The tidy sum of 37 cents may not elicit much of a reaction. For some restaurateurs, however, it’s significant.
As of Jan. 1, the minimum wage in Washington state was raised 37 cents to $9.04 an hour, the highest in the country and nearly $2 more than the national minimum wage of $7.25.
Washington's minimum wage is indexed to the cost of living by the state, required by the passage of Initiative 688 in 1998.
The cumulative effect of the minimum wage increase is felt by restaurants and, ultimately, guests, industry professionals contend. Some restaurants will increase prices. Others will reduce the hours of employees on minimum wage. And others will find cost savings elsewhere.
Most of the servers at restaurants on the Eastside are paid the minimum wage, with the bulk of their income earned on gratuity. Most of the kitchen staff at local restaurants earn more than minimum wage.
For Chad Mackay, president and chief operating officer of the Mackay Restaurant Group, the minimum wage hike computes to an additional annual cost of around $50,000.
The Mackay Restaurant Group owns and operates five restaurants: Aqua by El Gaucho on the Seattle waterfront and four steak houses in Bellevue, Seattle, Tacoma and Portland, as well as the Inn at El Gaucho. Altogether the company employs about 350 professionals, including more than 100 servers who are paid minimum wage.
Mackay says he will reduce the scheduled hours for servers by starting shifts later and phasing them out earlier at the end of the evening.
“The increase in the minimum wage is one of these things that there’s a real financial cost,” Mackay said. “We don’t just sit back and take it. We have to run labor tighter.”
Some restaurants will apply a combination of strategies to keep up with rising costs.
Joe Vilardi, proprietor of Bellevue's , said he will raise menu prices slightly and adjust personnel costs.
“There’s nothing you can do about the increase in the minimum wage,” Vilardi said. “You gotta keep labor costs in line, however. Otherwise you are out of business.
“It’s unfortunate to pass on the cost to the customers. It’s a bad economy and customers are strapped.”
Jonathan Zimmer of and Lisa Dupar Catering said food costs affect his margins more than labor costs. Zimmer said he pays his 50 or so catering servers more than minimum wage.
“We are already paying way above minimum wage,” Zimmer said. “Partly because we want to take care of people and partly because we are in Redmond and we have to be creative to get the most experienced servers."
Zimmer employs fewer than 20 servers at Pomegranate. He said menu prices will rise slightly come spring.
“Our food prices affect us way more. It used to be that food costs fluctuated a lot more according to seasonality. Now they just keep going up.”
At in Bellevue, menu prices are set by its corporate offices in Vancouver, B.C. Like at El Gaucho, employee hours will be reduced to adjust for the difference.
“We are already making adjustments on how many people we are staffing at the beginning of the year because business is slower during that time,” said Nick Rehse, a shift leader and bartender at Joey. “We make adjustments to dial down the hours.”
Ben Sheffield, a restaurant veteran with 14 years of experience as a server, bartender, sommelier and captain at restaurants such as El Gaucho, Waterfront, Branzino, Anchovies & Olives and Ibiza, said guests could feel the pinch, too.
“Food quality and service can suffer when the front of the house is understaffed,” Sheffield said.
Sheffield thinks the pay raise for servers may be counterproductive.
“I don’t think that the minimum wage necessarily needs to be raised for servers to do better,” Sheffield said. “As a server I never depended on my (hourly wage). Everybody works for tips.
“The profit margins when you run a restaurant are super slim. Labor cost is your biggest cost. When the minimum wage goes up your largest expense goes up.”
