Home / General / Are Seattle Restaurants Closing in “Record Numbers”? (Spoiler: No.)

Are Seattle Restaurants Closing in “Record Numbers”? (Spoiler: No.)

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Since the initial story about Seattle restaurant closings is making its way through the right wing blogs at the moment, prompting one wingnut outlet to declare that Seattle restaurants are closing “in record numbers,” let’s take a loot at the actual evidence provided in the story that launched the chain reaction. Before we begin let’s note despite long having one of the highest minimum wages in the country, while being located in one of only a handful of states with no ‘tip credit’ for wages, Seattle still manages to have the highest density of restaurants anywhere in the country, except for San Francisco and the greater New York City area.

What’s the evidence? The Seattle Magazine article that started this game of telephone identified four (4) restaurants that have closed or will close between February and May 2015. (A 5th restaurant is seeing its award winning chef resign to move to Spain; the alleged relevance here is unclear.) Included in these four restaurants is one that remains open at its original location, shifting its focus back to their original model, another is owned by one of Seattle’s most successful and celebrated restaurateurs, who continues to own five thriving establishments and is in the process of opening two new restaurants. The owner of the third closing restaurant  (easily the most over-hyped Indian restaurant openings I’ve ever seen), identifies the reason for closing as a poor fit between format and location, which seemed pretty obvious to me when they opened. The space the fourth restaurant occupies will be immediately replaced by another new restaurant.

What isn’t included is any analysis to suggest openings are failing to keep pace with closings. Given the short typical lifespan of a restaurant and the size of Seattle, we should expect annual openings and closings to be in the hundreds in a typical year. Identifying four closing restaurants over a four month period is evidence for the thesis in the same way finding a bunch of Democratic voters who don’t want to vote for Hillary Clinton is ‘evidence’ her campaign is in trouble. Indeed, the right wingers are hoping you don’t read the original article, which closes by refuting its own highly speculative thesis:

Despite these serious challenges, however, brave restaurateurs continue to open eateries in Seattle, which, remembering basic supply and demand, also naturally accounts for closures we’ve already seen and more that will come. Capitol Hill alone is carrying on an unprecedented dining boom, and in mid January, Capitol Hill Seattle announced that Nue, Chris Cvetkovich’s modernist global street food joint, was the neighborhood’s 100th food and drink opening in three years.

Other major Capitol Hill additions from the last few months include Stateside, (Eric Johnson’s long-awaited French-Vietnamese outpost), Tallulah’s (Linda Derschang’s [of Smith and Oddfellows] casual neighborhood café) and Serious Pie Pike (Tom Douglas’s third location of his pizza joint, now open in the new Starbucks Roastery). Moreover, just this week on the Hill, we’ve got news of Lisa Nakamura opening the Gnocchi Bar in the Packard Building on 12th Avenue (formerly the Capitol Hill D’Ambrosio Gelateria Artigianale) at the end of March.

Those keeping score at home will note that the article identifies more restaurants opening than closing.

I have no idea what impact, if any, Seattle’s minimum wage increase will have on total employment in the restaurant industry. It’s well worth watching, because knowing at what point more aggressive minimum wage increases have this kind of impact may be useful for shaping future policy. It’s also important because business owners and ideological opponents of the minimum wage will lie and obfuscate to create a false impression of negative impacts, whether they exist or not.

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  • J. Otto Pohl

    I am hoping that more open. If it becomes possible for me to earn $15 an hour I might move back to the US.

    • Dennis Orphen

      Here today, Ghana tomorrow.

      • For that I’m tipping you 20%

      • rea

        aquí hoy para ghanar mañana

    • Warren Terra

      Seattle’s $15/hour minimum wage will (the courts willing) be phasing in starting soon. Just saying.

  • DocAmazing

    Down here by the Bay, we had a few recent increases in local minimum wage (Oakland and SF, notably) and a local science fiction bookstore had a Libertarian hissy-fit and claimed that they needed to close because they couldn’t afford the increased payroll. A few local investors came forward and bought memberships or some other cash-infusion maneuver, and voila! back from death’s door.

