 per hour for businesses in New York City with more than 11 employees. Tipped employees’ hourly wage also rose from $8.65 to $10, with a tip credit that guarantees they’ll receive at least $15 per hour, and the changes extended to workers on salary; the overtime exemption rate rose to $1,125 per week in New York City ($58,500 annually).

Now, across the city, restaurant owners and operators are reworking their budgets and operations to come up with those extra funds. Some restaurants, like Rosa Mexicano, are changing scheduling. Other restaurateurs are cutting hours and staffers, raising menu prices, and otherwise nixing costs wherever they can.

And though the new regulations are intended to benefit employees, some restaurateurs and staffers say that take home pay ends up being less due to fewer hours — or that employees face more work because there are fewer staffers per shift.

“The bottom line is, we have to reduce the number of hours we spend,” says Westcott. “And unfortunately that means that, in many cases, employees are earning less even though they’re making more.”

In a survey conducted by New York City Hospitality Alliance late last year, about 75 percent of the more than 300 respondents operating full-service restaurants reported they’ll reduce employee hours this year because of the new wage increases, while 47 percent said they’ll eliminate jobs.

“There’s a lot of concern and anxiety happening within the city’s restaurant industry,” says Andrew Rigie, executive director of the restaurant advocacy group. Most restaurant owners want to pay employees more, he says, but are challenged by “the financial realities of running a restaurant in New York City.”

Merelyn Bucio, a server at a restaurant in Soho that she declined to name, says her hours were cut and her workload increased when wage rates rose. Server assistants and bussers now work fewer shifts, so she and other servers take on side work like polishing silverware and glasses.

“We have large sections, and there are large groups, so it’s more difficult,” she says. “You need your server assistant in order to give guests a better experience.”

One server says her workload increased when wages rates rose

At Lalito, a small restaurant in Chinatown, they used to roster two servers on the floor, but post wage increases, there’s only one, who is armed with a handheld POS (point of sale) system, according to co-owner Mateusz Lilpop. Having fewer people working was the only way for him to reduce costs, he says. Since the hike, labor costs at Lalito have risen about 10 percent — from 30 to 35 percent to 40 to 45 percent of sales, he says.

These changes get passed onto the diner, some restaurateurs argue. Service can suffer due to fewer people on the floor, or more and more restaurateurs will explore the fast-casual format over full-service ones. Some restaurants are also raising prices for customers. According to the NYC Hospitality Alliance’s survey, close to 90 percent of respondents expect to raise menu prices this year.

Lalito’s menu prices have increased by 10 to 15 percent, Lilpop says, and it’s not just the cost of paying his staff driving prices up — it’s a ripple effect from New York-based food purveyors’ own labor cost increases.

“If you have a farmer that has employees that are picking fruit, he has to increase his labor costs, which means he has to increase his fruit prices,” he says. “I have to buy that fruit from him at a higher rate, and it goes down the chain.”

John Seymour, founder and CEO of popular fried chicken restaurant chain Sweet Chick, is holding off on raising prices in his four New York locations. Instead, he’s trying to reduce maintenance costs and cut non-essential expenses. Details like candles on tables at dinner are being reconsidered so customers don’t have to take on the extra cost. “People have their own problems,” he says. “We want to try to alleviate their problems the best we can.”

Still, “it’s a tough business. And this makes it even tougher,” he says. Although many of his non-tipped back-of-house employees were already paid more than the minimum wage, the new regulations affect the entire staff. Employees who were making less than $15 hour went up to that, but then people who were making $15 before also received raises, he says.

Customers don’t always understand that these changes place financial strain on restaurants, says Westcott of Rosa Mexicano. “There’s a misperception about the profitability of restaurants in general,” he says. “Everyone thinks we’re rolling in it. And it’s tight. There’s a limit to what we can spend.”

Activists have been fighting for an increase in wages since 2012, when 200 of New York City’s fast food workers demanded $15 an hour. Restaurant Opportunities Center, an advocacy group for restaurant workers, sees the increase as an important step for New York City’s tipped employees — especially the 15 percent they estimate are below the poverty line.

“We hear a lot from people who make $400 a night at the top tier restaurants,” says Serena Thomas, worker organizer at ROC New York. “But the majority of tipped workers in the restaurant industry are not in those positions.”

And not all restaurateurs are struggling as much with the new costs. Annie Shi, partner and general manager of King in the West Village, says her restaurant budgeted for the past few years’ wage increases in advance and raised wages gradually through 2018. She says planning ahead ensured that the raise wasn’t a “huge shock” for the business, but phasing in a lunch service last year also helped offset rising costs.

At Root & Bone, a Southern restaurant in the East Village, owners Janine Booth and Jeff McInnis also made changes in anticipation of this year’s increase. They renovated their restaurant at the end of last year to utilize space better and increase revenue, reducing the kitchen size by half and adding 11 seats in the dining room. They are also contemplating extending their weekend hours.

Others have also been planning for years. Danny Meyer of Union Square Hospitality Group specifically pointed to increasing minimum wage when he adopted a no-tipping policy across his thirteen restaurants in 2016, though it’s a controversial policy that hasn’t worked for many other businesses.

Ultimately, restaurants need to change their business models to make sure people are paid fairly, Shi says, who sees the hikes as a positive change for the industry.

“It’s obviously a hard adjustment, and I think some people might feel like the rate at which it’s increasing is a challenge,” she says. “But I think that’s a little bit of correcting for the years of minimum wage not going up until now.”

Currently, ROC is campaigning for One Fair Wage, an initiative to eliminate the tip credit and level the minimum wage for tipped and non-tipped employees. The organization believes this will reduce wage theft and sexual harassment for tipped workers. According to a report released by ROC last year, the rate of sexual harassment experienced by workers in the seven states that have adopted One Fair Wage is half of what it is in states with a tip credit. The same report says that in One Fair Wage states, the rate of workers of color in poverty is 10 percent lower than the current rate in New York.

One Fair Wage advocates also argue that it may even help the restaurant industry grow. Another recent study from ROC showed that the number of restaurant jobs in the state increased with the increase of the tipped minimum.

Ultimately, restaurants need to change their business models to make sure people are paid fairly, Shi says

But it’s a development that some restaurateurs fear will make running a business even more difficult, saying it will double down on the pay disparity between back-of-house and front-of-house wages. It’s illegal for back-of-house employees to be paid from a restaurant’s tip pool, so if the tip credit doesn’t exist, “it really creates an uneven earning opportunity for those individuals in a tipped position versus a non-tipped position,” says Westcott. The NYC Hospitality Alliance is currently advocating for the tip credit to stay in place.

If it doesn’t, some restaurateurs say the outlook is grim. Between rising labor costs and rising rent, no amount of adjustments in their business model will keep businesses alive, they say.

“The old school days of making money in restaurants are sort of starting to go away,” says Lilpop. “You’ll see less and less places in the city because it’s just not a sustainable business model.”

M. Tara Crowl is a writer based in New York City.