Owner says Capitol Hill pizza joint closing because of $15 minimum wage rules for franchises

Screen Shot 2015-04-29 at 10.56.16 AMThese restaurants weren’t closing because of Seattle’s new minimum wage — but this one is.

The owner of the Broadway location of Zpizza — a franchise chain with locations in 14 states, Washington D.C., and three “international” outlets — has announced she is closing her shop across from Seattle Central this summer after five years of service because Seattle’s new minimum wage law makes it too expensive for small-time franchise owners to do business.

“I’m a franchise. The law states that if you’re a franchise, you have to accelerate your minimum wage just like Amazon or Chipotle,” Ritu Shah-Burnham tells CHS.

Shah-Burnham said the timing of her announcement — she decided to share her decision with Q13 Fox News earlier this week — has more to do with her lease and the next stages in Seattle’s minimum wage law implementation than the April 1st initiation of the march to $15 per hour.

In the sixth year of a 10-year lease, Shah-Burnham said she had the option to do a cost analysis and opt out of the remainder of the contract for her space in the Broadway Building at Broadway and Pine.

“When I saw what I had to do — if I had seven years, it was doable,” she said. “But to do it in 24 months, it was going to be too much.”

Looming for Shah-Burnham was 2017’s deadline for large “Schedule A” employers to reach a full $15 minimum wage in Seattle. Some types of businesses will have until 2021 to reach $15 under the law’s phase-in schedule.

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Zpizza certainly isn’t the first chain to call it quits on Capitol Hill. The neighborhood –especially Broadway — has attracted a steady flow of attempts by specialty chains and franchises to establish a beachhead in the indie-leaning community. Mod Pizza, another pizza concept with success in other locations and cities, fizzled out on Broadway in 2013, for example, and a business analysis predicted an unpromising environment for “limited service” restaurants on the street.

Zpizza’s building, however, has much of its retail space filled with chain stores including Blick Art Supply, GameStop, and a Panera Bread location. We’re told the space formerly home to the Yogurtland chain is also still being lined up for a new fro-yo provider after another yogurt business planned for the space fell through. A spokesperson for Capitol Hill-based developers Hunters Capital firm that built and manage the building said the new yogurt business will not be a franchise, however.

Even with Zpizza’s planned closure, Broadway is home to many if not most of Capitol Hill’s franchise businesses. Shah-Burnham said she doesn’t know if we might see a wave of similar closures on the street because some retailers and shops will have small enough overall labor costs to be able to transition to higher wages.

The Broadway restaurant is Shah-Burnham’s sole investment in the company. She doesn’t own multiple locations. Shah-Burnham said she doesn’t regret choosing to build a franchise business — she only regrets that she tried to do it in Seattle.

With 22 years of restaurant experience, Shah-Burnham said that she chose to open a Zpizza franchise because most of her experience had been in “front of house” work and she hadn’t operated a commercial kitchen on her own before.

“The goal was to open up a business where I didn’t necessarily have to grow from the ground up,” she said.

“I don’t feel like I made the wrong decision. I didn’t realize that we’d be attacked.”

Capitol Hill has seen an explosion in new restaurants and bars — we counted 100 in three years — with 30 or so more that were planned to open in 2015. Most of the new openings won’t be subject to Schedule A. We asked Shah-Burnham why she doesn’t take the 500 East route to transform her business from chain to independent. For one, she said, she is limited by contract. But Shah-Burnham also said she would be concerned about building a new business in Seattle again.

“I don’t know what’s coming next.”

In the meantime, Shah-Burnham said she and her 12 employees will continue working through the summer until she closes the pizza shop in August.

UPDATE 9:30 PM: We didn’t detail on key element of the story: the pizza. We’ve heard from a few fans with a shared lament — Z was the only place serving vegan pizza by the slice. If you’re looking for a new venture on the Hill, consider the opportunity.

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49 thoughts on “Owner says Capitol Hill pizza joint closing because of $15 minimum wage rules for franchises

    • Second that. My girlfriend and I would go to Yogurtland late at night at least once or twice a week.

  1. The pizza was pretty bad and it never seemed to have much business. I tried it a few times and walked by a lot. I can’t help but wonder if that has something to do with the inability to pay $15/hr.

    On the bright side, maybe a better pizzaria or some kind of cool restaurant will take over the space.

    • I have to agree. The pizza wasn’t good. Also, if a business has to rely on paying poverty level wages to succeed I don’t consider it a viable business. Good riddance.

      • Everytime I walked by the pizza place it was empty. I wonder if they would have had to shut down even if the minimum wage didn’t go up.

  2. how telling that the owner broke her story on ‘Fox News’ to feed their anti-worker appetite.

    Working Washington counters this ‘living wages kill business’ narrative by pointing out how many pizzeria chains on Capitol Hill are advertising for help on Craigslist at the moment:

    http://www.workingwa.org/blog/2015/4/29/about-that-story-on-zpizza-and-seattles-minimum-wage

    steve 1st commenter got it right: the problem is not the law, or even this franchisee – the problem is the franchise model. And consumer choice is the most powerful arbiter in matters of conscience.