    Restaurants keep opening. And closing. Minimum wage increases are never going to have as big an impact as His And Hers Harley Syndrome, wherein a restauranteur celebrates a profitable second or third year by indulging in a large personal purchase (in one memorable case, matching his & hers Harleys), which uses up the reserve that s/he needed to weather a tight couple of years following Being Hot. ‘Twas ever thus.

    • djw

      Or dubious expansions.

    • jim, some guy in iowa

      or even simple burn-out. the most successful long term restaurants around here have done it in large part through the sheer willpower of the owners to put in the long hours themselves. would seattle be much different?

      • Warren Terra

        Also, landlords. It’s not uncommon for successful businesses to help gentrify a neighborhood, thus causing their landlords to evict those businesses in favor of higher-paying tenants (or redevelopment followed by same).

        • DocAmazing

          In my neighborhood we had something like seven different restaurants become successful and then have their rent raised astronomically, closing them and forcing turnover. One location in particular housed a succession of brewpubs–the latest of which is still there because the landlord fell on hard times (imagine!) and was forced to sell to the current tenant.

          • Aimai

            The willingness of landlords to sacrifice present earnings from a reliable tenant in favor of hypothetical future earnings from a much more profitable one is astounding to me. There were places in Harvard Square which were forced out of business–usually bookstores–and which were not replaced by any tenant for years. How it could make financial sense to leave prime real estate empty on the off chance that somebody with deeper pockets was going to rent it is beyond me. And yet landlords do it. Or hold current tenants hostage by trying to jack up the prices beyond what they can afford and driving them out of business.

            • Tyro

              I think they’re basically hoping to get a new tenant to sign a 15-20 year lease at their “dream” price, so they’re willing to keep it empty until that tenant comes along. The commercial real estate business is a messed up world. Notably, most of my family members who own retail/food service business make sure to buy the buildings they operate in.

            • cpinva

              well aimai, I can tell you from both professional and personal experience, landlords aren’t necessarily the brightest bulbs in the box, especially if they aren’t professional property managers. “banking on the come” as they say, is a common mistake made by amateurs, and that’s who owns a lot of these properties.

              as well, empty buildings deteriorate at a rapid rate, due to the lack of constant maintenance, which you normally have with an occupied property. and yet, trying to get that across to these people is like beating your head against a brick wall, it just doesn’t feel all that much better when you stop.

        • Nobdy

          HOW DARE YOU?

          JOB CREATORS CREATE JOBS LIKE HYPERGRAPHIA SUFFERERS CREATE WRITING, compulsively and without the ability to control themselves. When a job creator strides down the street jobs sprout behind him like apple trees behind Johnny Appleseed. The science of economics tells us so.

        • Barry_D

          Or the landlord just raises the rent on an established restaurant, because they have the money.

    • efgoldman

      Restaurants keep opening. And closing.

      Hell, even here in suburban RI, restaurants close all the time. Some suck, some enter a saturated market sector (e.g. Pizza/Italian), some count on getting a liquor license and can’t, and some, the owners move away or retire or die, and there’s no-one to take over. Shit happens. The industry is notably volatile.
      People who use bullshit to make a separate ideological point should maybe make sure that there aren’t lots of verifiable facts lying around.

      • Nobdy

        People who use bullshit to make a separate ideological point should maybe make sure that there aren’t lots of verifiable facts lying around.

        Why?

        Republicans constantly make claims or statements that are provably wrong. Seems to be working quite nicely for them. Their target audience isn’t capable of independent research or, it sometimes seems, thought.

    • Brett

      The science fiction bookstore actually claimed that it would have required an increase in their book prices that they didn’t think would work out. Which actually makes sense – not all businesses have the same power to raise prices (or cut compensation elsewhere) in the face of a rise in costs. They pointed out, for example, that the attached cafe wouldn’t have that problem.

