Seattle’s Tom Douglas—winner of the James Beard Award—is a celebrated chef. His 14 Seattle-based restaurants employ more than 800 people.
Last August, Douglas chose to raise wages for his Back of the House (BOH) employees. His BOH now make $12-$15 per hour. Due to his “BOH initiative,” liberals have plugged Douglas as a prime example of a restaurateur who is sympathetic to the min. wage cause. Apparently, not so…
Despite being a proponent for a higher min. wage (though he does write “who decreed that it has to be $15?”), Douglas is not enthusiastic over Mayor Ed Murray’s plan to implement an across the board $15 min. wage that does not take into consideration tips or health care.
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Douglas expressed his concerns over how Murray’s plan will impact Seattle restaurants in a recent interview,
“I got to tell you, $15 across the board without any sort of tip credit or total compensation credit would be really huge for us. And I don’t know that it would put us out of business, but I would say we would lose maybe a quarter of the restaurants in town, would be my guess.”
An introduction to a letter penned by Douglas reads,
“…there hasn’t been enough public discussion given to issues such as whether benefits are to be considered part of wages and, of special importance to the restaurant industry, whether tips are to be considered part of wages. If the answer to both these questions is no, what are the economic consequences to businesses and in particular to our restaurant business model?”
Douglas goes on to warn that the price increase associated with Murray’s $15 minimum wage plan is “hugely inflationary to the restaurant business and is irresponsible when considering business people who have long-term leases and investments based on prior economic models.”
Douglas wraps-up with a stinging indictment of Murray’s plan,
“This is going to touch everybody soon, so I suggest you do your own math and see where it might affect your life. Can or will your employer still afford health care? Staff meals? Everything you buy from local produce to rent to childcare to your own meals out on the town will be affected. We do know that the City Council and Mayor’s office will still make their wage and enjoy their health and retirement benefits without fail.
“I would be lying to say that I’m not concerned with the outcome of this national experiment happening in the Seattle market. It is also not lost on me that our City Council and Mayor’s office have very little small business experience… the cost of failure is ours, the tax payers. Raises and benefits given to city workers are from our tax pockets. They might get voted out of office for their actions and decrees, but they won’t go bankrupt. It is inherently easier to spend other people’s money than the gut check of investing your last dime into a dream.”
Agreed, and well put sir.
Agreed, and well put sir.
The added cost of a $15/hr minimum wage for an entry-level position will cripple business. It will also cost many items and services out of reach of the people it aims to help. For the restaurants that don’t go out of business, it will raise prices, sometimes by double. People on the bottom of the income tier won’t be able to afford to go out. This is a horrible plan that will doom many for failure – many businesses, and many employees and their families.
The added cost of a $15/hr minimum wage for an entry-level position will cripple business. It will also cost many items and services out of reach of the people it aims to help. For the restaurants that don’t go out of business, it will raise prices, sometimes by double. People on the bottom of the income tier won’t be able to afford to go out. This is a horrible plan that will doom many for failure – many businesses, and many employees and their families.
Write me off for any weekend down town excursions. It will just cost too much. Seattle will turn into the new detroit. Businesses will close, housing will take a dive as tenants won’t be able to afford the expenses, it will implode.
Write me off for any weekend down town excursions. It will just cost too much. Seattle will turn into the new detroit. Businesses will close, housing will take a dive as tenants won’t be able to afford the expenses, it will implode.
Fully agree. Also, downtown “weekenders” should probably not be weighing in here. You don’t live in Seattle.
“Weekenders” matter because they make up a significant portion of downtown restaurant business. If they stop coming because restaurants just outside of Seattle (or in Bellevue, etc.) cost much less, that will have a definite impact. Hard to gauge how big of an impact, but it would be foolish to discount them.
Actually, I think Tom is being intentionally too nice. It’s not that they don’t understand business u2013 it’s that they simply do not care.nnThe mayor? There is only thinking about his next position. The council? For the most part, they are only thinking of the populist votes.nnThey know what will happen to small businesses. Too many small businesses have given them the black-and-white numbers, so again u2013 it’s not that they don’t know, it’s that they don’t care.
