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Eatless in Seattle

Via Twitchy, I came across this article asking “Why are so many Seattle restaurants closing lately?”

The writer, Sara Jones, goes through the possible answers to this question at some length. Ownership changes. “Concept switches”, whatever they might be. Premises too big. Ingredients too pricey. Menus too esoteric. Too loud. Too quiet. Managers who do too much. Managers who do too little. Many and various are the potentialities diligently listed by Ms Jones. It is a little hard to see why a plague of Managers Doing Too Much should suddenly descend on so many of Seattle’s eateries all at once, though. Could there be something else behind it all, some really strange and frightening phenomenon whose name no one in Seattle dare speak? It’s like in Jaws when no one wants to say the word “shark”.

Dim-dum dim-dum dim-dum dim-dum dim-dum dim-dum dimdum dimdum dimdumdimdumdimdumdimd-AAAAAAAGH!

Though none of our local departing/transitioning restaurateurs who announced their plans last month have elaborated on the issue, 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.

In fairness to the author, she does discuss the effect of the minimum wage hike eventually, after having exhausted all other options. She’s doing better than many.

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35 comments to Eatless in Seattle

  • JohnW

    Morality always trumps logic which is why explanations for the morality of capitalism are so important.

  • The comments are great in that article 😀

  • Greg

    While it pains me to think about all those hipsters with fewer dining options in Seattle–their angst is palpable in the article!–the author didn’t make the obvious analysis: that the hardest hit will be those at the bottom end of the socio-economic-foodie ladder, not the upscale restaurateur, her upscale customer who were the examples cited in the article. This downside to a higher minimum wage does not enter the consciousness of the Left in America.

    I suspect that labor costs are more than 30% of the cost of doing a fast food business (aside: does anyone believe the author’s claim that a restaurant grossing $700K a year has a net profit of $28K? If true, then most go into that business for love or insanity), so a 50% hike in labor cost will mean a 25% (20%?) hike in prices. That can’t be good for business. Why would I go to McDonalds for a $9 lunch, when I can go to a real restaurant with cloth on the table, better food (by far) and a view of the river for $10 (I live in a smallish town! on a beautiful river!).

  • Jim

    My friend runs a restaurant in the UK, and strangely enough we were discussing the wage bill as a percentage of turnover just the other day – she said that its at least 30%, could be more.

  • Molly

    Eatless in Seattle

    I LOL’ed 😀

  • pete

    So you can have restaurants in Seattle if you pay slave wages but you can’t if you pay decent wages which enable restaurant workers to live a decent life?

    I’m as libertarian as anyone, but poor wages and poverty are a recipe for social disaster.

  • So you can have restaurants in Seattle if you pay slave wages but you can’t if you pay decent wages which enable restaurant workers to live a decent life?

    er, seriously? Did you notice the central germane fact in the article? In case you did indeed miss it: restaurants are closing and this is self-evidently due to the increased minimum wage.

    So you are “as libertarian as anyone” but the way to avoid social disaster is to drive restaurants out of business via state action? How is this either libertarian or even rational? So the state should essentially make restaurants unprofitable as businesses unless they cater to wealthy people?

  • Jordan

    So you can have restaurants in Seattle if you pay slave wages but you can’t if you pay decent wages which enable restaurant workers to live a decent life?

    Slavery requires coercion. Does being unemployed allow those workers to live a better life?

    I’m as libertarian as anyone, but poor wages and poverty are a recipe for social disaster.

    As opposed to unemployment, which certainly does not contribute to poverty. Do you think it’s moral to employ state violence against somebody for offering a job? Do you think it’s moral to prevent somebody from selling their labor under terms that a politician disagrees with?

  • “The comments are great in that article.”

    Wow, you’re not wrong, Perry. A lone Lefty turns up acting all sniffy and superior, and gets hit by this:

    No you don’t get to get away with that. You don’t get to advocate policies which allow you to use force to deprive people of their jobs and their opportunities and then claim that those who would have provided the jobs are the heartless ones.

    You don’t get to trot out the insipid, mindless, tendentious talking points about how you are morally or intellectually superior when every “solution” you proffer is destructive and is based upon forcing others to do your bidding. You don’t get to decide whose job is worth preserving and whose isn’t and still claim the moral high ground.