      • Hob

        Yeah, “libertarian hissy-fit” is a bizarre way to describe the statements they made, which included lengthy acknowledgments that 1. living-wage laws are a totally necessary thing and 2. bookstores have unique problems of their own due to fixed cover prices, so their dilemma did not mean that the law would hurt the rest of the economy. And they weren’t calling for the law to be repealed, or for the city to stop regulating such things, but just vaguely suggesting that either maybe the city could come up with some kind of small business assistance program, or else maybe their fans would chip in with financial support which is what happened. If you want to see a libertarian hissy-fit (albeit a blessedly short one), see local tech-millionaire-turned-nightclub-owner Jamie Zawinski’s blog post where he lectured the store owners in “Economics 101!!!” style about how if a business doesn’t make enough money then that means it doesn’t make enough money and they should stop trying, and anyway he’s bought all his books online since the ’90s and so bookstores are obsolete.

    • joe from Lowell

      Down here by the Bay, we had a few recent increases in local minimum wage (Oakland and SF, notably) and a local science fiction bookstore had a Libertarian hissy-fit and claimed that they needed to close because they couldn’t afford the increased payroll. A few local investors came forward and bought memberships or some other cash-infusion maneuver, and voila! back from death’s door.

      That is brilliant.

      Comic Book Guy really knows his community.

      His And Hers Harley Syndrome, wherein a restauranteur celebrates a profitable second or third year by indulging in a large personal purchase (in one memorable case, matching his & hers Harleys)

      Developers do this, too. “I made money on a 6-house subdivision, so now I’m king of the world!” Say, King, I notice that you still haven’t replaced the missing body panel on that yellow Maseratti you bought after the last subdivision. What’s that? You need us to release two lots before you finish the street or the whole project is going under?

  • trollhattan

    In solidarity with Seattle restauranteurs and the oppressive maximum minimum wage, Seattleites all choose to eat at home now.

    Don’t restaurants have the highest failure rate among bidnez startups? If not the highest, certainly among the top few. Tallying their failures is like pondering why so many dead cicadas.

    • Shakezula

      Restaurants fail because Big Government forces the honest, hard-working owners to do things like wash the dishes after every use, throw out food before it develops the ability to speak and pay their employees with money instead of kicks to the head or buckets of food that has started reciting Shakespeare.

      • Lee Rudolph

        throw out food before it develops the ability to speak bus and wipe the tables

        FTFY.

    • thebewilderness

      The food and beverage industry is as unforgiving as transporting nitro.

      • DocAmazing

        The Minimum Wages Of Fear?

        • Hogan

          NICE.

        • rea

          Re-made as Out-Sourcerer–a title that never made much sense to me, but with a great score by Tangerine Dream

          • dr. fancypants

            I watched that movie with my dad when I was 13. Even for a teenager with a relatively dark view of the world, that was some bleak shit right there.

            My dad never was very good at choosing movies for us to watch together. (Nothing beats the time we watched The Vampire’s Kiss when I was 12.)

            • ColBatGuano

              Nothing beats the time we watched The Vampire’s Kiss when I was 12.

              My dad took me to see Deliverance on my 12th birthday. So, yeah…

    • Warren Terra

      I know you’re snarking, but so far as I know the higher minimum wage hasn’t even started phasing in yet.

      Although, I think we can all remember that year or so in which every asshole boss justified their firings and other bad treatment of workers on the grounds of Obamacare Will Ruin Me, even though it was still a year before their obligations under the ACA came into effect, and even though their claims of crippling costs were mostly bunk anyway.

  • CrunchyFrog

    It’s also important because business owners and ideological opponents of the minimum wage will lie and obfuscate to create a false impression of negative impacts, whether they exist or not.

    They’re Republicans. They lie, cheat, and steal by definition.

    • cpinva

      “They’re Republicans. They lie, cheat, and steal by definition.”

      true, but not the most important aspect. they’ll do it, with no fears whatsoever of any repercussions, by anyone, ever. they will never be called out on it, they’ll never be called a liar, they will never suffer so much as a hurt feeling about their lying. that’s what makes them so darn special.

    • Davis

      Be kind. Since the evidence of higher minimum wages reducing employment is nil, the poor things just have to make shit up.

  • trnc

    There is a lively and festering commentary after the article that appears to be written by people who believe the minimum wage should have been kept at $0.25/hour, but I sent some ones and zeros there to die an untimely death anyway.

