Monday, March 16, 2015

Why Are So Many Seattle Restaurants Closing Lately?

◼ Restaurants in Seattle Going Dark as $15 an Hour Minimum Wage Looms - RICK MORAN/PJMEDIA
By decoupling the value of labor from the real world of supply and demand, the consequences are a reduction in the overall value of labor and the forced increase in prices that will lessen demand. If your electric, gas, water, phone, and other overhead costs go up 35%, you are going to be forced to raise prices on your products, and reduce your workforce numerically as well as the number of hours worked per employee. Why would an increase of that magnitude in labor costs not result in the same outcome?




◼ Last month—and particularly last week— Seattle foodies were downcast as the blows kept coming: - Seattle Mag

Queen Anne’s Grub closed February 15. Pioneer Square’s Little Uncle shut down February 25. Shanik’s Meeru Dhalwala announced that it will close March 21. Renée Erickson’s Boat Street Café will shutter May 30 after 17 years with her at the helm (though, praise be, original owner Susan Kaplan will expand her neighboring Boat Street Kitchen into the space and continue serving the Boat Street paté, the amaretto bread pudding with butter rum cream sauce and other favorites).

Furthermore, less than a week after he was named a James Beard Semifinalist (Best Chef: Northwest) for his work at northern Italian restaurant Spinasse, Jason Stratton announced he would be stepping down from that restaurant and his others—Artusi and Vespolina—immediately to head to Spain.

What the #*%&$* is going on? A variety of things, probably—and a good chance there is more change to come....

Though none of our local departing/transitioning restaurateurs who announced their plans last month have elaborated on the issue, another major factor affecting restaurant futures in our city is the impending minimum wage hike to $15 per hour. Starting April 1, all businesses must begin to phase in the wage increase: Small employers have seven years to pay all employees at least $15 hourly; large employers (with 500 or more employees) have three.

Since the legislation was announced last summer, The Seattle Times and Eater have reported extensively on restaurant owners’ many concerns about how to compensate for the extra funds that will now be required for labor: They may need to raise menu prices, source poorer ingredients, reduce operating hours, reduce their labor and/or more.

Washington Restaurant Association's Anton puts it this way: “It’s not a political problem; it’s a math problem.”

He estimates that a common budget breakdown among sustaining Seattle restaurants so far has been the following: 36 percent of funds are devoted to labor, 30 percent to food costs and 30 percent go to everything else (all other operational costs). The remaining 4 percent has been the profit margin, and as a result, in a $700,000 restaurant, he estimates that the average restauranteur in Seattle has been making $28,000 a year.

With the minimum wage spike, however, he says that if restaurant owners made no changes, the labor cost in quick service restaurants would rise to 42 percent and in full service restaurants to 47 percent.... KEEP READING



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