Restaurant Chain Files For Bankruptcy, Cites Progressive Minimum Wage Laws
“Over the past three years, the company’s profitability has been significantly impacted by progressive wage laws along the Pacific coast”
The progressive push for higher minimum wage laws has had perfectly predictable results: lower-income people are most harmed, businesses switch to robots, businesses shutter, or as in the case of west coast Restaurants Unlimited, Inc., they simply file for bankruptcy. The chain closed six restaurants prior to filing.
We’ve reported many such incidents here at Legal Insurrection. Here’s just a sampling:
- California’s $15 Minimum Wage Hike Costs UC Berkeley Jobs
- San Diego Restaurants Serve “Dining Surcharge” After Minimum Wage Hikes
- Study Shows Raising Minimum Wage in Seattle Did Little to Help Workers
- Big Robot welcomes your $15 per hr minimum wage
- Seattle Minimum Wage Hike Backfires Hurting Low Income Workers
- *UNEXPECTEDLY* — NYC Restaurants Cut Staff and Worker Hours Due to New $15 Minimum Wage
- Minimum Wage Hike Kills Popular Upstate NY Eatery
- Unions Want Exemption from Minimum Wage Hike They Supported
- San Fran Raises Minimum Wage, Kills Local Book Store
- Good Job “Raise the Wage” Crowd! McDonald’s to Install Automated Kiosks Nationwide
The latest victim of progressive ignorance about the real world impact of raising the minimum wage too high is Restaurants Unlimited, Inc. whose restaurants include Henry’s Tavern, Stanford’s and Kincaid’s.
Progressive wage policies helped force upscale eatery operator Restaurants Unlimited Inc. into bankruptcy, according to court documents filed Sunday.
The company, which operates 35 restaurants ranging from fine dining to “polished casual” eateries, including Henry’s Tavern, Stanford’s and Kincaid’s, filed for Chapter 11 protection in Delaware on Sunday. Minimum wage hikes, two disappointing restaurant openings and consumers shunning casual dining are to blame for the bankruptcy filing, Chief Restructuring Officer David Bagley said in court papers.
“Over 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,” Bagley said. “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’s restaurants are concentrated in Washington, Oregon and California.
The company notes that the increased labor costs are unsustainable.
Over the past three years, the company said their “profitability has been significantly impacted by progressive wage laws along the Pacific coast.” As of now, Seattle’s minimum wage is $16 per hour for the company. Portland’s increased last week to $12.50 per hour. San Francisco’s is $15.59. Restaurants Unlimited says wage increases have increased their expenses by $10.6 million through the 2019 fiscal year.
In a statement to KATU News, a company spokesperson said, “The wage hikes — between 35% and 70% — have significantly increased our labor costs and have had a serious impact on the economics of the business. While striving to maintain the quality guest experience our customers have come to expect at our restaurants, management and staff at RUI have worked diligently to manage the impact of the wage increases which, in aggregate, far exceed the company’s net income.”
Before filing for bankruptcy, the company closed six restaurants, including two in Oregon: Prime Rib and Chocolate Cake in Portland and Portland Seafood Co. in Tigard. A spokesperson says there are “no immediate plans for additional closures.”
Six restaurants closed? That’s a lot of people out of work. I wonder how many of them would have loved to keep their jobs at a minimum wage their employer could manage?
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Comments
“…a lot of people out of work.”
For the little people, it is a bug (harm). They were ignorant but not anymore.
For the leaders of the left, it is a feature. Government to the rescue. The plan worked.
By any means necessary.
I’m thinking if you expect to make a decent living and support a family on a minimum wage job, you didn’t learn much math before you dropped out of high school.
The Left will not care one wit… there is unemployment insurance for the jobless and nothing for ownership. The Left wants profit sharing when there is profit and no layoffs when there is none.
If they had control of the stock market it would be buy high and sell low.
“Comrades, we’ve succeeded! The minimum wage has been raised to $20 an hour. We’re now working on the campaign to raise the minimum to $25 an hour. The voice of the people is being heard.”
“But, Ivan, I haven’t been given any hours to work.”
“You people are so unappreciative!”
I can’t wait for the laws that say you can’t go out of business so you have a choice: stay in business or turn your business over to the government to be run by an expert committee.