    • Warren Terra

      We just the other day had a thread about the importance of child farm labor (big clumsy arms can’t get at those hard-to-reach spots in the threshing machine). It’s all of a piece.

  • Shakezula

    I suspect only part of the story is making the rounds:

    Next, even great-tasting restaurants battle tough odds—especially new ones (Shanik and Pioneer Square’s Little Uncle location both reached two years; Grub reached two and a half). The National Restaurant Association doesn’t have exact failure rates for restaurants in their first few years, but media relations and public affairs director Christin Fernandez reports that according to census data, about 60,000 restaurants open and about 50,000 restaurants close in an average year.

    Statewide, Anthony Anton, president and CEO of Washington Restaurant Association, says that each year in Washington, 17 percent of restaurants go out of business or change hands. In Seattle, with approximately 2,300 restaurants, that translates to approximately 400 closures or sells expected—“in a good year,” Anton says.

    The effects of a minimum wage increase travel backwards in time!!!

    • gmack

      The effects of a minimum wage increase travel backwards in time!!!

      And some of you said that claims that Obama was the Devil were overblown. Who’s laughing now?

      • humanoid.panda

        Clearly, the chrome spikes of the Shrike are made of discarded surfaces from restaurants he is pinning to the Tree of Pain and Living Wages.

        • Francis

          Hyperion? Great book, terrible sequel.

          • humanoid.panda

            The first sequel, Fall of Hyperion, is awesome. The other two, god help us all.

        • NBarnes

          If I loved this comment any more, it’d be illegal in Georgia.

          • rea

            Simmons is an appalling wingnut, though. Crazy as Vox Day, though a better writer.

            • humanoid.panda

              Apparently, wingnuttery is common illness among SF writers.

            • Cool Bev

              Simmons is a wingnut? Are you sure you’re not thinking of John C. Wright?

              Oh well. I don’t read much of Simmons’ straight horror and he hasn’t written much SF lately.

    • Tsotate

      If the effects of closed restaurants travel backward through time, surely the owners can more than make up the shortfall of their restaurants closing by charging to send stock market information back.

  • Breadbaker

    The restaurant up the street closed twice in a week. The new owners couldn’t get along.

    Thanks, Obama.

  • howard

    i realize erik didn’t write this one, but i know he likes these little zelig moments, so i’ll note that i know the owner of grub (not well, but our kids were in preschool together) and i feel highly confident that she did not sell out on account of minimum wage.

    • Warren Terra

      Don’t be quite so sure. One of the people to testify against the higher minimum wage bill in Seattle was the owner of Dick’s Drive In, a local chain of extremely cheap hamburger joints that’s long been famous for its worker-friendly policies (starting pay well over the minimum; regular raises; paid vacations; employer-paid health benefits, long before the ACA; modest tuition support; all manager spots filled from promoting workers). For a grease palace, they were practically the ideal benevolent employers – but they didn’t want a mandated $15 minimum wage. Your acquaintances could be similarly enlightened, and similarly resistant to the $15 minimum.

      • Orbis_Terrarum

        Yep. No boss likes to lose control, no matter how benevolent.

      • Dick’s. Greasy since the late ’60s, at least, but a burger was only a quarter or fiddy cent.

      • djw

        I expect they didn’t want to lose their comparative advantage.

      • howard

        i will actually check it out since it aroused enough comments, but there’s a world of difference between what the market will bear in terms of price for a hamburger chain product and what the market will bear for the price of a good, homey restaurant in a reasonably upscale neighborhood.

        editorial addition: grub’s menu is still posted. their hamburger with cheese went for
        $14; according to dick’s menu online, the deluxe burger with cheese goes for $2.90.

  • evodevo

    “because business owners and ideological opponents of the minimum wage will lie and obfuscate to create a false impression of negative impacts, whether they exist or not.”

    Yes. This. For another example, see Mandate, Obamacare

    • JustRuss

      And of course, DEATH PANELS!!!!

  • thebewilderness

    These peeps are completely confused. All the businesses in the state of Washington went out of business, just as predicted, when the minimum wage was pegged to a COLA in 1998.

