Why Are So Many Seattle Restaurants Closing Lately?

Indeed! Had OSB bothered to read the OP article, and the sources it linked, he would have known that the $15 minimum wage was cited as a factor in closings, not the sole factor.

The economic facts are very simple. When government arbitrarily increases the costs in a business sector, those businesses have to increase prices or cut costs (or both) to remain profitable. There are limits to both actions: increasing prices reduce demand, i.e. how much customers buy; under-staffing hurts the quality of the product and service, driving customers away. When individual businesses hit one or both of those walls, they will shut their doors or have their doors shut.

Further, as sam noted, other reasons for restaurant closings were adduced in the article and its sources. Arbitrary government-imposed cost increases can only exacerbate other problems a restaurant (or other type of business) may have.

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The initial raise is from about $9.40 to $10. If that is bankrupting a restaurant (which it actually hasn’t) that restaurant will go under for other reasons as well, increase in rent, supply cost increase, etc.
Maybe in 7 years the $15 an hour will be too much for some restaurants, at the moment, it’s not an issue.

From my post, #16 in this thread:

“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.”

The $15/hr. Seattle minimum wage is imposed incrementally, over several years. Cutting through the complexity some:

  • The existing state minimum wage is $9.54/hr.

  • A non-chain restaurant with a very few (or just one) locations and no health plan will have to start paying $11/hr. on April 1, 2015, increasing $1/hr. annually through 2019, and then to $15.75 in 2020.

That’s a ~15.3% wage increase! An “average” restauranteur who has been making a 4% profit may instantly be losing 1.5%, absent changes in prices or reduction in costs (e.g. laying off people, reducing workers’ hours, buying cheaper ingredients, reducing portion size, or some combination thereof). That is not trivial, and as I said above, raising prices and cutting costs all risk loss of business, possibly making a restaurant’s situation even worse. And that is just an “average” restauranteur! By definition, up to half of restauranteurs in the area are below average.

Then, in 2016, the minimum wage increases ~9.1%; in 2017, another ~8.3% increase; in 2018, 2019, and in 2020 the government screws get tighter and tighter every year. Restaurants and other businesses won’t just plan for what happens to them in 2015, they will also plan for what they know is coming in successive years. So, from that POV, the effects on a business are greater than “just” that ~15% wage increase. And does anyone seriously think, if this lunacy isn’t halted, the screws - on any survivors - won’t be tightened in 2021 and beyond.

Your attempts at dismissal and denial can’t withstand a look at simple facts and simple math, OSB. Cities like SF and Seattle are going to drive businesses with entry- and lower-level jobs out of their cities. Nearby suburbs may benefit, some, but lunatic city councils and/or voters like those of SF and Seattle are only hurting their cities, and the people who will be hurt worst (the employees who lose their jobs and have to commute farther to whatever new jobs they may find).

[quote=“OldStyleBlues, post:42, topic:46264”]
The initial raise is from about $9.40 to $10. If that is bankrupting a restaurant (which it actually hasn’t) that restaurant will go under for other reasons as well, increase in rent, supply cost increase, etc.
Maybe in 7 years the $15 an hour will be too much for some restaurants, at the moment, it’s not an issue.
[/quote]You’re using as your benchmark “bankrupting”.

IOW, it’s OK to take money from the owner’s profits and give it to the minimum wage kings and queens AS LONG AS IT DOESN’T “BANKRUPT” THE OWNER. If the owner can just get by, that’s enough, no matter how hard they work to make the business profitable for themselves. If they have to work harder and live on less of THE BUSINESS EARNINGS just to give these people a raise, that’s OK?

So he/she/Ma/Pa/the family/the corporation-shareholders, or whoever owns the business, can reduce their profits and lifestyle so that these minimum wage people can have a STATE MANDATED raise . . . not a performance raise that benefits the business?

The VERY PURPOSE of the business is to make the lifestyle of minimum wage people better, regardless of either their performance or the owner’s goals for the business?

Is that what you endorse? (I’m phrasing these as questions so that you can not accuse me of putting words in your mouth.)

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Sounds like any full-time employee will make more than the restaurant own. Ain’t that just dandy!

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Any time the government gets its sticky fingers into something, you can bet on one thing: it will be a total mess.

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The progressive thinking is just like what our glorious dictator…Er I our elected president said(if you have a business YOU didn’t build that .)

Communism is the ideology of that stupid and lazy.

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Due to mandatory wage increases.

supply cost increase, etc.

Due to mandatory wage increases.

Maybe in 7 years the $15 an hour will be too much for some restaurants, at the moment, it’s not an issue.

Oh, so you don’t mind what restaurant owners suffer, so long as it’s only induced by increments.

And I thought people like you were against torture.

Haven’t you heard, BobJam? They took a survey, and it was concluded that people must have a “living wage” 'cuz they can’t make a living off of minimum wage.
Sheesh, get with program!

What’s so awful for me, personally, is that I had a sister come visit at the end of last August who, trying to sound so well informed and on top of things political, brought up that survey as if it was the latest of news.
How OLD was that “survey” by then? Worse, she runs a business hiring others when she needs a hand.
Gee, I wonder how much she pays them.

Throw in the normal upkeep of a business which has to be maintained or even if the business wants to grow. A business that remains static with expenses matching revenues fold.

What happened to OSB?

[quote=“2cent, post:49, topic:46264”]
Haven’t you heard, BobJam? They took a survey, and it was concluded that people must have a “living wage” 'cuz they can’t make a living off of minimum wage.
Sheesh, get with program!

What’s so awful for me, personally, is that I had a sister come visit at the end of last August who, trying to sound so well informed and on top of things political, brought up that survey as if it was the latest of news.
How OLD was that “survey” by then? Worse, she runs a business hiring others when she needs a hand.
Gee, I wonder how much she pays them.
[/quote]Guess I missed that “survey”. (Yes, I know your “sheesh” was a jest.)

Curious. WHO was surveyed? Business owners, libs . . . what? Whose conclusion? The MSM talking heads?

No offense to your sister, but with thinking like she apparently does, how in the heck does she even “run” a business?

Remember back when all those McDonald’s employees were going on strike for higher wages? It was they who were surveyed for the most part. (Along w/a mess of their kindred spirits, I believe.)
And yes, MSM jumped on that bandwagon, driving the issue with their usual liberal airheadedness.

No offense to your sister, but with thinking like she apparently does, how in the heck does she even “run” a business?

No offense taken. But to answer your question, I imagine like any run-of-the-mill Liberal does.

Dunno. Maybe life has him away from his computer or mobile device.