High Wages Did Not Kill Sitka & Spruce, Seattle Did

Comments

2

Here's a crazy idea: Perhaps Sitka and Spruce killed Sitka and Spruce?

The original space had too few seats to be more than break-even. The quality of the fare was made possible by the low volume. The business model did not scale up; with four times the seats and only twice the kitchen staff, quality declined. The extra seats remained empty, with dozens of better restaurants within a few blocks of the new site.

Perhaps it is not the price of labor, nor the macro-economics of the city. More restaurants are still opening than closing, despite continuous predictions of imminent industrywide collapse for at least the past 7 years. Maybe Matt Dillon just isn't very good at the business side of the restaurant business. Or maybe he is all played out, an old man in a world that demands constant novelty. Maybe his ad-spend in this quirky local dining circular just isn't enough anymore.

3

Occam's razor points to wages, as proven by how far Chuck had to haul his water to argue otherwise.

4

Occam's Razor does not state "The answer I have to think least hard about is the most likely correct one." It states that "the answer involving the fewest entities is the most likely correct one". By this premise, robotslave's answer above is the real razor-- Sitka & Spruce wasn't done in by another entity, wages, it was done in by itself, and its own poor business practices.

5

@3 If wages are the problem, how does the number of restaurants in the city keep increasing? Looks to me like you'd have to go a long way past parsimony to make your theory fit the aggregate data.

This doesn't mean Our Bumbling Mudede is right, either, mind you-- the man can't walk a straight argumentative line even before the lunchtime laudanum for his Rich Man's Disease.

6

@4
Okay. Sure. The poor business practice of employing people in Seattle. I can go with that.

7

If Seattle's business class had the guts to go after the rentiers and speculators who are slowly (?) bleeding Seattle to death through economic strip-mining, maybe higher wages wouldn't be required since rents wouldn't be rising. If Seattle imposed a ground rent/location fee on commercial property to discourage speculation and encourage development, we wouldn't see the inequality and stress we currently see in our workplaces and schools. But there is no leadership in Seattle capable of connecting rentier/speculators with the increasing cost of living. Rents chase wages: as wages rise, rents rise with them.

Antiquated and exclusionary zoning and high land costs prevent developers from making the best use of land, forcing the development of bland boxes with high prices instead of innovative designs at affordable prices and high densities. A $1 million parcel of land zoned for 10 units means each unit bears $100,000 in land costs before any work gets done. A land rent model that lowered the cost to acquire land lowers the cost per unit and smarter zoning might lower it further by increasing density.

8

People still need to eat, even when wages go up. Some people can now afford to go out more often because of their higher wages. Some people can now afford to go out less often because of higher restaurant prices. If minimum wages benefit those that eat out less often, then sure we'll see a few restaurants go out of business. This is not a strong argument against high minimum wages.

The strong argument against high minimum wages is that it reduces the number of low wage jobs overall, and that it's much, much more effective to lower the cost of housing (by lifting our artificially raised land prices caused by our suburban style zoning). Really high minimum wage jobs in our city turns into a burden on the middle class (those eating at these restaurants, shopping at these stores, having their kids taken care of by these child care centers). Which I'm mostly ok with, though I don't love that we never seem to ask the wealthy to carry their share. Plus it's kind of a bad idea to reduce the number of jobs at the low end.

9

@7 - That's why the purposed $1000/mo. from Andrew Yang would ultimately be kind of pointless. Man. could I use an extra $1000/mo. but I know for certain that as soon as I get it, my landlord is rubbing his hands together thinking of ways to get his/her hands on my new money, or the grocery wholesaler, or the utilities. You can't give me a chunk of money without instituting restrictions like rent control,

There is a lot of tech money in Seattle....a lot. There are many more middle-class workers who cannot afford $20 appetizers, $60 entrees, and $16 cocktails except on very, very special occasions. Seattle is not Manhattan where every third person is at least a millionaire. I'n not sure Seattle can support more than one traditional restaurant that famously costs an arm and a leg (hello, Canlis). Given that and the fact that a successful restaurant's lifespan is only ten years of so on average. It's largely a fad industry. Frankly, I'm surprised Sitka and Spruce was around as long as it was. I went many years ago and remember leaving feeling robbed and still hungry. It's pretty much when I stopped going to fancy restaurants and started enjoying diners.

