Six Restaurateurs Weigh In on Minimum Wage Moves Made So Far

When Seattle's City Council unanimously voted last June to raise the city's minimum wage to $15 an hour, Eater asked Seattle-area restaurant owners to weigh in with their thoughts and predictions. There are variations based on certain factors, but employers have two main schedules for reaching the target wage, according to their size. Those with $500+ employees (like Tom Douglas Restaurants and Ivar's) must do it by January 1, 2017; those with fewer employees (Renee Erickson's restaurants) have until 2021.

With the ordinance now in effect for six weeks, we have seen a few major shifts already. After first trying a two percent surcharge, Tom Douglas decided to raise menu prices instead. Ivar's Salmon House dropped tips in lieu of higher prices (with profits shared between the front and back of the house), and Renee Erickson eliminated tips and added a service charge to all checks to share among employees. Both Ivar's Salmon House and Erickson also raised all employees'  wages to $15/hour within the law's first month.

With these initial strategies underway, many more Seattle-area restaurant owners are waiting to decide what to do. Eater checked in to ask for chefs' reactions to the minimum wage changes thus far, and what they expect for the future of Seattle restaurants.

MANU ALFAU

Chef/Owner, La Bodega

So far some of the heavy hitters have raised the price of food and drinks from 4% to 20%. Others have limited their hours of operations. Most have done nothing because they have already been paying a higher wage than the new minimum at this time.

I think that the restaurant scene in Seattle will slim down a bit. We won't be seeing as many new openings as we are used to, but we will see a lot more closures. There will be restaurants with very limited hours, staff made up of only cooks, higher price points, and places that will be run by skeleton crews.

JEREMY HARDY

Owner, Coastal Kitchen and Mioposto

We are all feeling it out. I really empathize with the larger groups like Ivar's and Tom Douglas as they have no template to follow in terms of the economic strategy as well as how that strategy will play with their customers and the media. We smaller operators have the luxury of learning from their work.

On the restaurant scene a year from now: I think it will look much the same...what happens in 2017 is far more pressing as the current small tip credit (available only to those businesses below the 500 employee threshold) quickly shrinks and disappears while the minimum wage continues to climb, creating a lot of pressure on keeping operations in the black. I am expecting to see a hybrid of service charges, surcharges, and price increases.

UPDATE, 5/13: I will be opening a new Mioposto in the Admiral District of West Seattle the end of July and plan to open more Miopostos both within Seattle's city limits and beyond. As an optimist I have faith that Seattle's dining public will support its restaurant industry and, as operators, that we can figure out how to adapt.

JOSH HENDERSON

Chef and Proprietor, Huxley Wallace Collective

The changes we've seen so far are great. Change is always hard but it's necessary here. Each owner has to make those choices for themselves, and they're different because of each restaurant's price point. But I want anything we can do to help people make more money and raise the industry standard. I think [increased wages are] going to provide a more professional job for people—let line cooks have careers in the back of the house—and help equalize the playing field between the front and back of the house.

There will be a lot of changes in restaurants in the next year, and restaurant owners are having to move a lot of levers. I think we'll see more people dropping tips and adding service charges. In theory, it creates an opportunity where you need more teamwork. There will be a number of people touching tables and providing a better service experience for the guest, and people who do that well will be successful.

It's complicated, but certainly not the end of the world. If businesses are going out of business over this, that's ridiculous: either their product is not good, or their business model is not good.

His plans: My restaurants will probably be making a decision after the summer.

"If businesses are going out of business over this, that's ridiculous: either their product is not good, or their business model is not good." - Josh Henderson

Brendan McGill

Chef/Owner, Hitchcock, Hitchcock Deli

I think it's unfortunate how strong the reactions that I've seen online have been... But you know what they say, never read the comments. I admire T-Doug and Renee for being industry leaders on this one.

On the restaurant scene a year from now: We'll see how the laws are implemented. Since they didn't account for total W-2 income when considering a "minimum" wage, I imagine there will be less tips and more service charges. In restaurants like mine where we already pool tips, everybody chips in and the back of the house can see a few extra dollars an hour. If this isn't accounted for in the wage law, the tip will become a service charge, and the operator can distribute it to everyone who provides the service.

At our only restaurant in the city of Seattle, Hitchcock Deli in Georgetown, we start our employees well over minimum wage as it is, so we haven't been affected from a labor standpoint.

ETHAN STOWELL

Co-owner, Ethan Stowell Restaurants

I have a lot of respect and empathy for the people trying things [quickly], and I hope customers are sympathetic because it's a scary thing. It's a dramatic change, or has the potential to be. Tom [Douglas] is one of the most generous people the Seattle restaurant scene has ever seen and this is the time to give him the benefit of the doubt; don't persecute the guy. We are in the hospitality industry, and this is the time to be compassionate.

In the end, I don't think a lot of restaurants will lose a lot of business from [the new minimum wage]. Ultimately it's really good for the industry and I think everyone is going to settle down and the average customer is going to keep going out to eat like they always have. It's a bit of a storm for a little while, but I think people like to go out to dinner and ultimately restaurants and employers and employees will figure out a way that works well for everyone.

His plans: We're not making any decisions yet. We want to step back and not hurry into anything and let people experiment with some things. Ultimately we want the customers to tell us what they want us to do, and we want our staff to be involved. I think there will be a half dozen models that go up over the next year and I think we'll pick one and go with it or modify it and go from there. Our ultimate goal is to have the least impact on the customer and employee while coming up with a plan that's best for everyone.

RACHEL YANG

Chef/Owner, Joule, Revel, Trove

It seems like a lot of chefs are trying to tackle two very important issues here. One is obviously raising the minimum wage so all employees can have one full-time job and still make the living wage. While this applies to all sectors of business, the other issue is something that the general public didn't really know or care much about--the gap between the front of the house and the back of the house. It's very common to see a part-time server with very little experience in the industry to earn quite a bit more than someone like a lead line cook with five plus years of experience.

The industry is finally opening up to talk about issue like the living wage for the back of the house, the gap of the income disparities, the lack of insurance and benefits. This is good. However, it is very hard to change a system that has been customary for decades. The public would have to understand the price of menu items would have to go up to cover the increased cost, and also have to realize it doesn't quite solve the chronic problem that separates the front and the back of the house.