A restaurant chain has blamed its recent bankruptcy on the increased minimum wage in cities like Seattle and San Francisco. Here's...
A restaurant chain has blamed its recent bankruptcy on the increased minimum wage in cities like Seattle and San Francisco.
Here's what we know
According to the Seattle Times, Restaurants Unlimited filed for Chapter 11 bankruptcy on July 7. It is based in Seattle and operated 35 restaurant locations. It has also been forced to close some of its locations. According to KPTV-TV, Restaurants Unlimited is trying to find a buyer.
In court papers, Restaurants Unlimited's Chief Restructuring Officer David Bagley said "[o]ver the past three years, the company's profitability has been significantly impacted by progressive wage laws along the Pacific coast that have increased the minimum wage. As a large employer in the Seattle metro market, for instance, the company was one of the first in the market to be forced to institute wage hikes."
The company has locations in San Francisco (which has a $15.59 minimum wage), Seattle ($16) and Portland ($12.50).
Before it filed for bankruptcy, Restaurants Unlimited had raised menu prices and added an additional surcharge to compensate for the increased minimum wage, according to Fox News. However, these attempts proved ineffective.
Critics, however, pointed out that when the business was struggling, none of the six locations it closed down were in Seattle. Former Washington state Rep. Jessyn Farrell (D) told Fox News that this was "really telling" and said that it proved that the company was struggling because it "made some bad business decisions."
What else?
The Democrat-controlled U.S. House of Representatives passed a bill on Thursday that would raise the federal minimum wage to $15. However, this is not expected to pass the Republican-controlled Senate.
Wages are a business expense. Try not paying your suppliers, your bank charges, insurances, rent, legal fees and local business taxes, see how long your business lasts. The people who work for you should not subsidise your business costs with low wages. If you can't afford a wage bill you can't afford to be in business. Jobs will move to where businesses can afford their wage expense.
ReplyDeleteThe restaurant business is tough. Open a new one with unique new flavors and a nice environment and you can go great for a year or so. The next hip place in town that gets a favorable review is going to cut your business to shreds as people flock to try it and declare it as their new favorite.
ReplyDelete$15/hour minimum wage doesn't help when you are working those first few months to get the restaurant off the ground and get some good reviews and word of mouth. A good tipped server should be able to make good money on just tips if there is enough turnover. When tips are a larger portion of weekly pay, they also have to work harder and provide better service to earn good money. That's not a bad thing.