Fallout from higher wages

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Fallout from higher wages

Post by muthafunky » Mon Jan 22, 2018 5:34 am

There’s a local Best Pancake House that we’d periodically go to. The sort of cheapish diner that has good food, enormous portions, and reasonable prices. Like ten bucks for biscuits and gravy, eggs, hash browns, and a stack of pancakes. A lot of older people, families, and blue collar types, no hipsters or such.

They just closed suddenly. They are going to reopen as a bistro with a different name in a few months. We were lucky to get warning and went on their last day. We chatted with the staff and they told us the rising minimum wage put them out of business. They weren’t happy about it, even the ones making minimum wage. The new place might serve breakfast but it won’t be as cheap and the clientele will be different.

A positive thing? Sure doesn’t feel so.

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Re: Fallout from higher wages

Post by Godjira » Mon Jan 22, 2018 6:08 am

Well, most folks out there are just barely scraping by at $23,000 a month. How can you expect them to live at minimum wage?
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Re: Fallout from higher wages

Post by muthafunky » Mon Jan 22, 2018 6:15 am

Makes sense.

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Re: Fallout from higher wages

Post by harry_flashman » Mon Jan 22, 2018 7:19 am

Sounds like the owners are selling out and looking for an excuse to justify their position. Welcome to capitalism

There is something deeply perverse in the idea that people should accept near bread line wages so that others can overindulge at their expense .
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Re: Fallout from higher wages

Post by OnTheBall » Mon Jan 22, 2018 8:28 am

If it was such a great place why wouldn't they just raise their prices to compensate for their higher costs? I am sure patrons would have accepted the slighter higher prices.

At the end of the day, if a business cannot meet its obligations under the law then it isn't a viable business.

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Re: Fallout from higher wages

Post by eric84 » Mon Jan 22, 2018 3:02 pm

muthafunky wrote:
Mon Jan 22, 2018 5:34 am
There’s a local Best Pancake House that we’d periodically go to. The sort of cheapish diner that has good food, enormous portions, and reasonable prices. Like ten bucks for biscuits and gravy, eggs, hash browns, and a stack of pancakes. A lot of older people, families, and blue collar types, no hipsters or such.

They just closed suddenly. They are going to reopen as a bistro with a different name in a few months. We were lucky to get warning and went on their last day. We chatted with the staff and they told us the rising minimum wage put them out of business. They weren’t happy about it, even the ones making minimum wage. The new place might serve breakfast but it won’t be as cheap and the clientele will be different.

A positive thing? Sure doesn’t feel so.
How do you know it's because of wages? I know what the waiter told you but restaurants have closed for decades. They're kinda precarious businesses. It could've been badly run, handed over to the kids and run into the ground, changing demographics, increased local competition, etc. A bit premature to blame wages and why wouldn't you try to raise prices and give it 6 months?
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Re: Fallout from higher wages

Post by mishmish » Mon Jan 22, 2018 3:19 pm

If the bistro thing is going to be the same owner, owner apparently thinks it should now be called a bistro what with increased prices due to increased wage expenses. Possibly you need to think of this as paying the actual price of a living wage for the people who serve you.

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Re: Fallout from higher wages

Post by eric84 » Mon Jan 22, 2018 3:21 pm

Well, yeah, that too. There's been a big debate about minimum wage with Tim Horton's taking away paid breaks in Ontario because of wage hikes. Maybe we need to stop being addicted to cheap food.
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Re: Fallout from higher wages

Post by Citizen Baba » Mon Jan 22, 2018 3:37 pm

It seems lime the Seattle area already had a lot of opportunity for people of all skill levels. They also have a lot of low-priced or free training programs. It seems those are better engines of social mobility than a drastic minimum wage hike that seems to have done more harm than good.

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Re: Fallout from higher wages

Post by eric84 » Mon Jan 22, 2018 4:02 pm

I see a lot of conflicting research about the impacts on Seattle from the wage increase so not certain it was a bad idea.
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Re: Fallout from higher wages

Post by VinnyD » Mon Jan 22, 2018 4:10 pm

Assuming for the sake of argument that it is true that the higher minimum wage drove the pancake house out of bsuiness, that doesn't prove that it was a bad thing. It just proves that it has costs as well as benefits, which of course everyone already knew.

