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ʽ$15 minimum wage would cripple restaurant industry’

By Rod Lee

No sooner had the minimum wage in Massachusetts gone from $8 to $11 an hour than “The Fight for 15” began. There is no surer way to raise the cackles of Worcester restaurant owners than to mention that Bay State voters may be asked to weigh in, yes or no, on another jump, to $15, by way of a ballot question in 2018.

Unlike Michael Kantner of Cambridge Naturals, who in an appearance on WGBH-TV’s “Greater Boston” said he enthusiastically supports a higher minimum wage because it “creates a happier and more motivated staff,” Worcester restaurateurs Robb Ahlquist, Tom Oliveri Jr. and Oriola Koci see $15 an hour as fraught with peril for their establishments.

heir sentiments echo those of Bob Luz, president and CEO of the Massachusetts Restaurant Association (MRA), who in countering Mr. Kantner’s argument on WGBH said “we had the highest minimum wage in the nation for seven months and now the state is talking about going to $15. You have to measure the impact. Most successful restaurants in Massachusetts are operating on a 5% bottom line. There’s not a lot of room” for such increases to occur.

Nusa Dimopoulos, who owns Zorba’s Taverna on Stafford St. in Worcester (also a Zorba’s in Charlton), takes a more tempered view, saying “people need to make a living wage.” But, Ms. Dimopoulos notes, her service and bartending staffers are already earning in the neighborhood of $30 an hour with tips and her line cooks and hosts are primarily young part-timers; teens in some cases. A mandated $15 minimum wage would make it “hard to recoup the costs,” she said.

Mr. Ahlquist, who operates The Sole Proprietor on Highland St. and Via Italian Table and the 111 Chop House on Shrewsbury St., said that in increasing the minimum wage to $11 (albeit gradually), which was approved by the Legislature in 2014, “first, by raising the minimum wage $3, you have to understand that was like a $150,000-a-year hit for us. The first year there was not much of an impact. Most of our staff people were already about there. The big impact was with our service staff. They are our highest wage earners. I am fully aboard in getting entry-level employees in a better position. In our organization, once people hit a certain threshold they get a pay raise.”

The problem, Mr. Ahlquist said, is “by taking the broad-brush approach” and significantly increasing the remuneration his wait staff receives, his higher-paid personnel are going to ask “why are we giving that person a raise?” Particularly when the tip-credit minimum “keeps going up.

“Again, they work hard but for the most part they are well-compensated. The state is doing it to protect lower-service establishments (like coffee shops) but there should be a line of demarcation to sort that out. Every tip earner here gets treated the same way. Going from $8 to $11—that was a 40% increase in three years that I’ve had to absorb. The answer from legislators is ʽyou guys can raise your prices.’ That’s the best way I know to go out of business.”

Mr. Ahlquist sits on the Board of Directors of the MRA. His restaurants employ three hundred people. The MRA is “working on this issue every step of the way,” he said. “The bottom line is, we’re getting less and less profitable. It’s harsh, believe me. Why does it have to be in dollar increments? Why not 50 cents? This industry is labor-intensive. These kind of increases are so punitive. Why not smaller bites?”

Mr. Oliveri, whose family owns Peppercorn’s Grill & Bar on Park Ave., said “from what I gather, they want to increase the minimum wage from $11 to $15 over a four-year period starting in 2019 with a $1 per-year increase until the minimum wage hits $15 in 2022. What most people don’t realize is that the increase in wages will get passed on to the restaurant consumer. We just went through a minimum-wage increase a year ago over a three-year period. In my opinion, this will cripple the restaurant industry in Massachusetts. If I have to pay my prep cooks, dishwashers, bussers and hosts $15 per hour, what will my skilled line cooks want to be paid ($20+)? Restaurant owners will have no option but to increase menu prices across the board and in my opinion this will hurt business as a whole. People simply will not be able to dine out. Those who do not raise prices will have a difficult time keeping their doors open.”

Ms. Koci, who owns Livia’s Dish on Main St. in the Webster Square area and Altea’s on Park Ave. with her husband Enton Mehillaj, said, “I personally think this proposal will be detrimental to an industry that is already under a lot of stress and the margins are thinning every day. Restaurants, because of the nature of the business, are very expensive to run on a daily basis. There is a lot more than we have to pay other than our employees and food. These expenses may not be visual to everyone but they occur from the minute we open the door in the morning until the end of the day. All the plates and glasses that break on a regular basis have to be replaced and so much more.

“My opinion is based mostly on startups since I have done it twice in five years. It will be next to impossible to open a restaurant and have to pay your staff (most of whom are inexperienced at the beginning, at $15 per hour). For all the time that I have run these businesses, the ones who are hard workers we promote by increasing their salary on a regular basis, but if we have to start them at $15 an hour it would be impossible to the ones who work the hardest because it’s impossible to make any profit.

“I’m also concerned that this industry particularly has an enormous shortness of qualified staff. We would have to spend about two months training a new kitchen staff to our standards and then be able to utilize them completely. The hardest part about this business is the shortness, unreliability and unpreparedness of staff. To increase the minimum wage to $15 an hour means that the ones who are already making $15 now we would have to pay about $20 per hour. When you add this up together with your food, costs will go up by 30% which would absolutely destroy the owners that make the biggest sacrifice and risk everything to be able to open their business.

“The only way to really survive would be to increase everything on your menu by 30% and I’m sure no one would really like that.

“These conclusions are based on simple math without considering that all the produce will go up by at least 30% because of these vendors’ increase on payroll. This will have an incredible domino effect that I personally see right now. I have not seen any data out there that could provide information about how this would help the economy. Until then I’m personally against this proposed increase.

“This will force many restaurants to close which would have an immediate effect on the unemployment rate.”

Contact Rod Lee at [email protected] or 774-232-2999.