  3. Her business was really struggling. Sounds like she’s using this as her opportunity to call it quits. Maybe if their service would have been faster/friendlier…

  4. I suspect this closure has more to do with the pizza tasting like melted wax on a piece of cardboard than it does the $15/hr minimum wage.

  5. I expect a crowdfunding campaign in this woman’s name to start up any second now & rake in well into six figures before anyone realizes what she’s up to.

  6. Maybe this is another hidden lining in the $15 min wage law. Large chain franchisees typically are paying out obnoxious franchising fees to the franchisor (that is, to the national chain parent company) – often at a vig that would make Tony Soprano proud – and the only way that model works financially is to put out crappy, mass-produced, industrial grade product with the lowest quality ingredients while paying their workers slave wages.

    Nobody is going to shed a tear if these kinds of fast food joints get squeezed out and opportunities open up for locally-owned businesses paying better wages and putting out much higher quality product. Win-win-win all-around for customers, workers and local entrepreneurs.

  7. only spot in the neighborhood to get vegan slices. As a student at SCCC it definitely helps to have a quick semi cheap spot to grab a quick bite in between classes. Can another pizza place nearby cater to the segment of the population that doesn’t eat meat or dairy?

  8. This was one of the few gluten free pizza places on the hill. It was a bit over priced but the owner worked her ass off to keep that place going. She was always super friendly and helpful to me every time I went in. I have to say I won’t miss Z as much as I’ll miss an amazing business owner that the hill is losing to a loophole. I’m sure whatever future venture she chooses will be successful and I wish her the best.

  9. There are a lot of great restaurants on Capital Hill if you aren’t good you’re not going to succeed. Paying your employees a decent amount has nothing to do with it.

  10. This place sucked. NO, you are not going out of business because of the wage increase, it’s because no one wants to eat your shitty pizza?

  11. I am another person who was grateful for her vegan slices even if they were pricey, but the problem is a business model that doesn’t allow for them to pay a living wage.

  12. Not sorry to see something formulaic go. But there’s a reality to face. Is everyone’s guess here is that the space will be replaced with a locally owned, “someone with a cool idea,” “character-driven” business? Really? Oh, Capitol Hill. I love you so much but you lack small business common sense. Only franchises and chains can handle the time (and money) it takes for Capitol Hill residents to begin to “discover” and then fully support their own and “beloved” neighborhood businesses.

      • Veggie Grill would do well in that spot I think, but I would much rather that Native Foods comes to Seattle (and more importantly, Capitol Hill). They’re a fast food vegan chain like Veggie Grill, but I find the food is way tastier and more interesting. I rarely feel inspired to go to VG, but I’d go to Native all the time if one were close by.

  13. So, they sold pizza that didn’t taste good for way too much money, and she had no experience running a kitchen – but it’s the minimum wage hike that’s putting them out of business? Riiiiight.

  14. What I don’t understand is, why doesn’t someone open a vegan or vegetarian fast-food place on Broadway, with veggie burgers and sausages, fake-chicken fingers, etc. Offer both healthy and, um, less healthy options and you should attract a broad customer base in this neighborhood. Why is this idea less attractive than opening yet another Thai or Mexican place?

  15. It doesn’t seem very fair to me that franchisees are required to follow the wage increase rules that the large national corporations must follow. Franchisees are basically very small businesses and should be included in that wage schedule, not lumped in with McDonald’s and the like.

    • According to a 2012 BBC report, McDonald’s is the world’s second largest private employer—behind Walmart—with 1.9 million employees, 1.5 million of whom work for franchises.

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  18. The minimum wage mandated by Mayor Murray and the city council has nothing to do with income equality & everything to do with basking in the national spotlight. If they actually cared about income equality they would mandate a maximum wage, pursue a state income tax, reign in sales tax, and take a pay cut themselves (the Seattle city council is the highest paid in the country).

  19. I totally question the cause and effect of minimum wage and this place closing. Their food was plain bad. I work in the same building, it’s convenient and I eat out for lunch every day, but this never even is a consideration to me because it’s tasteless and kinda nasty. To try to external blame for failing as a business is just bad form guys.

  20. I’d be curious to know how her business was doing prior to this? Possibly she made a bad investment in signing into the ZPizza Company, there are many of them throughout the US and it looks like she signed a contract to open 3 in Seattle in 2009 and had hoped to have all 3 open by 2012. Clearly that didn’t happen. Pizza is a competitive market. She is unfairly blaming the wage increase on her business failing, when I bet her business was failing long before.

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  22. They were the only pizza place on the hill with decent vegan pizza. I think there are too many pizza places to compete for the non-vegan market, but I am very sad to see them go. I’m all for the $15 wages, and would’ve been perfectly content with paying more to keep them (and every other place I frequent) in business. Why do the cost analyses never include a “when I raise my prices” factor?

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