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Undaunted by new minimum wage, Seattle restaurant entrepreneurs make plans to extend Capitol Hill food+drink ‘boom’

A few of the Capitol Hill captains of food+drink industry

Not only are Seattle restaurants not closing down because of the “$15 minimum wage” but a wave of entrepreneurs and investors is pushing forward on plans to open more food+drink joints around the city. And they’re looking at Capitol Hill for how to do it.

Nearly 200 restaurant owners, developers, and brokers gathered at The Triple Door Wednesday morning for the second annual restaurant industry summit put on by Bisnow, a Washington D.C.-based trade publication outfit.

“Prices will increase, but I’m full steam ahead,” said Capitol Hill, Pioneer Square, and the New Restaurant Boom panelist Josh Henderson to the crowd of $80 ticket attendees. Henderson ain’t kidding. The prolific entrepreneur behind the Skillet-sprouted empire of the Huxley Wallace Collective just announced details of a fleet of new ventures he plans to launch in the city over the next year.

The “$15 minimum wage” — really, $10 an hour at businesses employing fewer than 500 people and providing healthcare or tips starting April 1st — doesn’t seem to be stopping him.

From 2012 through 2014, CHS tallied 100 bars and restaurants opening across the Capitol Hill area. There are more to come in 2015.

While most panelists that spoke to the dozens of food and drink pros Wednesday agreed Seattle’s wage hike would increase menu prices at their establishments (get ready for another nickel per scoop at Molly Moon’s, for example), most of the Capitol Hill experts who spoke had high hopes for the future.

“By the end of the seven year phase-in, there will $400 million more in this city’s workers pockets,” ice cream entrepreneur Molly Moon Neitzel said. “They will inevitably spend more on going out to eat.”

Others had bigger worries than higher wages.

As the Linda’s Tavern block fills with new development, Linda Derschang said rising rents could eventually force her bar out of the bar’s longtime E Pine home. Derschang said she’s also worried about how new Capitol Hill residential development will mesh with existing nightlife. “I’m not sure new tenants are going to enjoy the (Linda’s) patio at 2 in the morning,” she said.

Meanwhile, for Tom Douglas — who has vowed that his Serious Pie inside the Starbucks Roastery is as far up the Hill he plans to come — the lack of parking downtown and unsafe bus stops were most concerning. Meanwhile on the Hill, the glut of sterile, bland storefronts in new construction threatens the longterm viability of Pike/Pine and Broadway’s restaurant economies, according to Patrick Foley of Lake Union Partners.

Executing restaurant concepts, the failed promise of food trucks, and the need for daytime businesses were some of the other topics touched on in the wide-ranging discussion of how to get the recipe right for creating a food and drink boom that doesn’t bust.

Foley, who developed the 19th and Mercer building home to Tallulah’s, said allowing business owners creative input was crucial to building successful commercial developments.

“We didn’t want anyone except Linda,” he said. “We said ‘you just do what you do.’”

Looking toward the next “boom” neighborhood for restaurants, James Weimann, part of the ownership of Poquitos, and Rhein Haus, said he was impressed with the rise of “pocket neighborhoods,” like 19th Ave E on Capitol Hill and the small commercial stretch of NW 70th in Ballard that includes Delancey’s.

Looking at Capitol Hill itself, panelists seemed less concerned with bar and restaurant saturation and more worried the lack of daytime businesses on Capitol Hill. The worries about obnoxious and sometimes dangerously ignorant nightlife crowds also make a difference to the bottom line. “The bros and frat guys hanging out is real,” said Foley on concerns about cultural change on Capitol Hill. “National developers come here because they see lots of people moving here and good paying jobs.”

Among the hard chargers making plans to extend the food and drink boom, there was one figure in the room who said she was sitting on the sidelines for the next rush. Despite having one new business idea a week, Derschang said she has no plans to expand her empire at the moment. Instead, she said she wants to work on better managing her bars, restaurants, and the 250 employees that staff them.

We’ll have more on the first steps from Seattle and Capitol Hill employers — including restaurants, bars, shops, big organizations, and small — in the transition to a higher minimum wage starting April 1st soon.

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RWK
RWK
6 years ago

I don’t think restaurateurs need to be too concerned about having to (ultimately) pay the $15/hr wage, because as they admit all they will do is raise prices, which means customers will be paying the increased wage. But they do need to be concerned about the glut of new places, with more to come. And servers should worry too, because with increased prices it’s likely that their tips will go down.

notips
notips
6 years ago
Reply to  RWK

They won’t go down but disappear completely as they should.

amy
amy
6 years ago
Reply to  notips

Remember that no matter how you feel about tips, tipped staff usually have to tip out other staff, sometimes based on sales amounts not tip amounts. If you leave a bad tip or no tip, you could cost the server money. If you don’t like tipping, not tipping is not the appropriate way to protest it.

