A Seattle restaurant chain that just declared bankruptcy is blaming it in part on our city’s experiment in higher minimum wages, which I see has whipped conservatives into a full “told you so” lather.
“Over the past three years, the company’s profitability has been significantly impacted by progressive wage laws along the Pacific coast,” said a court filing for Restaurants Unlimited, which runs 35 dinner spots, including seven in Seattle such as Henry’s Tavern and Stanford’s.
Wait a minute, says I, paging through old photos on my phone. That rings a bell.
I had occasion to eat once at the Stanford’s outside Northgate Mall. It’s described as a “polished casual gastropub.” According to my bill, which I took a photo of because it irked me at the time, I went all in and had the sirloin steak.
Dinner was fine — until that bill arrived. Because tacked onto it was something called a “4.9% LWgSC.” Fine print at the bottom explained: A “living wage surcharge has been added to offset the cost of Seattle’s minimum wage … This is not for services provided and is not paid directly to the service staff of our guests.”
My reaction then was: Well who is it being paid to?
My reaction now is: This is a company that’s making a big political statement that it can’t afford to pay the increased wages of its workers. But that sneaky fee it charged me at the end of the meal was supposedly to pay the increased wages of its workers!
So one wonders now, where did my LWgSC actually go.
Many of the Restaurants Unlimited joints around town levied a similar living-wage charge. The company’s bankruptcy filing makes no mention of it, though, only blaming progressive wage hikes at length for increasing “aggregate wage costs” by more than $10 million (out of the company’s $176 million in revenue).
“The wage hikes … have significantly increased our labor costs and have had a serious impact on the economics of the business,” the company said in a statement.
OK, but … how much money did the living-wage charges bring in? They don’t say.
I haven’t been back to Stanford’s, partly because I found this approach so heavy-handed. When City Light raises power rates, restaurants don’t add an “electrical rate surcharge” to your bill. So why for this, except to make a statement? Just roll it into the food prices and be done with it.
The charges were so unpopular in Portland that this same restaurant chain rolled them back down there.
Local restaurateur John Howie did the same last year, after he had levied a wage surcharge at John Howie Steak. One day he was playing golf and saw a $3 “water fee” appended to his bill. You have to pay extra to water the grass?
“Oh, it’s kind of like what you’re doing” with the wage surcharge, his wife told him.
He canceled the surcharges and raised menu prices, he later wrote on his blog, because he was convinced the fees “felt like an unpleasant way to end an otherwise lovely evening.”
The point is: Go ahead and charge Seattleites for our expensive progressive policies. We get it: Higher wages mean higher costs. So roll it into the menu prices, but don’t make some big politically aggrieved show about it.
All of this is happening in a superheated political atmosphere, as Congress is talking about a vote to raise the federal minimum wage to $15.
On Monday, the Congressional Budget Office put out a new study summarizing the research on the effects of $15, $12 and $10 minimum wages. It said what Seattle already knows — that there are pros (higher wages, more stability at the bottom of the economic ladder) and cons (higher prices, as well as some loss of jobs and working hours in certain industries.)
I’d say Seattle’s experience so far shows it’s a net positive, though not uniformly so. Congress should go for at least the $12 level.
As for our restaurant bankruptcy, one thing is certain: There now will be bales of political hay made from it in the days ahead (Fox News will be on it for sure, and maybe we’ll even rate a Trump tweet). So consider one other data point: As Restaurants Unlimited was going bankrupt, 111 new restaurants opened in Seattle and surrounding areas just since May.
Maybe the minimum wage drove them under. Or maybe they weren’t doing it right.