  • ColBatGuano

    Boy is that minimum wage justification just tagged on there or what? Rest assured that the Seattle restaurant scene will struggle on.

  • Latverian Diplomat

    Are there that many min wage staff in a fine dining establishment that it makes a difference? Shouldn’t they be looking at McDonalds and Subway closings instead? Or better yet, the most damning evidence of all, there is not a Chick-Fil-A to be found in the greater Seattle area.

    • Ken

      That was my thought too. Offhand it seems a fast food joint with a dollar menu has less cushion than an upscale sit-down restaurant that charges $12 for a salad.

    • Orbis_Terrarum
    • David Allan Poe

      Are there that many min wage staff in a fine dining establishment that it makes a difference?

      Yeah. Fine dining is a lot more labor intensive than fast food. Even your neighborhood restaurant, no matter how lowbrow, is more expensive than even a small statewide chain. Your local hamburger joint is a lot more expensive to run than McDonalds. Generally speaking, the better the food, the more the labor is closer to the plate, principally because you lose economy of scale.

      I’m intellectually sympathetic to the restaurant people who don’t like a high minimum wage, because I’m in the same business and I understand why they think the way they do. I’m just not emotionally or ethically sympathetic, because it seems obvious to me the that the solution to our problem is either a guaranteed basic income or a very robust welfare state.

  • Murc

    I always like to cut right to the heart of debates like this with a hearty “So what?”

    It’s not even sarcasm. Really, so what? If a business can’t stay afloat while paying it’s workers a minimum wage, that business should fold, because the owner is seeking to profit off the misery and labor of others. If raising the minimum wage to a living wage will destroy jobs, those jobs were worthy of destruction.

    This doesn’t convince everyone, of course, but it does avoid all the shilly-shallying, and it lets you not concede important points. In my mind, once you get drawn too deeply into a “well, treating workers right doesn’t actually destroy jobs” defense, you’ve implicitly conceded the point that if it did, that would be a bad thing.

    • cpinva

      I believe it was john Kenneth galbraith who opined that a job not worth paying a living wage to do, was a job not worth being done.

    • efgoldman

      but it does avoid all the shilly-shallying

      What is the federal DOL six-digit classification for shilly-shallyers.

    • Brett

      If we actually did get significant unemployment as a result of minimum wage increases, then it’d be something worth considering. You could have a debate over whether it’s good to simply go ahead with the minimum wage hike and then try to subsidize/public hire/support the people who don’t get jobs, or something else like allowing a lower wage rate and subsidizing people directly.

      But so far we haven’t, and the Danish example seems to indicate that minimum wages in the $15-20/hr range don’t really hurt employment, or even lead to significant reductions in hours (although they do allow teenagers to have a lower rate, and not inconsequentially have a higher teenage employment rate than the US).

      • cpinva

        it has been proven, historically, that, contrary to the shrieks/tearing of hair/rending of garments, not only does the unemployment rate not go up, it actually goes down. this is because people in the minimum wage demographic will spend all of their wage increases, resulting in increased demand, more hiring, etc.

    • djw

      I don’t disagree, but when considering the question of how much to raise the minimum wage in an environment where minimum wage jobs are (perhaps due to other policy failures) both scarce and extremely important to the well-being of people who have them, it’s not unreasonable to keep in mind the point at which raising it further might start to notably reduce their availability. Granted, in the context of American debates about minimum wage increases this is virtually never relevant, because the outer threshold of possibility is generally well below the point at which that might be an issue.

      If I were to worry about Seattle’s minimum wage increases from a policy perspective, it would be that a minimum wage increase in an environment of highly restrictive housing supply, it might end up functioning primarily as a way of transferring wealth from one segment of capital (low wage employers) to another (landlords).

      • David Allan Poe

        This is an excellent point. There are precious few restaurants that own their premises, and there are precious many landlords that are happy to point out that, without their most excellent building and their graciousness, said restaurant would cease to exist.

        • jim, some guy in iowa

          just wanted to compliment the choice of ‘nym

          quoth the raven, “you never even called me by my name”

    • brugroffil

      Creative Destruction is only good if hedge fund managers are getting rich.