Have you ever worked in a restaurant as a BOH employee? Have you tried to pay off culinary school loans AND support yourself on the exploitative wages restaurateurs pay cooks? I have. I do. Cooks, on average, work 12-13 hour days on their feet, are afforded almost no vacation time, and are severely underpaid for their efforts. It’s time for a change in the foodservice industry. Celebrity chefs rise to prominence on the backs of underpaid cooks, and then they’re lauded for all they’ve accomplished. It’s disgraceful.
Been in the industry for 32 years. Currently work for a celeb. chef. BOH has been over $15. for many when they earn it. Quarterly reviews. careful measure and accountability get them there. Goal setting. Business plans for it, employees earn it. No strong arming from the city to do so, just good business sense. Feeling like you deserve it? Then work for it. Feeling like it is owed to you? Well, good luck when businesses shutter their doors and you have NO pay.
I agree with loopy. I’ve been in the business for almost 20 years, have had to pay off culinary school loans, bills, rent, etc. I started in the Midwest making $7/hr, busted my ass and, AFTER earning it, have worked up to a nice situation with good pay, vacation and health benefits. Increasingly, “entitlement over effort” seems to be the new motto of the American worker, and those that have earned their wages are tired of hearing it. Put in your time, live within your means, and stop complaining.
I started working when minimum wage was 2.75 in the midwest back in the early 90’s. Most of my cooks walk in the door making 122-15 an hour depending on experience and we aren’t even a well known restaurant. The cost of labor will rise to nearly 50% if minimum wage rises to 15. I was always taught from the get go if you wanted something you worked hard for it. Within the past 5 years the BOH workforce has been flooded with entitled cooks who think they deserve kush schedules and way to much money without the effort.
I think your numbers are skewed because I started a crap fast food job at 16 in the mid 80s and min wage was around 3.35 I think. Were you getting tips? Either way I agree that the $15 min wage is ridiculous and its all a play buy that idiot sawant. I prefer the plan suggested by the owners that tied it to your education level. They argued that it encouraged kids to get an education and move out of the low end job. I didnt make 15 an hour til I was 31-32. And that wasnt from lack of trying, it was just working my way up from the bottom. Now I make considerably more but I worked for it.
Did someone force you to pursue a career in a field as difficult, demanding and underpaid as professional cooking? Law school is mandatory for an aspiring lawyer, med school is the same for doctors, culinary school is not a prerequisite for becoming a successful executive chef. Going into debt because you chose to attend culinary school is your choice, the industry standards of compensation in the restaurant business were readily available to you if you cared to research them. “Celebrity chefs” 9 times out of 10 achieved their status through hard work, attention to detail and paying their dues just like everyone else. “Disgraceful”?? The restaurant business must have some of the tightest margins imaginable. Welcome to the real world. I didn’t begin my professional cooking career with any financial expectations whatsoever, I’ve had to adjust and live within my means just like everyone else and after 20+ years in the industry I’ve been compensated well for my experience, knowledge and skills, it is what it is.
Well said. I will add many of the culinary schools lie to students to get them in the door, and essentially put them in shackles with debt. I am one but am getting my head above water and working hard. In the end you have to take your future in your own hands and decide what you want to do. Sink or swim?
I think that most cooks don’t go to culinary school. That is just a trend you see with the advent of Top Chef and stuff glamorizing a not so great career. Long hours and no appreciation by the likes that go out to eat and dont care how much work it took to drop that plate of food in front them. I didn’t care for the hours and the pay, but I loved the camaraderie in the back of the house and the line cooks.
Celebrity chefs rose to prominence by being underpaid cooks, working hard, learning, growing and taking the opportunity when it came.