Anyone who bitches about a high minimum wage - a wage that is supposed to be just barely enough to keep the kids fed and the lights on - deserves to be bull-whipped or better yet, work at Carl's Jr. for $8 an hour.

10

A business which can't pay a living wage to its employees is not a sustainable business.

Because its employees can not sustain themselves in the economy at large.

A society which can't or won't pay a living wage to its members is not a sustainable society.

Because its members can not sustain themselves in the economy at large.

A business which does not pay a sustainable wage is attempting to take or is taking from others who are sustainable.

The sustainable entity of last resort is society at large, often represented by the government and non-profits including charitable organizations and the neighbor or food bank or stranger who cares more about someone unable to sustain themselves then they do for themselves.

11

"Jason Rantz" is a completely appropriate complete sentence.

12

What @10 said.

If a company can't stay in business because of wages, then it deserves to fail. You know... capitalism. Free market. Invisible hand and so forth.

People will still want to eat at high end restaurants. Demand isn't going to disappear. If the only restaurants available are ones that are more expensive because they pay their employees more, customers will patronize them.

13

I agree with Charles arguments, but he is incorrect in stating that tech companies don't care about affordability, it is just that what often qualifies as affordable for their employees is totally unaffordable for someone making minimum wage (even at $15/hour). Tech companies often invest in building employee housing and support upzoning. Even the increase of tech companies in Seattle is partially explained by tech companies looking to attract the talent of people who are looking to escape the astronomical prices in the bay area.

14

There are very, very few restaurants that last long enough to become local traditions. Most fold rather quickly after opening. It's a low margin, high turnover business. Meanwhile, the Puget Sound region is chock full of restaurants closing down for a myriad of reasons.

Some are closing because their owners want to retire.

Some are closing because of serious illness striking the owner or his/her family.

Some are closing due to bad or inept management that led to a huge debt burden and/or running deeply in the red for far too long.

Some are closing because they catered to a trend that's gone defunct and their customers have moved on to the next hot thing.

Some are closing because they served shitty or way over-priced food that drove customer away.

Some are closing because they own the property they're in and have received an over-the-moon offer from a developer to buy that property they can't turn down.

Some are closing because the owners have become excited about doing something else and want to move on to follow a new dream.

Some are closing because the owners want to leave Seattle and/or Washington. No, this is not Nirvana for everyone currently living here (pun intended).

Some are closing because they lost their lease or the rent's become too high or the building will be demolished.

No doubt there are even more reasons restaurants are closing all over the Puget Sound region, even in areas without a high government mandated minimum wage or out-of-control real estate inflation. Sitka and Spruce is a single case so it can't be used to generalize about Seattle real estate or wages. It had a damn good run for any restaurant. Nobody would have noticed its closing if it hadn't been so high profile (that is, a darling of Seattle food critics).

15

If y’all can’t handle Seattle socialism, get the fuck out, we don’t need ya,

You know all those Right to Work State’s you idiots keep talking up as if they were the promised land? Go move to one. You’ll find all te meth fueled desolation and poverty you can handle, mullets galore, baby. Have fucking fun in some Ozark shithole.

16

"there is no need to read the rest of this post" should be the second line in every mudede keyboard mashing.

17

I read the Rantz thing a few days back; his readers picked it up in the comments as gospel true that high wages was the problem and ran with it to broad conclusions.