Comrades! The future is only 20 minutes away!
Sounds like directive 10-289. Or the platform of most of the democratic presidential candidates.
i’ve read that book…
i think the author was Ann something.
This is my shocked face.
And my question to Leftists remains: What business is it of government to regulate what goes on between 2 consenting adults (employer / employee)?
The options are to legally pay them $15 over the table or illegally $10 under the table. As always, the unintended consequence will be to eliminate government from the equation. That is until .gov ups the number of revenue agents.
Either progressive prices or minimum wage are not viable or sustainable. This is similar to Obamacare et al that have been diagnosed but only received piecewise treatments.
They will reopen using $7/hr illegals.
The unintended consequences – from the point of view of the useful idiots marching for their leftist handlers.
The leftist handlers are on soros’ or colleges’ payrolls, and will do just fine when Cloward Piven finally wreaks havoc.
O hours X $15.00 = $00.00
Useful idiots: you know what happens when you have a high minimum wage? You wind up with a low maximum wage.
Ask any worker replaced by a robot.
You can already see the line of defense the left will take. It won’t be due to the minimum wage. It will have happened because of this, “two disappointing restaurant openings and consumers shunning casual dining are to blame for the bankruptcy filing” as described by the company in it’s filing. Never mind the other part of the filing about minimum wage being the 800 lb gorilla in the room.
‘Those who do not learn history are doomed to repeat it.’
George Santayana
Given the lack of a traditional “Classic Education” in the last 50 years which required reading and reasoning of the Classics of Latin, Greek, German and Hebrew texts in the original languages, the Leftist Colleges and Universities are turning out “Slaves” and not “Masters of Reason and Discipline”. The Slaves follow orders from the Mainstream Media and the “Progressives” and do not think out the consequences of their actions or understand that History can happen again.
“Fight for $0/hour, the real minimum wage!”
I think we can all agree that this chain did the right thing and sacrificed itself for a good cause. And they may even have employed some proto-Democrats, undocumented citizens and voters in their small sacrifice for the cause.
Ordering kiosks or terminals at the tables, wait staff will go the way of the Dodo bird.
Planned ICE raids are putting the restaurant industry on edge
https://www.sfgate.com/news/article/Planned-ICE-raids-are-putting-the-restaurant-14092681.php
An industry that operates off the backs of illegals (hiring illegals is against the law) deserves all of the legal issues it faces.
Businesses avoiding government?
Governments need to be careful about this sort of thing.
Alcohol Prohibition is only one example.
The unemployment rate in Seattle is less than 4%.
These workers will be rehired immediately by other companies
Look in Craigslist Seattle to see how desperate companies are for entry level help in the general labor section of Jobs Posting
The unemployment rates in areas with a 15$ minimum are all low
Stop living in a right wing bubble
Print money, emit credit, devalue capital and labor, force a decadal reset.
Mandating a $15 minimum wage for restaurants is counter-productive. Here is why.
Most restaurant business models are based upon paying wait staff no more than half of that rate. The wait staff then supplements this low wage through gratuities. This does two things. It allows the ownership/management to hold down overhead, in the form of wages and employee taxes. And, it stimulates the wait staff to higher levels of performance. In a high end restaurant, if a waiter is being paid $5 an hour and picks up $80 in tips in that same hour he is making almost 6 times his hourly salary. Even if he has to split his tips, he is still making 3 times his hourly salary. In less prestigious establishments, the tips will be lower, but a waiter can still make more than the minimum wage, if they hustle. Their earnings are not guaranteed, however.
Now, let’s look at general wage scales. $15/hr yields $30,000 a year. Sounds good, doesn’t it. But, that is starting salary range for jobs which require extensive education or are high risk professions. Firefighters and LEOs, both high risk professions, generally start at around that level. Teachers and nurses, both of which require college or technical degrees, the same. So, if we double the minimum wage for clerks, dishwashers, waiters, maids and lawn mowers, do we double the rest of the wage structure? Do firefighters, cops, teachers and nurses now start at $50,000-$60,000 a year? And, exactly who pays for that?
Wages, just as prices, should be determined through the free market. When businesses are locked into a salary range, should there be an economic downturn, then employees will be cut.
