Minimum wage hikes sending restaurants the way of the shopping mall?

Fox Business ^ | 2018 January 15 | Brittany De Lea

[CutePuppy]

Eighteen states raised their minimum wages at the start of 2018, but increasing labor costs are strangling the dining industry so much that restaurants could soon face the same fate as shopping malls.

"I think you're going to see thousands of restaurants close their doors," Willie Degel, "Restaurant Stakeout" host and CEO of Uncle Jack's Steakhouse, told FOX Business. "Fine dining is going to go by the wayside."

The downward cycle seems daunting to Degel and other industry insiders. As costs rise, only so much of the burden can be passed along to consumers in the form of price hikes before they decide they cannot afford the expense.

"When we increase in prices ... we see guest count go down," Degel noted. "The consumer is not willing to pay for the experience then." ..... < snip >

..... In addition to raising prices, businesses often cope with minimum wage increases by firing staff. Last week, casual dining chain Red Robin Gourmet Burgers (NASDAQ:RRGB) announced it would eliminate busboy positions at 570 restaurant locations. Degel said he got rid of busboys at his New York restaurants two years ago, and has more recently turned to staff cuts "across the board." ..... < snip >

..... Many business owners have turned to technology to both compensate for the loss of labor and to reduce expenses. Some restaurants, including Chili's and Applebee's, have already replaced servers with tableside tablets for placing orders and paying bills. ..... < snip >

..... In addition to the 18 states and 20 cities that raised their minimum wages on Jan. 1, three more states will implement a hike later this year. ..... < snip >

[CutePuppy]

The problem for large national chains, in particular, is that an increase in minimum wage (mandatory expense) in some states may force "voluntary" increase in other states, to keep workers from resenting the disparity and joining the "fight for $15".

Meanwhile, companies like GrubHub (GRUB) are capitalizing on the situation and the technology to provide the consumers the experience of restaurant meal without visiting the physical place where the meal was made. Couple it with comfortable home setting and a glass / bottle of wine bought at significantly lower prices than at restaurant, no hassle of driving, finding parking or paying for valet and/or dressing up... and you have a better, cheaper experience. There are now restaurant/gourmet "kitchens" that have no tables or servers, just doing catering orders by delivery.

[glorgau]

Simple, cut back on the tip.

[ProtectOurFreedom]

Good insights, CP. I hadn’t thought of tech and the delivery model overhauling food service the way it did retail, taxi, and video delivery. Why go to a movie theater when you can have your own private home big screen with content streamed to it? Same for food as you say.

[OrangeHoof]

The California answer, which has already made it to Austin, is food vans where there are few tables, no servers. People wait in line cafeteria style to get their food and take it someplace else to be eaten. It all may be an illusion but I’m generally turned off by such places. My image is seedy greasy food from fly-by-night businesses but there’s no arguing that the low overhead allows for cheaper prices than in a brick-and-mortar restaurant.

[CutePuppy]

Why go to a movie theater when you can have your own private home big screen with content streamed to it?

Exactly. Last time I paid for a movie theater ticket was in 2000... though attended couple of times for special previews by invitations to corporate or business events (not the setting I usually enjoy). I definitely prefer "home theater" experience.

[Yosemitest]

Minimum-wage increase proposals are NOT about minimum wages.
It's about UNION wages (read government employees mostly) and UNION DUES.
Like "Artie" on another thread wrote.

"but my theory is that
this is one of the foundations of single payer.
Down the road, as single payer replaces ObamaCare,
all healthcare workers will become in essence government employees.
Think about how many thousands of new, dues paying union members will magically become part of the SEIU.

Barry had sealed this deal with Andy Stern years ago.
Barry promised Andy and the SEIU thousands of new members,
Andy says
great,
this is the wage structure we need
so we can pay the slush fund.
Gotta pay a living wage to all of the new union members
so dues can be extracted
and kickbacks to the dems can be made.
It’s convoluted
but what dem scheme isn’t,
especially when large sums of cash are involved?"