    You have to own this. You have to accept responsibility for the suffering your ignorance has caused and you have to understand that there is no way forward as long as you remain ignorant. Until you can begin to think rationally instead of being so full of hate that you think the best solution to every problem is to use force against those you disagree with then you can’t be accepted into the company of decent people and will always be seen as supporting those who would oppress us because that is exactly what you are doing.

    Beautiful. There’s still hope for America. Of course, on this side of the Atlantic the majority of the commenters would side with the idiot he’s replying to.

  • Couldn’t happen to a nicer bunch of socialists. The sooner that Lefty metropolis implodes and sinks into the Pacific, the better.

    No doubt the next piece of rotten legislation will be a mandatory two-year notice period before being “allowed” to close one’s business.

  • bgates

    does anyone believe the author’s claim that a restaurant grossing $700K a year has a net profit of $28K?

    The Houston Chronicle (quoting the National Restaurant Association) says that as of 2010, full service restaurants had profit margins between 1.8 and 3.5 percent, depending on how upscale they were.

    if you pay slave wages

    Slaves aren’t paid wages.

  • Why do you hate poor people and kittens, Natalie?

    Let’s raise the minimum wage to $75/hr and really “equalize” those damn 1%’ers.

  • So you can have restaurants in Seattle if you pay slave wages but you can’t if you pay decent wages which enable restaurant workers to live a decent life?

    No, for the simple reason is that working in a restaurant (for most positions) is not supposed to provide wages commensurate with living a decent life in Seattle: it is to provide some cash to those working part time, studying, or youngsters still living with their parents. One of the biggest fallacies of recent times is the idea that every job should pay well enough to support a family. Entry-level jobs were never supposed to, and for good reasons.

  • Mr Ed

    So presumably Seattle’s Lefty orcs (I repeat myself) will say ‘Wow! That’s really worked, look at all the exploitation we’ve stopped.’ when all the closures work through and congratulate themselves. And if they do foresee and understand these consequences, they would do the same again anyway, if not harder. If you do not understand that, you do not understand the socialist mentality of hate, destroy and kill.

    What they would NOT do, ever, is suggest, say, a cut in Seattle’s local 3% Sales Tax that goes on the restaurant bill, the highest allowed under Washington law (and on top of the State’s 6.5%). Hat-tip to the US site http://www.tax-rates.org

    Still a snip at 9.5% with VAT here at the UK’s 20%, but hey. Note that in the Isle of Man VAT is levied on domestic repairs, but at a lower rate of 5%.

  • CaptDMO

    Oooo…..”food deserts” as so-called progressive socialists say of their newly discovered “host” community.
    Wait…this wasn’t ALWAYS a food desert!
    Mandatory wages to “support” the city, endless parade of permits and “inspectors”, unusual farm-to-shelf transportattion “fees”, protection (from “the farmer”), “liability” expenses, and outright theft…”for the children”.
    It’s ALL “shrinkage”.
    Oddly, no one from the apparently transient “community activism” squad owns/operates a retail
    business, or has CV/Resume “credentials” to do so.
    They just gnaw a new environment into the NEXT “host”!

    Don’t worry, it’ll be different THIS time.
    How many “annecdotals” does it take to make up a recognizeable pattern?
    Is one generation (18-25 years)enought for a “host” to “forget”?
    Is 20 years enough for the spawn of the paracites to deflect/censor “history” books?

  • JohnW

    So you can have restaurants in Seattle if you pay slave wages but you can’t if you pay decent wages which enable restaurant workers to live a decent life?
    I’m as libertarian as anyone, but poor wages and poverty are a recipe for social disaster.

    LOL.

    The market price of labour is NOT determined by the whims of a malevolent cartel of grasping employers as you contend – businessmen do not pay high wages because they are kind and nor do they pay low wages because they are cruel.

    The market price of labour in a free market system is determined solely by its socially objective value, i.e., the sum of the individual judgments of all the men involved in trade in the marketplace at a given time, each within the context of his own life.

    Individual businessmen are utterly powerless to decide the value of a product which is, in essence, the sum total of the all the judgments of the market.

    All other factors being equal, if the businessman pays wages higher than the market rate for his workers’ labour, his profits must fall, which in turn, constitutes an incentive to move his capital and investment elsewhere [to places like China].
    If he pays lower wages, on the other hand, his production must fall as labour of that skill-level is incentivised to seek higher wages elsewhere.

    By the law of supply and demand there is no alternative.

    Minimum wage laws therefore, do not help the poor – they merely force capital and investment away from the poorest members of society and deprive young entrepreneurs and marginal producers their rightful place in the market.