  • Nobdy

    Presumably all these restauranteurs are packing up and moving to the economic paradise of Wisconsin, where they can grow bountiful profitable restaurants free from a local minimum wage or the threat of unionization. Wisconsin’s economy must be hotter than China’s right now!

    • Lee Rudolph

      Move to Wisconsin? What’s the matter with Kansas?

      • The fresh sea bass has that not-so-fresh feeling.

      • DocAmazing

        Oh, well played.

  • matt w

    Four restaurants closing in four months is supposed to be a record?

    • cpinva

      in most places, it would be a record low.

      • Shakezula

        You’re not kidding. There’s a three block stretch next to UMD where it’s rare for a restaurant to last two quarters. I’ve seen a McDonald’s fail.

        • Lee Rudolph

          I’ve seen a McDonald’s fail in Central Falls, Rhode Island, just a couple of blocks from a privatized prison!

          • Shakezula

            I’ve seen McDonald’s on fire off the shoulder of Orion!

            Hey, how did that get in here?

            • Bruce B.

              All these moments will be lost in time, like the “hold the tomato” on your order.

              • Wake up! Time to eat.

          • efgoldman

            I’ve seen a McDonald’s fail in Central Falls, Rhode Island

            And just a few miles away, in Lincoln (across the street from the mall) a Wendy’s failed and they razed the building altogether.
            McD’s, Five Guys, Starbucks, Chili’s, Panera, and Dunkin’ Donuts in the immediate area are doing quite well.

            ETA: But what doesn’t fail in Central Falls?

            • There are some excellent Colombian joints in Central Falls that I assume do well.

              • efgoldman

                There are some excellent Colombian joints in Central Falls that I assume do well.

                You come all the way up to Central Falls from Kingston, and you can’t go another 3/4 of a mile and drop in for dessert and coffee?
                Damn!

              • DocAmazing

                Colombian joints never fail.

                Or so they tell me.

                • JustRuss

                  + 420

        • Brett

          That is rare. The worst location I’ve seen is in a strip mall next to a grocery store, where you’d think there would be tons of traffic. Instead, about six places have failed in the last 10 years – but none of them were chains, all of which are still open nearby after years of being there.

          • efgoldman

            The worst location I’ve seen is in a strip mall next to a grocery store

            You live in my neighborhood? Said restaurant is now a pretty good Mexican place (I don’t know, I don’t do Mexican, but my daughter likes it.) Before that it was Italian/Pizza/Subs, one with a beer/wine license (which didn’t save it) one without, and I don’t remember what it was before that. When we first came here, it was the paint annex to a hardware store.

          • Woodrowfan

            yeah, there’s a spot near me like that. For almost 20 years one place after another failed there. The one restaurant that was doing well closed when the local cops found its real revenue stream was coming from, um, young ladies of negotiable affection that were working there. The most recent attempt failed recently and now the location is being turned into a laundromat.

        • Craigo

          In Oakland, the neighborhood where most of Pitt’s campus located, a Burger King and a Wendy’s failed within five years of each other. How two fast-food options could go under amongst a sea of college kids I can’t figure. (Granted, that Wendy’s was in an unnecessarily huge space – the rent must have been obscene).

          The local McDonald’s is still going strong last I checked, despite a Chipotle’s across the street.

    • Warren Terra

      Seattle’s sadly diminished alt-weekly The Stranger (a couple of years ago, they were a great community reporting and activism site, and won a Pulitzer; they’ve since fired or lost at least a half-dozen of their best writers, leaving them with maybe one-and-a-half decent writers or reporters) has an irregular feature announcing restaurant openings or closings. I don’t know how to find all the instances, but this one from January is pretty much par for the course. And, of course, that’s only the ones that catch their attention …

  • Tyro

    Restaurateurs are notoriously poor business people. To wit: if they were decent business people, their restaurants wouldn’t close so often. Even moreso, if they knew what they were doing, they would almost certainly not bother opening a restaurant in the first place.

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  • Roger Ailes

    “let’s take a loot at the actual evidence….”

    Looters!

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