So read the following:

Union Support Of Minimum Wage Hike Is Self-Interested by RICHARD BERMAN on Aug 26, 2013

Mary Kay Henry, president of the Service Employees International Union, ... was quick to emphasize that her organization's support of a more-than-twofold increase in the minimum wage was "not about growing unions."

This may be true — but it's also undeniable that such a move would have a profound impact on growing union paychecks, even if those unions don't count a single minimum-wage employee in their ranks.

The fine print can be found in union contracts. Each year, the Department of Labor's Office of Labor-Management Standards (OLMS) releases a number of union collective bargaining agreements (CBAs).

Unsurprisingly, many CBAs available in the OLMS database LINK union salaries and wage rates to the federal minimum wage. There are a number of methods that unions use to accomplish this end. The two most popular appear to be setting baseline union wages as a percentage above the minimum wage, and mandating a flat wage at a set level above the minimum wage.

One example is a series of CBAs signed with the Union of Needletrades, Industrial and Textile Employees (UNITE). Their contracts mandated that
"(w)henever the federal legal minimum wage is increased, minimum wage (in the agreement) shall be increased so that each will be at least fifteen (15%) percent higher than such legal minimum wage."

There's also an SEIU local's contract, which ordered that
"(t)he minimum hourly wage rates shall exceed any statutory applicable minimum wage rate by 50 cents."

Some unions have also arranged contracts where the employer MUST renegotiate their contracts in case of a minimum-wage hike, NO MATTER HOW LONG is left on the pact's life span.

The possibility for abuse here is staggering:
Unions with average wages WELL ABOVE the minimum wage CAN INSERT such clauses into their contracts, FORCING negotiations in industries not otherwise affected by a wage hike.

Given the limited number of CBAs available in the OLMS database, it's impossible to determine just how widespread this practice is.

But at least one union has trumpeted this arrangement as "one of the many advantages of being a union member."

Earlier this year on its blog, the United Food and Commercial Workers International Union proudly boasted that "oftentimes, union contracts ARE TRIGGERED TO IMPLEMENT WAGE HIKES IN CASE OF MINIMUM WAGE INCREASES."

This is a stunning admission of SELF-INTERESTt for an organization that's actively PUSHING minimum-wage hikes at both the state and federal levels of government.

It also raises questions about unions' growing use of nonunion "worker centers" like the Restaurant Opportunities Center, OUR Walmart, Fast Food Forward and other organizations that have made headlines in recent months.

These groups advocate many policies that would affect those businesses that pay a minimum wage — restaurants, retailers, etc. — and a minimum-wage hike is often the FIRST demand that these union front groups make. This only casts further suspicion on the motives of the labor unions funding these groups.

No matter how you look at it, the benefits that these unions stand to reap from a minimum-wage hike should raise questions about their real motives — and whether they're only manipulating the debate over fast-food wages for their own benefit.



Berman is the executive director at the Center for Union Facts.

Young Student Gets Limbaugh Lesson on the Minimum Wage
Oct 27, 2017


RUSH: This is Caden in Reno.
Great to have you.

CALLER: Hi, Mr. Limbaugh. RUSH: Hi.

CALLER: This is just an honor.
I just want to say how much of an honor this is to be speaking with you on your show.
I am just… I’m doing a speech on Monday in my speech and debate class on why the minimum wage should NOT be increased.

RUSH: Mmm-hmm.

CALLER: And I would like to…
I was wondering if you could give me a couple of talking points on why
raising the minimum wage to $15 an hour would affect the economy
or just business in general.

RUSH: Okay.
Caden, but first, before I answer this,
do you have a computer ?
Are you able Google things and search them ?

CALLER: Yeah.

RUSH: Okay.
Because you’re gonna need to do this because you’re gonna find the evidence I’m gonna give you.

