Afternoon Jolt

Restaurateurs Say $15 Had Nothing to do with Closures; More Restaurants Opening

Local restaurant entrepreneurs unwind misleading Fox News report.

By Josh Feit March 17, 2015

Afternoon Jolt

The FoxNation website got way ahead of itself yesterday when they published an article titled "Seattle Eateries Closing As $15 Minimum Wage Approaches." Trying to tie the closures to Seattle's new wage law (it kicks in on April 1), the loosey goosey article said:

Last summer we talked about the rather faint hopes that some Seattle businesses were clinging to as the city moved toward jacking up their minimum wage (for some jobs) to $15.00 per hour. Employers – particularly in the restaurant industry – were asking the city council to reconsider as they evaluated their options in the face of labor costs which were about to rise to between 42 and 47 percent of their operating expenses. It all fell on deaf ears, unfortunately, and the plan is moving forward. And rather than waiting for the roof to come crashing down, some owners are preemptively closing their doors.

Rather than getting the facts on why the restaurants are closing, the Fox-linked blog Hot Air blog (plus the local conservative think tank the Washington Policy Center and another libertarian blog called Western Journalism) got the story backwards. The four recent restaurant closures that are cited (all news first reported by my colleague at Seattle Met, Allecia Vermillion) may actually represent how vibrant Seattle's economy is.

Let's take the examples one by one.

Pioneer Square's Little Uncle: There are two Little Uncles. The one that used to be on Yesler in Pioneer Square is actually moving; and it's already "close to sealing the deal" on a new location owner Poncharee Kounpungchart tells me. Meanwhile, the Madison location is staying put.

Here's what  Kounpungchart told me today about the hubbub: 

"We did not close our Pioneer Square location due to the new minimum wage," says the owner of Little Uncle, who is about to open a new spot.

"We are not sure when and where the closure of the Pioneer Square location became connected with the new minimum wage law. We want to clarify that we were never interviewed for these articles and we did not close our Pioneer Square location due to the new minimum wage. We were strategic enough to not lay anyone off upon the closing of the Pioneer Square location, in fact we gave a couple raises and hired on one more person. Recently, we even began offering our staff a stipend for health care. When our time in a few years comes as a small business that offers tips and benefits, we are planning to be prepared to comply with the law."

And Allecia has more news today: A new restuarant (Kraken Congee) is already set to open in the Pioneer Square spot vacated by Little Uncle.

Interbay's Boat Street Cafe is closing, but owner Renee Erickson is opening two new restaurants on Capitol Hill. Here's what Allecia reported in late February when Ericksen decided to close: "Erickson has owned Boat Street for 17 years. The lease is up soon and she feels ready to focus on other things. 'Brunch still has lines out the door, but the cafe has kind of run its time,' she says. Although it's still adored, it's still pretty slow.'"

Meanwhile, the Boat Street Kitchen, the sibling restaurant in the same space, but run by a separate owner, is expanding there. Final score on this supposed example of doom: Three restaurants instead of two.

Queen Anne's Grub: Owner Sharon Fillingim announced the closure on Facebook noting she was leaving "at the top of [her] game" and that she's looking forward to "my opportunities in this wonderful industry."

She was also asked point blank in the comments thread on her post if the closure was related to the new minimum wage. "No it was not," she said.

She also announced that a new entrepreneur is opening a restaurant in the same space. Rather than hand wringing about why so many restaurants are closing in the advance of the increased minimum wage, the article could have asked why another restaurateur had decided to open one. I posed that very question to Meg Trainer who is opening Bounty Kitchen in the spot where Fillingim ran Grub.

Trainer told me, "I think Seattle is a great place to open a restaurant. I've been in the business for 30 years, and I've always wanted to open a restaurant." Most recently Trainer was on the purchasing team at Whole Foods. Bounty Kitchen, she says, will focus on veggie meals.

As for the $15 minimum wage, she tells me "we're aware of it and budgeting for it. We've done our due diligence." She also said she enthusiastically supports the policy, concluding:

"I'm a new business owner for a small business, so I'm always concerned about whether I can and cannot pay my employees. And there's a myriad of new business concerns that I have. But we believe in $15 for Seattle. We're kind of proud of it. We're doing everything we can to open with it—if not immediately within the first year, we'd like to ramp up to that. We are just are going to do whatever we can to pull it off. We believe a high-tide raises all ships."

She says she's hiring 15-to-20 staffers at her new restaurant.

South Lake Union's Shanik: The owner of the fancy South Lake Union Indian restaurant simply acknowledged that business wasn't good during the week. "It was just the wrong finer dining concept for that location," Meeru Dhalwala told Allecia in February when the bad news hit.

Seattle Magazine, which rounded up Allecia's restaurant news to initiate the $15 framing, asked Anthony Anton, the head of the Washington Restaurant Association (which donated $110,000 to defeat SeaTac's $15 minimum wage campaign), what the closures meant. He said that the largest percentage, 36 percent of Seattle restaurant costs,  go to labor—and the coming wage increase could bump that to 42 or 47 percent. "Something has to give," the Western Journalism article editorialized, noting an estimated four percent profit margin.

But as Working Washington has pointed out: restaurant claims about the economics of $15 have been alarmist and unreliable. For example, in the days before the city council passed the wage hike last year, a Subway franchise owner said sandwich prices would increase by $1. However, in February, the same owner estimated a much smaller four percent increase.

Sage Wilson, a spokesman at Working Washington, which contributed $500,000 to the SeaTac $15 campaign, said: "As for 36 percent to  to 47 percent, on April 1 [when the law starts], the minimum wage for any restaurant with 500 or fewer employees is $10 and $11 in wages plus tips plus healthcare. So we’re talking 53 cents an hour for servers at non-gigantic restaurant groups. This is the latest cause of the end of the world?"

Trainer, who hopes to open Bounty Kitchen on Upper Queen Anne in late April or early May summed up: "I think there was attention [to the closures] because there were a string of them," which she says is typical right after the holiday season. "But if you really look at it, I think there's more [restaurants] opening than closing."


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