Seattle hit with mysterious rash of restaurant closures

Seattle Magazine asks this month: “Why Are So Many Seattle Restaurants Closing Lately?

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

Along with normal reasons for closures, there is this major new factor (and it takes a while for the magazine to drop this shoe):

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.

“Everyone is looking at the model right now, asking how do we do math?” he says. “Every operator I’m talking to is in panic mode, trying to figure out what the new world will look like.” Regarding amount of labor, at 14 employees, a Washington restaurant already averages three fewer workers than the national restaurant average (17 employees).

Such an outcome (which I imagine must be worse for lesser restaurants not noticed by “foodies,” but serving poorer neighborhoods and dealing with tighter operating margins) was entirely too predictable. Waiters and bartenders in Seattle campaigned against the minimum wage increase. They could see this disaster coming.

Economists have known for over a century the negative effects of a minimum wage increase.

In fact, progressive economists pushed for the first minimum wage specifically on eugenics grounds. They wanted to price poor people out of work, especially “the colored races,” so that they would not undercut white workers’ labor prices and, they hoped, would therefore have to be “segregated in rural communities or sterilized.”

The self-styled “moral” movement, which professes to care for the poor while loudly and angrily pushing for policies that would make their lives harder, is of course loudly and angrily pushing for a hike in the state’s minimum wage. It should be to their shame.

Jon Sanders / Director of Regulatory Studies

Jon Sanders studies regulatory policy, a veritable kudzu of invasive government and unintended consequences. As director of regulatory studies at the John Locke Foundation, Jo...

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