Not a single one of these self-proclaimed common sense geniuses had the character to wonder about how restaurants in Seattle are doing on the whole. Scores of restaurants fail every year, all of them because incomes don't cover expenses. It's a competitive game.
Scores more open. As far as I've heard, in total we have more restaurants in Seattle than ever, more solvent businesses. The industry is not just stable but growing, which means, at minimum, that the wage increase hasn't broken the industry. Maybe it's slowed growth; maybe if there's a recession it will hit Seattle restaurants harder than if they had cheaper labor. But killed the industry? Nah, the Sitka and Spruce guy just didn't play the game we'll enough to compete, and got sorted out by the invisible hand, and now is pointing fingers and playing the tiny violin to the right wing wolves.

18

High wages my behind. They're fake, arbitrary wages installed at the end of a gun.

@10 @12 and everyone else talking your lazy "businesses that can't pay a living wage...blah, blah, blah." The tipped workers at these establishments didn't need a raise in their base wage. All the "new restaurants" that are pointed to as the "sky-isn't-falling" examples are quick service, counter service and fast food with extremely abbreviated hours; AKA, minimal labor.

All of you who think the government is going to provide you with a worker's paradise can go back to getting stoned and reading Das Kapital.

19

Why is a film critic writing a piece about a restaurant closing? It's as bad as a food writer defending bad labor laws.

20

Love to see people who complain about higher minimum wage and more affordable health care get their own wages and health plan cut.

21

@18,

So you're saying there are NO high end restaurants in Seattle anymore? That's a shame. Where do you guys go if you want to dine out for a special occasion? Portland?

23

22, it is funny you don't think greedy landlords charging higher rents can also play a big role in these restaurant failures. You should celebrate restaurant failures anyway. Capitalism weeds out the weak, right?

As for Poppy, the owner retired and is moving to Palm Springs.

25

@24,

Yep, that's why there are no restaurants in Seattle anymore. All gone. Everybody is forced to eat at home now.

26

At least in the old Wild West, company towns built housing for their workers.

We will just have to eat the Rich, I guess.

pass the salt ...

27

@25 I mean, we should just ignore all the help wanted signs at all the restaurants in Seattle we eat at, right? After all, if there was a demand for more workers at the current price, that would indicate there was a problem with enough supply, not "capitalist restaurant owners being priced out of the markets" like @24 says.

The markets care nothing for your alt-right politics.

29

24, how many of those restaurants also failed because of shitty food, bad location, lack of market appeal, lack of customers, not enough profits, tired owners? I can see there are many reasons a restaurant failed. You on the other hand focused on only one reason -- the one you have a political problem with.

31

It's just like how, after the US Civil War, the slave plantations were forced to hire paid workers and subsequently, the price of cotton got so high that the entire industry collapsed.

That's why you don't see anything made out of cotton anymore. It ceased to exist after 1865. Price was too high due to having to pay workers instead of having free slaves.

Too bad the markets never managed to adapt or anything. Nope. Cotton just disappeared.

Just like all the restaurants in Seattle. Gone forever because nobody is willing to pay $55 for a steak. $50 sure, but $55 is way too much.

32

@15 Plenty of meth fueled desolation and poverty right here in Seattle, no need to move! Sustainable!

33

30, what did you blame restaurant failures in Seattle on before $15 minimum wage?

34

Can someone please show me the portal to the Seattle Universe where there aren't 3 upmarket restaurants serving $16 cocktails opening for every one that closes, and instead the new places are all tightly focused steet-stall or counter-service type places?

That sounds like a much more interesting place to go out to eat than Real Seattle.

35

Interesting to me the subject of this article is Sitka and Spruce, a high end restaurant. A high-end restaurant. Implying, well, premium prices, right? And then the discussion isn't about why the fuck we need high-end restaurants in the first place but that these high-end restaurants should pay higher wages. Seems like a circular reference.
Restaurants have a 50% failure rate within the first 12 months of opening. They are very labor intensive endeavors. If you're going to open one, you should expect that your margins will be especially sensitive to labor costs. In my humble opinion, people who open restaurants aren't very smart from a business perspective. Too much risk. Too much emotion.