RF
RF
6 years ago
Reply to  RWK

I’m a restaurant owner in Capitol Hill and as any restaurant owner should, I have a general idea of how the next ten years could play out based on the Mayor’s minimum wage plan. The one thing that everyone needs to understand is that these wage increases will absolutely not be paid for only by price increases. The 4-5% increase that has been mentioned in some articles is simply the beginning, to cover the first couple of years of the plan for small businesses (large businesses have a whole different schedule). As the increases continue, restaurants will have to find other ways to generate those labor dollars because the public will simply not be able to stomach prices that have grown 30 or 40% over time, even if in incremental amounts. Hence the discussion around surcharges and service charges. It allows the restaurants to keep pricing at a level that is palatable to the public and gives them revenue that can be directly applied to the wages of the staff. Ultimately, we may end up with a city-wide acceptance of an 18-20% service charge. The only problem with this is tipped employees will most likely make less money as the service charge revenue is used to pay the increased wage of all the employees, rather than just going to the front of the house employees. Some might prefer the stability over the higher wage, some may not. We’ll get an idea of how it is handled at the larger restaurants as they go to $15 in 2017 but I wouldn’t be surprised if some go to a surcharge or service charge as soon as April 1st.

RWK
RWK
6 years ago
Reply to  RF

I wouldn’t mind it if a 18-20% service charge comes to pass…..that’s the way it is in Europe (usually built into the menu charges). But then I will tip 0, or perhaps a token few dollars, and I suspect most will do the same.

COMTE
COMTE
6 years ago

The tip issue is a valid one, but the flip-side is that restaurant employees across the board will be less dependent on the vagaries of tipping. Also, because incomes will be more stable for everyone, and because dishwashers, line cooks, etc., will be earning more alongside servers, bartenders & other front staff, there will be less pressure to have to spread tips around. I think long-term it’ll end up as something of a wash – tips may go back down to the 10 – 15% range, but prices will be slightly higher, so the tip amounts, even at a lower percentage, will end up being a little more to reflect that.

whynot
whynot
6 years ago
Reply to  COMTE

I still don’t understand why are tips “mandatory”. Charge for service and be done. Like every other country.

well there
well there
6 years ago
Reply to  whynot

That’s exactly why tips ARE mandatory? Because we don’t provide servers with a decent wage. Answered your own confusion.

Dav
Dav
6 years ago
Reply to  well there

Wait. I thought the whole point of $15/hr is so that I don’t have to tip anymore. I accept that my overall cost for dining out will probably increase (means I won’t eat out as much) but now that everyone is making $15/hr – tipping will no longer be “expected”.

If you are telling me making over 31K gross salary a year is not livable wage then I am confused. I know recent college graduates that make 35K gross a year so I say tipping is not necessary.

Dave
Dave
6 years ago
Reply to  Dav

Say you make 32K gross. The rent on your nice-ish Capitol Hill apartment is $1500/mo. That’s half of your gross income. And when you consider net income? C’mon.

Dav
Dav
6 years ago
Reply to  Dav

Where does it also say that livable income means living on the Hill? Or living in a “nice-ish” apt on the Hill? When I first graduated college I lived in a garden level studio apartment for $600 a month in the u-dist. It was by no means “nice-ish” but it was the sacrifice I made to save money to move to the Hill. I think you are confusing livable with convenient – those are two VERY different concepts.

well then
well then
6 years ago
Reply to  Dav

Not only is 31k definitely NOT a livable income and you should actually look up how living wages are defined, but you’re just assuming all servers are straight out of college and in their early 20s. A lot of people are servers well into their later years, and living in a studio apartment past age 30 is a fucking embarrassment.

RWK
RWK
6 years ago
Reply to  well there

But, with the new legislation, servers will be getting a big increase in their previous wage. There was an article in The Seattle Times some months ago which stated that the average earnings (wage & tips) for a server in Seattle was something like $28/hr…..not bad for a young person with limited training and experience. Of course, this figure included high-end restaurants, where they make considerably more than $28/hr.

DM
DM
6 years ago
Reply to  RWK

It’s never enough.

Maarten
Maarten
6 years ago

Out of curiosity, what is the “failed promise of food trucks”?

Worker
Worker
6 years ago
Reply to  Maarten

Good question. And I’m temped to say “First World Problem” after seeing it in the article.

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[…] entrepreneurs and investors gathered last week to talk about opening new projects in the city. Here’s what folks like Josh Henderson, Linda Derschang, and Molly Moon Neitzel told […]

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[…] announcement from Derschang comes as the Capitol Hill food and drink veteran had said she was done opening new venues. Apparently she wasn’t done having really great […]