Seattle’s $15 minimum wage law goes into effect on April 1, 2015. As that date approaches, restaurants across the city are making the financial decision to close shop. The Washington Policy Center writes that “closings have occurred across the city, from Grub in the upscale Queen Anne Hill neighborhood, to Little Uncle in gritty Pioneer Square, to the Boat Street Cafe on Western Avenue near the waterfront.”
Of course, restaurants close for a variety of reasons. But, according to Seattle Magazine, the “impending minimum wage hike to $15 per hour” is playing a “major factor.” That’s not surprising, considering “about 36% of restaurant earnings go to paying labor costs.” Seattle Magazine,
“Washington Restaurant Association’s Anthony 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.”
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8 comments:
Very, very interesting. The article claims that if a restaurant owner wants to make a $28,000 profit (salary for the owner), the restaurant must gross $700,000 a year in sales.
If a meal costs $10, then the restaurant owner must sell 70,000 meals a year, or 191 $10 meals a day.
Consider Station 7 in Pittsville. Was Station 7 selling and average of 191 $10 meals 365 days a year?
It's no wonder locally owned restaurants are closing.
Soooo, as the conservatives predicted, the mandated $15/hr wage turns in to unemployment!
Good to see the business owners are not pussy-footing around this one....close down and tell everyone why!
This is what socialist government wants. Raise the wages of some to collect more tax revenue to pay the welfare of the rest. The more people beholding to the government the easier to keep them under control.
Plus factor in the taxes (federal, social security & state) the owner has to pay on the $28K, and there's much left.
MD's $10.10 (2017) is a joke, but $15 is pure crazy. More entitlement attitude at work.
Liberal policies always fail.
Before they raise the minimum wage, they should lower the welfare wage! As long as you can make more while not working than you can while working - folks will not work - even if they can!
Did I offend some business guy by saying that labor costs of 36% pointed out how stupid he was as a business operator, especially when he's paying less than $3 an hour to his wait staff?
I'm not giving him hell, I'm just telling the truth and he THINKS its hell.
I KNOW some restaurant owners. If I told them their labor was 36%, they would crap their pants and have an immediate heart attack. Or shoot the manager.
Just because someone SAYS they are closing because of "labor costs", doesn't mean that's the real reason.
No one will say "I ran the business into the ground", or "I spent every dollar as fast as it came in", or "I wasn't ready to operate my own business".
Its "labor costs are too high."
Right.
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