36

I'm not sure about Sitka and Spruce, but there are a couple of big problems with how Charles is viewing the real estate market and how it works. Most of Seattle is zoned as single family housing, which is really, really expensive to build. This isn't something that real-estate speculators are behind, it's the homeowners of Seattle who fight tooth and nail whenever someone wants to up-zone a neighborhood. Just getting ADU changes past, which create housing at the lower end of the market, took years because of NIMBYs, not real-estate developers. This means that over 80% of the land for housing can only be used for the most expensive type of housing out there... and most of it has already been built upon. This means almost all new housing is crammed into less than one fifth of the land... which makes it expensive.

Second, developers are certainly happy about higher prices for their products, but they're more about taking on projects that will be profitable than driving up housing costs. In lots of places, developers build cheaper housing than what is available in Seattle, average rents in Portland are 2/3rds of those in Seattle for example. This isn't because they're more charitable elsewhere or market forces don't apply, but because they can actually make money at it. Capitalists who run restaurants don't conspire to drive up the prices of food but will sell burgers and fries cheaply if they can make money doing so. Real-estate developers work the same way. What's missing are profitable ways to build cheap (i.e. multi-unit) housing. I know, this would mean real-estate investors would make some money, something that the City Council seems to try to ensure won't happen with any new regulations. However, if Seattle wants more investment in housing, something to increase the supply side, those investments will need to be profitable. I guess the alternative would be to hope the city government will build enough low income housing to meet demand, but so far that hasn't worked well.

37

Mudede is right on one point. Seattle wants it both ways. Our politicians (and many Millenial voters) are toddlers who don't grasp the concept of cause and effect.

In the personal realm, this magical thinking is what leads mids to take out 100s of thousand of dollars in student loans to major in Medieval Art Appreciation or Women's Studies. And then wonder why thwir minimum wage barista job isn't enough to eat out every night and yet pay off those student loans AND buy a home. So they get mad at older generations who made other decisions and were willing to sacrifice and delay gratification. And warfare sets in.

In the same vein, super low-IQ politicians spend all day dreaming up new, massive property tax levies to pass, as well as a plethora of anti-business and anti-landlord laws and regulations. I mean Seattle's Landlord Tenant Code must be bigger that the federal Income Tax Code, and new laws keep coming. My landlord is only half joking when she says it'll soon be illegal for anyone to charge rent -- all dwellings must be maintained to highest standards by LL and then given out for free to the first comer!

I have a great LL. The whole thing about Pls making a killing and living large is a joke. I don't know about big rime developers and LLs, but I don't see that with any LLs I know. Most are looking to sell and get out of the business because the city has made it so miserable. Same thing for many small business owners.

My rent stayed the same for 17 years, not a penny increase. But in the past 5 years, she's had to raise it every year and it's painful to both of us. City utility bills and property taxes have more than doubled in 5 years; taxes went up 32% in one year alone, about 3 years ago. Both the rates and assessed values are aggressively going through the roof. As is every other expense, thanks in big part to 40% jump in minimum wage which in turn bumped up all other wages esp at the lower end. If jobs that paid $9 now pay $15, then the ones that paid $15 or $18 now have to be closer to $25-30. And those that paid $25-30, well you get the picture.

LLs have 5 major expenses. 1. Mortgage which is a factor of property prices, which is through the roof. 2. Taxes, we already discussed that. 3. Maintenance, ie building materials plus labor. Again already discussed. 4. Utilities, insurance and fees. Same thing.5. Tenants from hell who are no-pay and destroy the property. These are usually (not always but more likely than not) people with past evictions, extensive criminal records, domestic violence, the works. Well guess what? You can no longer screen or reject people for any of these reasons.

Oh but it's the greedy LLs. We really need to bring back EDUCATION and commonsense in our schools. Right now all they focus on is gender pronouns, who to "call out" and when to march or riot over some trivial PC crap. We don't need to worry about climate change ruining our planet and world as we know it. The Millenials (aided and abetted by The Stranger and its ilk) will do it long before nature takes it's course. Smh!