“Craigslist”
—
now *there* is a reliable source of information.
nice try, cupcake! got any real data?
Actually, Seattle has one of the highest starting salary ranges in the country, about twice that of most of the rest of the nation. Of course it has a 10% sales tax as well as the highest liquor taxes in the nation. Then there is the 37% retail pot tax. And, the rest of the tax structure is similarly inflated. And, still, it wanted to impose an income tax on the wealthy. for an apartment. And, the average rental rate is over $2100 a month, for a one bedroom apartment and over $2700 for a two bedroom apartment. That is $24,000 a year for a single person in a one bdrm apt. So, $15/hr is like $7/hr in the rest of America.
Just looked at Craigslist Seattle and most of those jobs are not in Seattle. They are in the surrounding areas like Bellevue and Mercer Island. Very few were actually in Seattle, which is where the minimum wage is $15/hr. Typical leftist who shades the truth to support the narrative. Buzzfeed and Vox are looking for folks like you.
Having one restaurant company blaming the $15 minimum wage for its failure as a corporation in a city with a booming economy and using that as a debating tactic is pretty weak
Is it true that those areas with a $15 minimum wage have lower unemployment rates ? Is that difference significant or not ?
Too bad NOBODY could foresee this (quite obvious) eventuality and warn them not to (artificially) jack up wages…
Oh…wait…
There are about 3500 restaurants in Seattle
Looks to me that the 6 most poorly managed are going out of business
There are 100s of job openings on Seattle Craigslist gif restaurant Wagner’s or other entry level jobs all at 25$ MINIMUM
And if you want good workers you better pay more
You do realize that a $25/hr wage yields $50,000 a year for a 50 week job with five, 8hr work days, right? I would love to get a job that started at that $50,000/year without requiring a college degree.
While I am now retired, everytime wages were raised, it made more work for me designing automation to replace a bunch of those people who felt they were worth so much.
I am looking forward to the day I can walk into a fully automated food establishments.
In Leftist Ann Arbor, a local coffee roaster had a coffee shop on Main Street. The employees demanded a “fair” wage. The Progressive owners shut down the shop instead. I think there are several lessons in there somewhere.
Well of course one lesson is that restaurants have historically had many failures
This is true, but why would progressives want the government to make it even more difficult to be successful in this field? It makes no sense to me.
Is the unemployment rate higher or lower in places that have a higher minimum wage ?
Hi johnr, you might not be aware of how online comment sections work, but you need post the same question only once. People will see it, but if you spam it (as you have done here), people will tune you out as a troll. /just saying.
As to your question, it’s a bit complex, but the short answer is that yes, a $15 minimum wage has a detrimental effect on the employment rate. One of the complexities involved, of course, is one pointed out by Mac above, comparing the overall employment rate–that of high paid, skilled workers–with that of minimum wage, unskilled workers is a recipe for economic disaster. They are not the same thing, and touting it as such, is not a good look.
Here are some helpful links to help you figure it out for yourself:
https://www.forbes.com/sites/adammillsap/2018/09/28/how-higher-minimum-wages-impact-employment/
https://mises.org/library/yes-minimum-wages-still-increase-unemployment
https://www.bls.gov/opub/mlr/2014/beyond-bls/determining-the-employment-effect-of-raising-the-minimum-wage.htm
https://www.bls.gov/opub/reports/minimum-wage/2017/home.htm
This is a fascinating topic, and I hope you take the time to explore it fully.
The only problem with the example given in the thread is the location. As I mentioned above, Seattle is one of the most expensive places in the country to live. It also has a high salary range. So, Seattle MIGHT be able to support a $15/hr minimum wage. The rest of the country, not so much.
Seattle, WA average salary is $104,714, median salary is $103,000 with a salary range from $23,510 to $868,500
Orlando, FL average salary is $77,824, median salary is $70,100 with a salary range from $22,942 to $650,000
Austin, TX average salary is $84,071, median salary is $80,000 with a salary range from $20,800 to $700,000
Source: https://www.salarylist.com/
Restaurant ownership will be restricted to large families that have mom and pop in the kitchen and the kids waiting tables. They will all be partner owners and exempt from the law.
Isn’t that how Waffle House is set up – every employee also owns stock in the company. Does this exempt them from the law as well?
Let them eat biscotti.