If a speed limit on a street that has become residential is reduced from 40 to 25, it will take people longer to get from place to place. That does not prove that the limit should have stayed at 40.

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Re: Fallout from higher wages

Post by korgy » Mon Jan 22, 2018 4:41 pm

muthafunky wrote:
Mon Jan 22, 2018 5:34 am
The sort of cheapish diner that has good food, enormous portions, and reasonable prices. Like ten bucks for biscuits and gravy, eggs, hash browns, and a stack of pancakes. A lot of older people, families, and blue collar types, no hipsters or such.
isolating the minimum wage increase from every other factor, and the general trend in places like Seattle and Brooklyn to move away from inexpensive diner type places to more specialized boutique type eateries, seems a little misplaced, imo. i'm actually surprised this is just happening there now -- at this late date.

we have one diner-type place left in my neighborhood, but it really is more of a diner-themed restaurant than it is an old diner: it is more expensive than many of the boutique restaurants in the nabe, and the food is much worse. basically, you are paying to go there either because it is open 24-hours, or you just want to sit in a big orange booth, or maybe you want a huge (too huge) menu of mediocre-to-bad diner-type food.
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Re: Fallout from higher wages

Post by muthafunky » Mon Jan 22, 2018 5:02 pm

OnTheBall wrote:
Mon Jan 22, 2018 8:28 am
If it was such a great place why wouldn't they just raise their prices to compensate for their higher costs? I am sure patrons would have accepted the slighter higher prices.
Why are you sure of that? As I mentioned, the clientele is different from other, more expensive breakfast places - a lot of seniors, young families, people that don't look like they have a lot of money. Increasing prices may have just lost them business.

Additionally, it's part of a chain and as such does not have much leeway to change prices.

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Re: Fallout from higher wages

Post by muthafunky » Mon Jan 22, 2018 5:04 pm

How do you know it's because of wages?
Because the woman we know told us? She's actually the front of the house, not a waiter and she chats with people waiting to go in. She's worked there for years. I suppose she might be lying, but I don't see any reason to think so. With minimum wage going up 50% in a few years it's obvious some businesses - particularly restaurants with low margins - are going to go out of business. It's not a stretch to see that a restaurant that only serves breakfast at modest prices might struggle.

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Re: Fallout from higher wages

Post by muthafunky » Mon Jan 22, 2018 5:05 pm

mishmish wrote:
Mon Jan 22, 2018 3:19 pm
If the bistro thing is going to be the same owner, owner apparently thinks it should now be called a bistro what with increased prices due to increased wage expenses. Possibly you need to think of this as paying the actual price of a living wage for the people who serve you.
I'd be happy to pay more, it's not a cost thing for me. It is probably a cost thing for most of the customers there though. I guess they just don't get to eat breakfast out.

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Re: Fallout from higher wages

Post by DCComic » Mon Jan 22, 2018 5:06 pm

Businesses will respond to higher minimum wages by raising prices, reducing profits, cutting labour costs some other way or closing.

Tax funds subsidising profitable businesses by subsidising less than livable pay isn't ideal, but IMO it is better for people to earn a little and get top-up benefits than to live on benefits alone.

Is there data that shows real outcomes?
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Re: Fallout from higher wages

Post by muthafunky » Mon Jan 22, 2018 5:06 pm

Citizen Baba wrote:
Mon Jan 22, 2018 3:37 pm
It seems lime the Seattle area already had a lot of opportunity for people of all skill levels. They also have a lot of low-priced or free training programs. It seems those are better engines of social mobility than a drastic minimum wage hike that seems to have done more harm than good.
It's certainly a good question. Increasing minimum wage 50% is pretty drastic.

