Running a Restaurant in a $15/Hour World

Restaurant Staff

Seattle and many other cities around the country are gearing up to raise the minimum wage to new highs. These new minimums are promising to close the economic gap, improving the quality of life for low-level workers so that the average rental rates fall within an acceptable range of affordability. Unfortunately, raising the minimum for tipped workers is causing some concerns for restaurant owners.

According to Brad Rosenstein, the owner of Jack’s Oyster House in Albany, New York, maintaining the current base salary for tipped employees is critical for the sustainability of restaurants. Currently, under New York law, restaurants like his own must assure their tipped employees the equal of an $8/hour wage, making up the difference if their tips fall short. Rosenstein describes how servers at his own restaurant can average a $30/hour wage with the tips they make, and raising the base wage from New York’s current $5/hour minimum would force him to cut jobs or the hours of his employees.

“In order to create good jobs, we need to keep that wage down for tipped employees because they’re making so much in tips,” says Rosenstein, “which is great, and we want them to have the flexibility to make so much in tips.”

Rosenstein’s opponents include Michael Kink, the executive director of Strong Economy for All Coalition. According to Kink, “Elimination of the sub-minimum wage for tipped workers is good labor policy, it’s good economic policy. It’s something that will help businesses and workers across the state.”

Here in Seattle, some businesses are adapting to upcoming minimum wage increases by eliminating tips. The local seafood chain, Ivar’s, has already given its servers a flat $11 salary by raising menu prices and instructing customers not to tip. The chain expects that it will thereby be able to maintain a functional business while simultaneously giving their workers a salary equal to or greater than what they received with tips.

Unfortunately, not all businesses are managing to adapt. Contact our Bellevue business consulting service for more on how you can survive in a $15/hour world.