The first phase in Seattle’s new minimum wage law kicked in April 1st amid predictions for higher costs and — at least in the long term — better financial equality in the city. At least a couple of the city’s major restauranteurs are pushing back immediately on the costs front. Wednesday, Tom Douglas Restaurants, operator of $$$ and up style restaurants across the city including the newly opened Serious Pie outlet inside the Starbucks Roastery on Pike, announced it was instituting an automatic “Wage Equity Surcharge” of 2% on every bill:
If you are reading this note, you have likely been to one of our restaurants and have seen the 2% surcharge funding the Mayor’s Wage Equity Surcharge (WES). After months of our team working together to craft the best plan for us to handle the wage increase, we felt the most competitive and least intrusive is to implement a surcharge equal to the increase in wages until all restaurants in Seattle are on the same playing field.
100% of this surcharge will be distributed to our staff in either wages or benefits. If there is a surplus, we will distribute it to current hourly staff at the end of the calendar year as a bonus and adjust the surcharge for the next calendar year.
UPDATE 4:45 PM: The blog post has been removed from the site. The company spokesperson has not yet returned our messages and the company’s social media channels have not addressed the situation. A cached version of the message can be viewed here. We’ve also posted a copy here.
UPDATE 8:45 PM: In a new post, Douglas writes that’s he is dropping the surcharge:
Thanks for reading my blog. You spoke and I’ve listened. Since posting my comments on 3/31 I have had many people tell me that they would prefer a clear picture of the debate and not my political comments that were unnecessarily snarky and snippy. I agree with you and have reframed my blog post to just the facts.
At the same time we are immediately removing the 2% wage equality surcharge we instituted on 4/1 so near future labor increases will be reconciled in the menu price increases as many of you have suggested you would prefer.
UPDATE 4/3/2015 8:50 AM: In a brief phone call from Minneapolis where he is traveling, Tom Douglas tells CHS he wants people to know he has been a long time supporter of the push for $15/hour and that he went about covering the costs of the new law the wrong way.
“I was trying to level the playing field,” Douglas said. “It was stupid of me to get political about the whole thing.”
Douglas said he didn’t intend the surcharge to be a symbolic act. He said he also didn’t mean to rile customers.
“What I should have done, obviously, is poll the customers,” Douglas said.
He said he doesn’t expect the climb to $15 will destroy Seattle’s restaurant industry.
“I’m all for $15, I’ve been saying all along. Those people need it. My employees already make $11 an hour. I’m really proud of that. I just didn’t frame my thoughts very well.”
The announcement, written in first person from the perspective of owner and member of the mayor’s “VIP panel of business and labor leaders” Douglas, also includes a lengthy background on the restauranteur’s view of how the fight for $15/hour played out in Seattle:
I know all of you eat at a variety of Seattle’s restaurants not just ours. With their plan, the Mayor and City Council have decided that restaurants of our size should pay approximately 10% more per hour for servers, bartenders, host and bussers than any of my contemporaries. Just on raw talent it’s hard enough to compete with amazing Seattle restaurateurs like Ethan Stowell, Matt Dillon, Renee Erickson and Thierry Rautureau. Now I get to pay millions more in labor cost on top of it.
With this first phase of the new law, minimum wage at Seattle employers with more than 500 employees has risen to $11 — an 18% jump. Employees at smaller companies with no tips and no medical benefits also have a $11/hour floor. Small employers of tipped workers and employers that provide medical benefits may pay a $10 minimum and make up the balance with credit for the tips.
Recent attempts by restaurants, bars, and cafes to use surcharges to offset new labor laws and costs in Seattle have not gone well. In April 2013, E Olive Way’s Bleu Bistro’s Grotto dropped its 1.9% sick leave surcharge after public outcry. The Cherry Street Coffee chain also faced backlash over its surcharge at the time.
According to a KOMO TV reporter, Tom Douglas Restaurants isn’t alone among the “501+” size restaurants that have tacked on a surcharge:
— Lindsay Cohen (@lindsaycohen) April 2, 2015
UPDATE: The other restaurant has been reported to be Belltown’s Black Bottle. Unlike Tom Douglas Restaurants, Black Bottle is a much smaller operation well under the 500 employee tier.
We have a message out to Tom Douglas Restaurants about the surcharge but have not yet heard back.