@Jonathan: Welcome to most fresh out of school employment opportunites. I’m currently earning $17.15 as a KM. I’ve worked extremely hard to get to the position I’m in. And I have an enormous amount of responsibility to the restaurant. I find it appauling that someone with no experience will earn nearly as much as i do. Let me help you understand something about restaurants. This isn’t a standard formula, but we’ll use this model as an example. You have labor costs, food costs and overhead. Owners and managers struggle to keep labor under 25%, food costs at about 25-30% and overhead at 20%, and 3-5% for misc spending (maintenance, repair, etc.) Often labor costs fluctuate between 17-30% or more. This is heavily dependant on business. Busier the store is, the lower the labor costs. However, when it’s slow maximizing the labor you’re paying is critical. So having skilled, hard working people on the floor is desirable. Basically, an average of $10.20/hr is tricky to cover, as it is. Now we’re bumping that wage up 50%. Take a step back, and look at this objectively. Labor will now be between 32-45% at current costs. Let’s add that up:nnAnnually speaking… After the wage increase…nFood we’ll say is 28% nOverhead is around 22%nLabor we’ll say is 40%nMisc Spending is at 5%nnThat’s 95% of the revenue. Before annual taxes. As an owner, where would you make the cuts? You. nYou cut the expensive fat then start in on the lesser fat until your operation is trimmed back into the black.nn I’ve also worked with culinary school grads that couldn’t tell their ass from a hole in the ground. Unfortunately, just because you completed a cooking program at your tech college doesn’t mean you’re entitled to earn top pay. You knew what the wages were coming into this profession as a newb. Work your ass off, don’t complain, and you’ll move up along with your wage. Just like any other profession.
True about the school Nathan, but if you pushed yourself in school you can still get a upper hand. But you have to work for it, like everyone else you have to be a little more hungry than the person next to you. Nice job on the breakdown. These people are nuts, and I’m wondering what someone thinking about opening in Seattle in the next year thinks about this. Anyone?
Well every chef before you has experienced it, you entitled ass.
What an incredibly lame post by Jonathan. Nobody is forcing you to accept a job; hence you are not exploited. If you think it is so easy, why don’t YOU start your own restaurant and pay some non-exploitive wages?
Hi! Does this mean everyone in Seattle gets a cost of living increase? Sure, I already make $300K per year, but the cost of living in Seattle is getting too darn high, and it’s only fair. Also, since the minimum wage has gone up, I’m going to raise the rents on all of my rental properties since everyone can clearly afford it now.
Nice Frank, Not sure if you joking but good point either way. Even though the wage will increase it gives free range to jack up the price on everything, because people can pay more, then all the sudden they are back at square one.
In response to Jonathan, Yes and yes. I’ve worked for Seattle restaurants since the minimum was $6.75 back in 2001. I have debts like every cook I know. I will never get paid what I think I’m worth. Who does other than the obvious? It would be delusionary for anyone to think they can get rich or even live comfortably in the restaurant industry working in the BOH. Yes, even those chefs who rise to prominence worked as mules for even less than what we make now. This is why the industry is “hardcore”. It is meant to employ only the hard working, non-ego, mercenary types. I don’t think the culinary industry became a desired place to invest schooling and a career until dog and pony shows like Top Chef and Hell’s Kitchen made it look like this rock star palace. All of a sudden, you have this mass of kids who have zero work ethic, pride, and a severe ego problem thinking the industry owes them something for going to school. That’s your choice, sucker. It’s all a crap shoot. Whining for a minimum wage that is neck and neck with entry level wage at tech industries because you feel that you need to live comfortably? I know what you cooks do with your money. Don’t pretend you pay off loans and support a family. It’s to afford drugs, alcohol, and crap you don’t need. I’m not saying all cooks are like this, but you’d be a fool to think this isn’t real. The cooks I know who support their families and pay off debts work for 2 restaurants at 10-12 hours a day. I did, and did so until I was 8 months pregnant. Do I feel like I get used? No. It was my choice to be in this line of work, and I wouldn’t trade it for anything that is mind numbingly boring behind a desk or under a hard hat. nWhat this wage increase will do is wipe out any desirable restaurant any of you self serving, entitled asshats, out of business so you can inevitably succumb to the real restaurants who can pay that minimum. Oh,they’re famous too. Your choice, the clown or the king?
I have worked in the industry for about a decade, and recently had to hire a few new cooks for the summer. Some of the people I interviewed asked if we would be paying $15/hour soon because of the new wage increase. I said probably not anytime soon, and they decided to go elsewhere. As annoying as it was to get that question, and more so knowing that is going to be more of the case, it is also my choice whether to hire that person or not, because SKILL LEVEL gets you into the great restaurants. I think chefs can tell whether someone wants to be in this industry or not. If someone has no skill level and decided to be a cook just because the minimum wage went up, go to a big chain restaurant. I know talent when I see it, and the cooks who who have passion, drive, and potential in the kitchen, and a commitment to this industry, deserve a good wage.