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Re: Fallout from higher wages

Post by muthafunky » Mon Jan 22, 2018 5:08 pm

korgy wrote:
Mon Jan 22, 2018 4:41 pm
isolating the minimum wage increase from every other factor, and the general trend in places like Seattle and Brooklyn to move away from inexpensive diner type places to more specialized boutique type eateries, seems a little misplaced, imo. i'm actually surprised this is just happening there now -- at this late date.
I don't know that it's "just happening", it's just happening a lot more. I don't think minimum wage is the only factor, but certainly such a large increase in a short time is going to have effects like this. The other big factor is that real estate prices have been nuts the past few years, that in particular has driven cheaper places out of downtown and nearby neighborhoods.

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Re: Fallout from higher wages

Post by eric84 » Mon Jan 22, 2018 5:10 pm

muthafunky wrote:
Mon Jan 22, 2018 5:04 pm
How do you know it's because of wages?
Because the woman we know told us? She's actually the front of the house, not a waiter and she chats with people waiting to go in. She's worked there for years. I suppose she might be lying, but I don't see any reason to think so. With minimum wage going up 50% in a few years it's obvious some businesses - particularly restaurants with low margins - are going to go out of business. It's not a stretch to see that a restaurant that only serves breakfast at modest prices might struggle.
Sure, but weren't you also bemoaning the loss of dive bars in Seattle which happened well before the min wage increase? Face it, with the influx of high income techies like you, the place is being gentrified so diners and dive bars are going out of business more because of changing demographics and tastes and less about wage levels.
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Re: Fallout from higher wages

Post by muthafunky » Mon Jan 22, 2018 5:11 pm

DCComic wrote:
Mon Jan 22, 2018 5:06 pm
Businesses will respond to higher minimum wages by raising prices, reducing profits, cutting labour costs some other way or closing.

Tax funds subsidising profitable businesses by subsidising less than livable pay isn't ideal, but IMO it is better for people to earn a little and get top-up benefits than to live on benefits alone.

Is there data that shows real outcomes?
There have been a few studies. What sort of outcomes do you mean? I doubt they would be to the level of things in the OP, such as menu prices, type of clientele, type of restaurant, etc. It's also hard to study minimum wage in isolation at a macro level, particularly when so much else is changing in the city.

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Re: Fallout from higher wages

Post by muthafunky » Mon Jan 22, 2018 5:13 pm

Sure, but weren't you also bemoaning the loss of dive bars in Seattle which happened well before the min wage increase?
I think people have been bemoaning places that close for a few centuries now. Certainly nothing new. People are talking more about just how much faster it's happening the past 5 years or so. It's not just the minimum wage, it's also real estate prices. Amazon is as much to blame as the $15 minimum wage.

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Re: Fallout from higher wages

Post by korgy » Mon Jan 22, 2018 5:13 pm

muthafunky wrote:
Mon Jan 22, 2018 5:08 pm
The other big factor is that real estate prices have been nuts the past few years, that in particular has driven cheaper places out of downtown and nearby neighborhoods.
yes.
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Re: Fallout from higher wages

Post by Citizen Baba » Mon Jan 22, 2018 5:13 pm

muthafunky wrote:
Mon Jan 22, 2018 5:06 pm
Citizen Baba wrote:
Mon Jan 22, 2018 3:37 pm
It seems lime the Seattle area already had a lot of opportunity for people of all skill levels. They also have a lot of low-priced or free training programs. It seems those are better engines of social mobility than a drastic minimum wage hike that seems to have done more harm than good.
It's certainly a good question. Increasing minimum wage 50% is pretty drastic.
There was a similar proposal here in Baltimore. The coffee shop owner around the corner said if it was passed and he needed to comply, he would have to shut down and just run the coffee wholesale business himself. He employs kids from the neighborhood (in their early 20s) who would likely be hood rats if they didn't have the job. Obviously, Seattle and Baltimore are in different places, and the needle between job quantity and job quality is different.

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Re: Fallout from higher wages

Post by muthafunky » Mon Jan 22, 2018 5:13 pm

Though in the case of the place I mentioned, it's not real estate prices. The owner owns the land and it's in a part of the city that hasn't changed much. Yet.