    And there is nothing kind about that.

  • korblimee

    I see the article but no comments 🙁

    [Added by NS: to see the comments you need to scroll down past a block of six pictures headed “Related Articles”.]

  • JohnW

    @Sam Duncan – that comment caught my eye too!

  • does anyone believe the author’s claim that a restaurant grossing $700K a year has a net profit of $28K? If true, then most go into that business for love or insanity

    A great many people do go into that business for love or insanity, yes. I believe it.

    An obvious point is this, too. Take a low paying job. Do it well. You will get a pay rise, or possibly another employer will poach you and will pay you more. In the fast food business, McDonald’s pays a lot lot of people minimum wage. It’s also the case that a great many of the people (right up to senior management) who work for it and make more than minimum wage started with the company on minimum wage jobs in the kitchen or behind the counter.

    This may be less the case in high-end and other fancy restaurants than it is at McDonald’s, but this is because that business is (as mentioned above) completely mad. That is a reason for not working in that business, though, rather than having anything to do with minimum wages.

  • Snorri Godhi

    Is there any reason why a restaurant in the US cannot impose a 15% or 20% service charge on customers and use the proceeds to increase wages?
    If customers want to leave a tip on top of that, they can; though waiters should be told not to expect it.

  • bobby b

    “Is there any reason why a restaurant in the US cannot impose a 15% or 20% service charge on customers and use the proceeds to increase wages?”

    No. But, is there any reason I should or would buy a meal there when I can get the same meal next door for 20% less money?

  • Snorri Godhi

    is there any reason I should or would buy a meal there when I can get the same meal next door for 20% less money?

    The key word there is “when”: right now, you can; but when the $15 minimum wage comes into effect, the place next door will be closed, or else will have the same service charge.

  • bobby b

    M. Godhi, assume “next door” means “next door, which happens to be on the other side of the municipal line.”

    See, such regulation can only work once you have achieved world domination.

    Fortunately, you won’t ever achieve that, because such systems invariably fail before they can wipe out all competition.

  • Paul Marks

    If people think that wages and conditions of work can be improved by government officials giving orders backed by threats of violence – then they, the leftist activists, are stupid.

    And, yes, they are also evil.

    Post and comments correct.

  • Gunga

    If you can convince people that they can get to the top by cutting the bottom rung from the ladder, you can teach them to stand in line for bread.

  • toadboy65

    JohnW- “businessmen do not pay high wages because they are kind and nor do they pay low wages because they are cruel” I agree, although I suppose there are exceptions. It has been my experience that in today’s business world, there is a constant push to increase profits at any cost. Prices can only be raised so high before business drops off. Then it is time to look at expenses. Once again, purchasing cheaper materials can only take you so far before the quality of your product drops off and you start losing business again. But there are always the wages. you can always cut the wages or benefits a little, in order to show the investors a little more profit. The managers do not cut wages out of cruelty, they do it out of a complete indifference to the employee. Whether that employee can afford food or medical care is irrelevant in today’s business environment. It used to be that low wages would drive the good employees elsewhere. But today there is an increasingly desperate workforce. you can always find someone to work for a pittance, even though your workforce will always be transitory and looking for something better. And the process feeds on itself. As a larger part of the population cannot ever work enough hours to achieve middle class, those same people are going to stop spending their disposable income in your business. The tactic of everyone lowering wages works great for a while, until nobody comes in to buy your product anymore.And of course you need not actually lower wages. You can effectively lower wages by simply raising them slower than the rate of inflation.

  • Rich Rostrom

    bgates @ March 15, 2015 at 2:45 am:

    does anyone believe the author’s claim that a restaurant grossing $700K a year has a net profit of $28K?

    The Houston Chronicle (quoting the National Restaurant Association) says that as of 2010, full service restaurants had profit margins between 1.8 and 3.5 percent, depending on how upscale they were.

    The key is not margin on sales, but return on investment. In some businesses (food retail for instance) turnover is a substantial multiple of invested capital, and a small margin on sales translates into a substantial return on investment.

    In other businesses (oil production and electric utilities) the ratio of turnover to invested capital is much smaller, and the required margin on sales is much higher.

  • JohnW

    It’s the tendency toward the uniformity-of-rate-of-profit across the whole market that enables workers to buy more and better products at progressively falling real prices. I quote from Reisman:

    “It cannot be stressed too strongly that these progressive gains, and the generally rising living standards that they translate into, vitally depend on the capitalist institutions of private ownership of the means of production, the profit motive, and economic competition, and would not be possible without them. It is these that underlie motivated, effective individual initiative in raising the standard of living.”

