The elimination of the tip credit had a significant impact on Chicago restaurants during the past 12 months. That’s according to a new survey of 305 fullservice restaurants in Chicago fielded July 1-24 by the Illinois Restaurant Association. 

When asked if they took any actions as a result of the increase in the minimum tipped wage from $9.48 to $11.02 an hour on July 1, 2024, 84% of respondents said they increased menu prices. 69% of operators said they cut employee hours, while 62% reduced staffing levels in their restaurant. 51% of operators said they postponed plans for new hiring.

Other common actions taken included postponing expansion plans (36%), reducing hours of operation (33%), adding automatic service charges to checks (31%) and adding equipment or technology that reduces the need for employees (28%).

Actions taken by Chicago fullservice restaurant operators as a result of the increase in the minimum tipped wage from $9.48 to $11.02 an hour on July 1, 2024

Restaurant operators are expecting to make even more dramatic changes to their business model after the latest bump in the minimum tipped wage from $11.02 to $12.62 an hour on July 1, 2025.

97% of operators said they will likely increase menu prices, adding to the burden placed on their customers in this challenging economic environment. In addition, 69% plan to add an automatic service charge to checks.

91% of respondents said they will likely cut employee hours, while nearly 9 in 10 are likely to postpone plans for new hiring (87%) or cut staffing levels (84%).

A majority of operators plan to postpone plans for expansion (80%), add labor-saving equipment or technology (73%), trim their hours of operation (63%) and cut employee benefits (52%).

One-third of operators (34%) said they are likely to permanently close a restaurant as a result of the July 2025 wage increase.

Percent of Chicago fullservice restaurant operators who say they are likely to take these actions as a result of the increase in the minimum tipped wage from $11.02 to $12.62 an hour on July 1, 2025

On top of the added pressures of higher labor costs, Chicago’s fullservice restaurants are facing an extremely challenging business environment:

• 72% of respondents said their customer traffic during the last 12 months is lower than it would normally be. Only 4% said their customer traffic is higher than normal.
• 48% of respondents said their restaurant was not profitable during the last 12 months, while 84% said their profitability is lower than it would normally be.
• 46% of respondents said their restaurant took on additional debt during the last 12 months.