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Re: Fallout from higher wages

Post by Citizen Baba » Mon Jan 22, 2018 5:16 pm

I've said this before, but I read somewhere that the median income of a person with only a high school degree in Seattle is $50k.

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Re: Fallout from higher wages

Post by eric84 » Mon Jan 22, 2018 5:17 pm

muthafunky wrote:
Mon Jan 22, 2018 5:13 pm
Sure, but weren't you also bemoaning the loss of dive bars in Seattle which happened well before the min wage increase?
I think people have been bemoaning places that close for a few centuries now. Certainly nothing new. People are talking more about just how much faster it's happening the past 5 years or so. It's not just the minimum wage, it's also real estate prices. Amazon is as much to blame as the $15 minimum wage.
So, it may be overly simplistic to suggest that a minimum wage increase is solely to blame for a breakfast diner closing.
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Re: Fallout from higher wages

Post by DCComic » Mon Jan 22, 2018 5:17 pm

muthafunky wrote:
Mon Jan 22, 2018 5:11 pm


There have been a few studies. What sort of outcomes do you mean? I doubt they would be to the level of things in the OP, such as menu prices, type of clientele, type of restaurant, etc. It's also hard to study minimum wage in isolation at a macro level, particularly when so much else is changing in the city.
How does the minimum wage effect the number of people in employment? How does it effect the overall social security bill?
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Re: Fallout from higher wages

Post by eric84 » Mon Jan 22, 2018 5:18 pm

Citizen Baba wrote:
Mon Jan 22, 2018 5:16 pm
I've said this before, but I read somewhere that the median income of a person with only a high school degree in Seattle is $50k.
Would median not be a good measure here given the high wages in Seattle? What's the mean?
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Re: Fallout from higher wages

Post by Citizen Baba » Mon Jan 22, 2018 5:22 pm

eric84 wrote:
Mon Jan 22, 2018 5:18 pm
Citizen Baba wrote:
Mon Jan 22, 2018 5:16 pm
I've said this before, but I read somewhere that the median income of a person with only a high school degree in Seattle is $50k.
Would median not be a good measure here given the high wages in Seattle? What's the mean?
Yes, median is a much better measure. The mean is likely higher. See Bill Gates.

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Re: Fallout from higher wages

Post by Citizen Baba » Mon Jan 22, 2018 5:22 pm

DCComic wrote:
Mon Jan 22, 2018 5:17 pm
muthafunky wrote:
Mon Jan 22, 2018 5:11 pm


There have been a few studies. What sort of outcomes do you mean? I doubt they would be to the level of things in the OP, such as menu prices, type of clientele, type of restaurant, etc. It's also hard to study minimum wage in isolation at a macro level, particularly when so much else is changing in the city.
How does the minimum wage effect the number of people in employment? How does it effect the overall social security bill?
What's a social security bill?

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Re: Fallout from higher wages

Post by DCComic » Mon Jan 22, 2018 5:31 pm

Citizen Baba wrote:
Mon Jan 22, 2018 5:22 pm
DCComic wrote:
Mon Jan 22, 2018 5:17 pm
muthafunky wrote:
Mon Jan 22, 2018 5:11 pm


There have been a few studies. What sort of outcomes do you mean? I doubt they would be to the level of things in the OP, such as menu prices, type of clientele, type of restaurant, etc. It's also hard to study minimum wage in isolation at a macro level, particularly when so much else is changing in the city.
How does the minimum wage effect the number of people in employment? How does it effect the overall social security bill?
What's a social security bill?
Huh? You're not usually dim for effect.
Bill = cost
Social security = government funds to support people.

I'm not sure which part of that was lost in translation.
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Re: Fallout from higher wages

Post by VinnyD » Mon Jan 22, 2018 5:34 pm

Mutha, what percentage of restaurants in Seattle have closed in the last five years, and how does that compare with a typical five-year period in the last thirty years or so?

"People are talking" is not evidence.

DCC, in the US "Social Security" means old age ad disability pensions.

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Re: Fallout from higher wages

Post by Citizen Baba » Mon Jan 22, 2018 5:34 pm

Social security means a much more specific thing here, DCC.

