Higher wages aren't just hurting labor costsHigher wages aren't just hurting labor costs

This post is part of the On the Margin blog.

Labor costs have been a growing problem in the restaurant industry. A number of chains, including Bojangles Inc. and Texas Roadhouse Inc., noted that higher wage rates ultimately hurt their profit margins.

But that’s not the only place where labor costs are hurting the restaurant industry. It’s also costing them more to build new locations. 

Development costs at Texas Roadhouse increased to more than $5 million per location in 2016, from $4.7 million the year before, and costs increased further this year. Executives on the company’s earnings call on Monday said those costs will remain high into next year.

The reason? Higher construction costs. 

“It’s getting really tough, particularly building con...