CALLER: Okay. RUSH: Seattle.
You need to search “Seattle and restaurants” and find out what happened to them after the minimum wage was raised to $15 an hour.
A bunch of restaurants closed, Caden.
Raising the minimum wage
— choosing an arbitrary number that has nothing to do with the market and demanding that the least qualified earn that money —
means that people get fired.
Businesses do not have a pile of money they’re not using
that they can go raise wages from.
They have to earn it via sales or whatever.

So what happens when the minimum wage is raised arbitrarily on the command of government
is that people lose their jobs.
More people end up out of work,
and the resulting increase in the minimum wage is not enough to counterbalance that at all.
But you Google “Seattle and restaurants,” and you’ll find out
the number of restaurants that have had to close since they raised the minimum wage to $15.
It will be your argument right there.
You can do your entire report on that story.



---



Related Links



• Washington Post: A ‘very credible’ new study on Seattle’s $15 minimum wage has bad news for liberals

[Yaelle]

Robots. Restaurants might stay, but restaurant jobs are going. Busboys are already nearly gone in CA.

[CutePuppy]

Robots. Restaurants might stay, but restaurant jobs are going. Busboys are already nearly gone in CA.

Yep, it's happening.

Red Robin eliminates bus boys as restaurants combat minimum wage hikes - FBN, by Brittany De Lea, 2018 January 09

[CutePuppy]

When in CA, I’ve seen all kinds of “food trucks” lined up near business areas / buildings, particularly during breakfast and lunch hours. Though I’ve never bought anything from them, I wouldn’t say that the prices are “cheap”, and from what I was told, some of the trucks provide freshly made “gourmet food,” from lobster rolls to specialty burgers or steaks.

Could be that it beats “brown-bagging it” or waiting in line in cafeterias / sandwich shops / Starbucks...

[Joe Dallas]

Provide good food, good service and do so in an efficient manner and your restaurant will succeed.

[867V309]

I won’t eat where an illegal with hep C handles my food.

[jiggyboy]

“Government is simply the name we give to the things we choose to do together.” — Barney Fwank

[heylady]

Maybe restaurants should follow the Australian model ( or McDonalds). When you arrive at a restaurant you go to the counter and place your order, pay for it,then go find a table. Waiters will bring your food but you bus your own table. There are also no refills on beverages.

I do find that the younger generation absolutely loves to eat out. Spent 2 months with my daughter and her family and she only cooked about 4 or 5 times. Lunch was always leftovers from previous nights dining out.

[scrabblehack]

Who charges less for takeout than for eat-in?
The only way that’s been true for me is to not leave a tip for takeout, whereas I leave a tip for eat-in.

[NTHockey]

Simpler, cut down on portions. People are too fat anyway; they don’t need to eat a lb. of pasta or a baked potato the size of a baby’s head.

I do like the idea of cutting tips - as long as workers are really making the $15/hr. Restaurants could just post a sign - “No tipping allowed”.

[joesbucks]

Many chains were on last legs before this. The increase may help their demise, but the food industry has been in decline for quite some time.

[mewzilla]

Large chains may be better able to weather this, economy of scale thing, than the mom-and-pops. Around here the latter’s margins run around 5%. These hikes are a killer. And NYS plans more.

[cweese]

"My image is seedy greasy food from fly-by-night businesses..."

I used to think the same until Franklin BBQ (in Austin TX) opened. IIRC, Aaron Franklin was serving out out of a food truck for several years before he opened his brick and mortar location. His BBQ is some of the best, ever.

[Susquehanna Patriot]

Your post reminded me of a sign that I saw posted in a back road, country gas station:

Price, Quality, Service - Pick any Two.

Over time, I have found this “wisdom” applicable to many businesses, including restaurants. As distorted minimum wages are increased for unskilled labor, one of the other two factors should be negatively impacted, ...if the business can remain viable.

[Alas Babylon!]

I’m miles out in the country. No Grubhub here.

Not many restaurants, either. Those that are here have staff that are often friends and family, and grateful for any wage and love their work and customers.