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Re: Fallout from higher wages

Post by Citizen Baba » Mon Jan 22, 2018 5:35 pm

VinnyD wrote:
Mon Jan 22, 2018 5:34 pm
Mutha, what percentage of restaurants in Seattle have closed in the last five years, and how does that compare with a typical five-year period in the last thirty years or so?

"People are talking" is not evidence.

DCC, in the US "Social Security" means old age ad disability pensions.
The one study I saw showed low-wage earners making $125 less a month.

Have you seen any others?

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Re: Fallout from higher wages

Post by VinnyD » Mon Jan 22, 2018 5:38 pm

What question is that an answer to, cb? You seem to have quoted a question of mine to mutha about something he said about businesses closing by mistake.

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Re: Fallout from higher wages

Post by DCComic » Mon Jan 22, 2018 5:44 pm

What's the catch all term for US govt money given to people so they don't starve on the street?
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Re: Fallout from higher wages

Post by cowtown » Mon Jan 22, 2018 5:48 pm

muthafunky wrote:
Mon Jan 22, 2018 5:13 pm
Though in the case of the place I mentioned, it's not real estate prices. The owner owns the land and it's in a part of the city that hasn't changed much. Yet.
then why the change to a bistro?

a pancake hood is not a bistro hood or maybe it's changed enough?

here, when an area gets hot, all the cheap eats and dives get pushed due to rent or increased property tax

something really doesn't add up about this spot, the owner may just want to go bistro and has an agenda to push
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Re: Fallout from higher wages

Post by muthafunky » Mon Jan 22, 2018 5:58 pm

So, it may be overly simplistic to suggest that a minimum wage increase is solely to blame for a breakfast diner closing.
It would be simplistic to say that generically, but it doesn't seem simplistic to say that about a place where the staff said it was the reason. As I mentioned, given its location and the fact that the owner owns the property, it's not real estate prices. It's not popularity either, that place was always packed.

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Re: Fallout from higher wages

Post by muthafunky » Mon Jan 22, 2018 6:04 pm

cowtown wrote:
Mon Jan 22, 2018 5:48 pm

then why the change to a bistro?

a pancake hood is not a bistro hood or maybe it's changed enough?

here, when an area gets hot, all the cheap eats and dives get pushed due to rent or increased property tax

something really doesn't add up about this spot, the owner may just want to go bistro and has an agenda to push
I'm assuming the reason to change is to be open for lunch and dinner and sell alcohol to try to stay profitable. What has changed the last few years is their wages expenses have gone up around 50%. The area it's in isn't "hot" right now, though I'm sure it will be in a few years, such development is creeping north where this place is located.

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Re: Fallout from higher wages

Post by muthafunky » Mon Jan 22, 2018 6:05 pm

Mutha, what percentage of restaurants in Seattle have closed in the last five years, and how does that compare with a typical five-year period in the last thirty years or so?
I have no idea, maybe you should google it if you care about that statistic.

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Re: Fallout from higher wages

Post by muthafunky » Mon Jan 22, 2018 6:08 pm

The next breakfast place that I'm assuming has to be closing soon is the IHOP on Capitol Hill, an expensive neighborhood next to downtown.

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Re: Fallout from higher wages

Post by eric84 » Mon Jan 22, 2018 6:26 pm

muthafunky wrote:
Mon Jan 22, 2018 6:04 pm
cowtown wrote:
Mon Jan 22, 2018 5:48 pm

then why the change to a bistro?

a pancake hood is not a bistro hood or maybe it's changed enough?

here, when an area gets hot, all the cheap eats and dives get pushed due to rent or increased property tax

something really doesn't add up about this spot, the owner may just want to go bistro and has an agenda to push
I'm assuming the reason to change is to be open for lunch and dinner and sell alcohol to try to stay profitable. What has changed the last few years is their wages expenses have gone up around 50%. The area it's in isn't "hot" right now, though I'm sure it will be in a few years, such development is creeping north where this place is located.
So, employment will increase with the change in restaurants. What again is the bad news here?
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Re: Fallout from higher wages

Post by sodelicious » Mon Jan 22, 2018 6:35 pm

Is Goldie's still open?
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Re: Fallout from higher wages

Post by muthafunky » Mon Jan 22, 2018 6:51 pm

So, employment will increase with the change in restaurants. What again is the bad news here?
If you mean this specific place, the bad news is another inexpensive breakfast place in this vein has closed and you don't see places like this opening anymore in the city. Also, the fact that the business wasn't profitable means they have to try something new and different which might end with the business closing down completely.