  • PaulH

    Interestingly the people who actually own those restaurants say they’re not closing because of the minimum wage legislation. http://www.seattletimes.com/seattle-news/politics/truth-needle-is-15-wage-dooming-seattle-restaurants-owners-say-no/

  • Given the copious evidence that minimum wages kill businesses and jobs, I have my doubts it is not a factor Paul.

  • Mr Ed

    PaulH

    Would you tell the media why you were closing? You might
    (a) devalue your business by giving your prospective purchasers a stark statement on viability, and
    (b) be branded ‘greedy’ in the media for not wanting to pay ‘proper wages’ , all stored online forevermore and
    (c) might be a conflicted liberal unwilling to rationalise the situation and draw coherent and logical conclusions.

    What we cannot know is what might the situation be were the increase not looming.

  • JohnW

    As it stands now, the claim that these restaurants closed over the minimum-wage issue is false.

    LOL. I saw a BBC documentary last year showing British businessmen complaining about the increasing labour costs in China – it’s terrible, apparently. All that cheap Chinese labour had inexplicably become very picky all of a sudden but strangely neither the businessmen nor the Chinese workers ever mentioned Ricardo’s law of comparative advantage.

    You can explain these basic principles until you are blue in the face but the Left will always trot out some survey or statistic or other that proves black is white – they will never accept the principles of logic or “bourgeois logic” as Marx called it.

    Von Mises provides the historical background:

    ‘There was still the main obstacle to overcome: the devastating criticism of the economists. Marx had a solution at hand. Human reason, he asserted, is constitutionally unfitted to find truth. The logical structure of mind is different with various social classes. There is no such thing as a universally valid logic. What mind produces can never be anything but “ideology,” that is, in the Marxian terminology, a set of ideas disguising the selfish interests of the thinker’s own social class. Hence, the “bourgeois” mind of the economists is utterly incapable of producing more than an apology for capitalism. The teachings of “bourgeois” science, an offshoot of “bourgeois” logic, are of no avail for the proletarians, the rising class destined to abolish all classes and to convert the earth into a Garden of Eden.

    But, of course, the logic of the proletarians is not merely a class logic. “The ideas of proletarian logic are not party ideas, but emanations of logic pure and simple.” Moreover, by virtue of a special privilege, the logic of certain elect bourgeois is not tainted with the original sin of being bourgeois. Karl Marx, the son of a well-to-do lawyer, married to the daughter of a Prussian noble, and his collaborator Frederick Engels, a wealthy textile manufacturer, never doubted that they themselves were above the law and, notwithstanding their bourgeois background, were endowed with the power to discover absolute truth.’

    Von Mises continues in Human Action:

    ‘…In the eyes of the Marxians the Ricardian theory of comparative cost is spurious because Ricardo was a bourgeois. The German racists condemn the same theory because Ricardo was a Jew, and the German nationalists because he was an Englishman. Some German professors advanced all these three arguments together against the validity of Ricardo’s teachings.’

    Plus ça change…

  • PaulH

    The Boat Street Cafe quoted in the articles is being closed, but the space will still be part of a restaurant, and the owner is expanding into two new premises. Another of the restaurants is reopening soon. Maybe the other owners are being disingenuous about their motives, but it’s hard to see how expanding from 4 to 5 restaurants (The Boat) is evidence of the harmfulness of a minimum wage. In short, the minimum wage might well be a disaster for Seattle, but this article contains almost zero evidence of that. I don’t think signing on to sensationalist bollocks helps anyone’s cause.

  • I don’t think signing on to sensationalist bollocks helps anyone’s cause.

    Just use Google because I just cannot be bothered to do it for you. There is soooooo much evidence for the damage that minimum wage laws do, that at this stage it is like debating the merits flat earth theory with someone. Just not worth the effort. Making businesses less profitable has an effect.

  • PaulH

    Perry – you’ll notice that at no point have I denied the idea that the minimum wage hurts employment. If, as you say, that has reached the status of incontrovertible fact, then why quote this article at all? Shouldn’t we examine some of these well tested academic studies, rather than an article whose only evidence in favor of the idea is essentially “Some bloke says it’s worrying”, and at the same time provides plenty of evidence to suggest that it’s not that worrying because people keep opening new restaurants?