We’ll see how many restaurants Tom closes. My guess? He closes none due to the rise in minimum wage but might lose some profit off the top. In the end he still makes plenty of money and no shops close. Time will tell.
you high Jake. He may be able to for a bit, but it will hurt. The bigger think is he won’t be opening any new restaurants, making new jobs. He may stay even but he won’t grow. He would be insane
This is what happen when politicians make economic decisions. They have no understanding of the economic impact. Seattle – the next Detroit…
So, not making enough money? Get a new job that pays better. Minimum wage was never meant to be a living wage. When the wages go up, so will everything else, and guess what? We will be right back to where we are now. People whining they don’t make enough. Seattle is such a liberal non educated city. The saying that numbers don’t lie is true. Do the math folks or are you to stupid to figure out the simple equations. Obama was voted in because he is black, he does not know anything about business or economics. The mayor of Seattle was voted in because Seattle had to have a gay mayor, he knows nothing about business or economics also. Truth hurts doesn’t it. There isn’t anything wrong with being black or gay, but there is something terribly wrong when our leaders don’t know the things they are SUPPOSED to know. The city council is dumber than they look. Its time for elected officials to have closer scrutiny from the voters before they are elected. Maybe a real job interview. Maybe no donation of funds from lobbyists or companys. Maybe being elected with your own money and your own knowledge. Maybe being elected on truths and not lies.
Seattle is actually one of the most educated cities in the world. The President isn’t voted in based upon his ability to be the president of a business, he is the leader of a country made of people– not numbers. He was not simply voted in for being black. If that were the case we would be dealing with Herman Cain and his 9-9-9 plan. Think before you type, maybe know (as opposed to ‘no’) the facts before you step on the soapbox.
There is “educated” and there is Educated. The people of Seattle may have above the national average in college education but that NEVER takes the place of good old common sense and intelligence. I’d say that is what Seattle is missing if they really believe this is a good idea. Seattle, meet Detroit.
I didn’t vote for anyone because of race at any level. Also, my portfolio has been SKY ROCKETING with the way the Dow Jones has performed the last three years. Guess it must be a lucky despite he’s black, President? nnI have no issues with one’s sexual orientation and I voted for McGinn. I hardly believe Murray is in because he is gay. He is in because of the frustration levels people had with McGinn. I did not think Murray was qualified. nnI also find it funny how you state “Seattle is such a liberal non educated city”. Can you see the irony? You’re missing a comma and a hyphen there, Mr. Education. nnYour points are not off on min. wage, your generalizations though, are moronic. n
If there was a tip credit/benefits credit for foh workers, restaurant nowners could and would pay an actual living wage to boh workers. This isn really what TD is stating. I have 22 years old servers with no degree nat all that earn $35-$40 per hour while I can only pay line cooks boh nwages of$14-$15 per hour. Everyone bumps with no tip credit-we all go nout of business and everyone loses their jobs. Do you think my KM’s aren going to not need a large increase per hour when the brand new ndishwasher is making $15? Bad idea with no tip credit. With tip ncredit? Everyone wins really. This issue should have began being naddressed years ago…
Since there is no evidence that Armageddon (or even a slow down) will happen, I’m puzzled by people who are convinced we’re facing certain economic doom. Other industrialized nations pay a minimum of $15 and higher, have stronger economies and lower unemployment. Businesses will adapt, marketplaces will correct themselves, and the republic will continue strong.
You should look up the definitions for inflation and supply and demand. You can try to push the minimally skilled workers up financially, but it’s going to have an effect on the economy. The middle class isn’t getting a raise and this does nothing to the rich, other than make them the only people that will still be able to eat meals at restaurants at whatever prices are charged. Seattle has other strong industries to support it, but the mayor just nailed the lid closed on growing the tax base long term. It’s a short term gain with major consequences.
As a retired banker, I would say that, as Nathan pointed out, if your labor expenses are 40%, your line of credit is in trouble, which equates to your vendors not getting paid in a timely manor, which equates to loss of discounts and sometimes going to a cash basis with vendors. Not a good scenario for any business. The banks will be looking more closely at income statements going forward. The restaurant business has always been high risk for lenders, but more for things like controlling food costs. This whole bright idea is not going to work for anyone, including the folks that think they are getting a big payday.