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Re: Fallout from higher wages

Post by section8 » Mon Jan 22, 2018 6:52 pm

muthafunky wrote:
Mon Jan 22, 2018 6:04 pm
cowtown wrote:
Mon Jan 22, 2018 5:48 pm

then why the change to a bistro?

a pancake hood is not a bistro hood or maybe it's changed enough?

here, when an area gets hot, all the cheap eats and dives get pushed due to rent or increased property tax

something really doesn't add up about this spot, the owner may just want to go bistro and has an agenda to push
I'm assuming the reason to change is to be open for lunch and dinner and sell alcohol to try to stay profitable. What has changed the last few years is their wages expenses have gone up around 50%. The area it's in isn't "hot" right now, though I'm sure it will be in a few years, such development is creeping north where this place is located.
Diner margins tend to be very low. They need volume to be profitable, and a wage increase would be hard to cover with eggs and hash browns. Adding booze is probably their best move.
This is the only musical: the mouth. And hopefully the brain attached to the mouth. Right? The brain, more important than the mouth, is the brain. The brain is much more important.

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strife
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Re: Fallout from higher wages

Post by strife » Mon Jan 22, 2018 6:53 pm

muthafunky wrote:
Mon Jan 22, 2018 6:04 pm

I'm assuming the reason to change is to be open for lunch and dinner and sell alcohol to try to stay profitable.
Bingo.
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muthafunky
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Re: Fallout from higher wages

Post by muthafunky » Mon Jan 22, 2018 6:55 pm

sodelicious wrote:
Mon Jan 22, 2018 6:35 pm
Is Goldie's still open?
I used to love Goldies just after college. Dollar bottles of beer on Mondays and there was that one night where you would get 50% off your pitcher if you could answer a Trivial Pursuit question. That was the best. Lots of darts, pool, and arcade games. When smoking was allowed there was that huge ash pit in the middle of the place.

If you're talking about the Goldies on 45th, it closed maybe five years ago. It's called the Iron Bull now. It sucks.

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muthafunky
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Re: Fallout from higher wages

Post by muthafunky » Mon Jan 22, 2018 6:56 pm

Diner margins tend to be very low. They need volume to be profitable, and a wage increase would be hard to cover with eggs and hash browns. Adding booze is probably their best move
Yep. A 50% increase in labor costs was too much for the place to handle. Its closing was inevitable.

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Re: Fallout from higher wages

Post by eric84 » Mon Jan 22, 2018 6:57 pm

muthafunky wrote:
Mon Jan 22, 2018 6:51 pm
So, employment will increase with the change in restaurants. What again is the bad news here?
If you mean this specific place, the bad news is another inexpensive breakfast place in this vein has closed and you don't see places like this opening anymore in the city. Also, the fact that the business wasn't profitable means they have to try something new and different which might end with the business closing down completely.
Yeah, again, the resto business is pretty tough. You started this thread as a lament that increased minimum wage so it's weird that the actual result is increased employment at least in the short term.
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Re: Fallout from higher wages

Post by section8 » Mon Jan 22, 2018 7:03 pm

It's a tough business and a substantial increase to salaries would be difficult to weather.

Another strategy that might work would be to add in the increased costs (so the $8 bacon and eggs would now be $12), market yourself as the longtime, local, 'authentic' diner to all the new tech residents who will pay $12 for bacon and eggs, and extend your operating hours.
This is the only musical: the mouth. And hopefully the brain attached to the mouth. Right? The brain, more important than the mouth, is the brain. The brain is much more important.

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