Social justice warriors lashed out against one of the most successful restaurant conglomerates in the nation over a new surcharge instituted at one of its chains.
Landry’s, which owns chains such as Bubba Gump Shrimp Co., the Rainforest Café and McCormick & Schmick’s added a new line to the bottom of receipts at its Oceanaire restaurants, stating: “Due to the rising costs of doing business in this location, including costs associated with higher minimum wage rates, a 3% surcharge has been added to your total bill.”
Dissenters called the practice deceptive and even went as far as calling it a “political statement.” This caused the company to remove the rescript in favor of raising menu prices at all of its locations, as they noted in a recent statement.
While Landry’s chief executive, Tilman Fertitta, is outspoken about the effects of raising the minimum wage, he apologized for the surcharge, and offered to refund those who still had their receipt. Fertitta did not comment on how menu prices would change, but also didn’t contradict the company’s earlier statement.
After all, the managers who instituted the charge in the first place did so for a reason. According to a Harvard Business School study, a one dollar increase in the minimum wage leads to a 14 percent increase in the likelihood of exit for a 3.5-star restaurant (like The Oceanaire). While 5-star restaurants aren’t as likely to face closure, they also have more flexibility to increase their prices because consumers normally expect to pay a little more for a 5-star dining experience.
Minimum wage hikes are, in essence, weeding out mid-grade restaurants, making it more expensive for Americans to eat out and also making it more difficult for new, mid-grade restaurants to survive. As the turnover rates of mid-grade restaurants continue to rise, investors will be less likely to finance similar establishments, and more apt to fund ritzier restaurants.
Although Oceanaire’s surcharge might be labeled as deceptive, it’s hypocritical to call it a political statement when the movement to raise the minimum wage was based more on politics than facts.
Political leaders cite the benefits of wage hikes to low-income workers in order to build up their electorate prior to election season. The Los Angeles Times predicted that minimum wage hikes would increase unemployment among minority youth, leading to a higher crime rate, and that more low-paying jobs would go underground, meaning less benefits and protections for workers.
As predicted, minimum wage hikes have done more harm than good to employees. According to Breitbart, Seattle’s three dollar minimum wage increase cost low-skilled workers in the city an average of $1,500 a year.
Restaurateurs are just trying to keep their doors open in a business environment that is already extremely challenging. Sixty percent of restaurants don’t survive their first year, and 80 percent fail before their fifth anniversary. Those are some daunting statistics.
Minimum wage hikes force restaurants to stretch their resources and find creative ways to pay their bills and their employees. Rather than be blacklisted for adding a surcharge, these businesses should be applauded for their efforts to retain employees.