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Governor Inslee

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NEVER HAVE YOU HAD A CATASTROPHIC SHIFT LIKE THIS

April 24, 2020

By Jabriel Donohue

We are weeks, it’s hard to tell how many, into the COVID-19 stay-at-home order in Seattle. My pour-over coffee skills have improved. I’m listening to albums I haven’t heard in years. I’m writing a book. I’m smoking too much blessedly legal weed. I’m taking this stretch of forced unemployment in the most White-Guy-From-Seattle way possible. As a fresh mug of coffee finishes steeping, I reach out to an old friend of mine who works in local tech. We talk about how he, already a work-from-home employee before this started, hasn’t experienced a big lifestyle change in the face of COVID-19. Sure, he can’t go out to the bars or enjoy his favorite restaurants but really? Not a catastrophic shift.

The bar I manage looked desolate with all the liquor taken off the shelf. We locked it up and walked out of the building. The hotel where we’re located wrapped their own front doors in chains and went home too. I’d been watching this virus spread in China since January, when we were still unaware that it had already reached Seattle. Like many of my generation I have a mild obsession with doomsday scenarios and what I saw out of China was not generating what felt like the proper anxiety on our shores.

Now here I was two months later, helping to close my place of business and the source of income for nearly fifty people. Meanwhile, Donald Trump was holding press conferences saying we had this thing licked. The incongruity was staggering.

I make an offhand statement to my friend on the phone, one echoed among many of my colleagues, that this is laying bare the unsustainable nature of our modern restaurant business. “I expect when they start to open stuff again, restaurants will run at half capacity.” he says, and I feel a rage well up inside me.
I’m not mad at him. My anger is at the entire collapsing system. We can’t, I tell him, run restaurants at half capacity. That is not how restaurants today work. You don’t have to be full every day to break-even, but you also can’t be at half-or-less capacity every day either; especially after incurring the costs of closing and reopening. It would be suicide and not even a slow one. In the local news I see that another couple of restaurants have decided to close their doors for good.

In our last days of business several of our employees came to me in the hope that I might have some answers for them. I’ve been in the restaurant industry in some capacity or another for almost sixteen years. I have seen some shit. They were right to think that I had a better idea of what is coming than they did. But I didn’t. I don’t. I told them to file for unemployment as quickly as possible and to stock up on staple foods at the grocery store; to not blow too much on beer. I tried to sound authoritative. I told them to call me for anything. That in the worst-case scenario I could drive to them; then a piston seized in my truck’s engine on my way home.

I’m trying to explain the struggle within the struggle to my buddy and to his credit he’s being as receptive as he can but the whole conversation is underlining just how fundamentally disconnected our nation’s workforce is as whole. Every successful restaurateur from Danny Meyer to Tom Douglas to the guy who owns the brasserie down the street have just had their businesses collapse underneath them in the span of weeks. Insurance companies are refusing to cover losses, citing virus provisions they quietly added after SARS. Unemployment Insurance, for many, is woefully inadequate. The practice of under-reporting or not-reporting tips, a common if foolish practice in the restaurant industry, means that many unemployment checks are practically nonexistent no matter how badly they are needed. “COVID-19,” I tell my friend, “is going to change the restaurant industry forever.”

To understand this, you need to understand some rudimentary restaurant economics. The restaurant industry is a high cash flow business model. That means much of the money that comes in through our doors goes right back out those doors almost immediately. If we do well over the course of a month, we’ll have money left over as profit. If we don’t do well, we’ll be dipping into our reserves. A well-resourced and managed restaurant will have six to nine months of reserves in case something like a market downturn or an emergency event saw you operating at a moderate loss for a couple months. A less well-resourced establishment might only have three months in the bank. In my experience, the actual majority have even less than that. There are no restaurants that have a model for having zero revenue, even for a short period.

In management a big part of our job is controlling the restaurant or bar’s costs. We typically do this by using margin guidelines. That you should only spend 20% of what you sell for liquor, wine and beer, is an example of a common cost control. That you should only spend 30% of what you make in total on labor is another example. There are ways to make it more complicated (and hopefully more profitable) but for the most part when all is said and done the majority of restaurants hope to make 5%-10% in profit at the end of the fiscal year. For decades, before the bar and restaurant explosion of the late aughts, when drinking fine cocktails and eating inventive meals went from an aspirational hobby to a national fad, this was all you needed to be successful.

Working as a bartender or server in this environment was simple. You essentially ran your life as an independent contractor. Job interviews may have been full of bullshit artists who claimed to make the best drinks you’d ever tasted but if you made a name for yourself in town as a skilled, reliable and mostly sober bartender you’d never go without work. And because nearly everybody paid minimum wage plus tips there was rarely an incentive to stay in one place. The exception came if you were looking for a job that offered higher minimum wages or health insurance. Those jobs could almost exclusively, only be found only at fancy hotels where you were competing with most of the city for the gig. And if you wanted things like sick pay, a reliable schedule, a dedicated group of coworkers and any recognition for your hard work beyond your wage and a pat on the back, you were better off trying your chops at the Laugh Factory.

This was the national standard of food and beverage operations for a very long time. The kind of business done, encouraged and lobbied for by the National Restaurant Association and adhered to by nearly every establishment in the country. Under this standard a national lack of worker protections and investment in employees continued with few exceptions for so long that the lack became institutional. The new gig workers of America, rideshare and app-based delivery drivers are experiencing the same thing right now.

The model began to change as America fell back in love with restaurants and bars. Every major city and many minor ones were growing exciting restaurant cultures. As competition grew, bar and restaurant owners began to place renewed value on things like employee retention. Wages increased and worker protections began to be mandated in at least some cities. And as health insurance took a gasping, sputtering, woefully insufficient step towards universal coverage, so did the costs of operation. But while the obvious answer to rising operation costs would have been to raise prices until these things were affordable, the unrestricted nature of competition kept prices down. Meanwhile costs of living were on the rise.

To make matters worse, as new waves of investors, developers and aspirational businesspeople packed our cities with more and more first-time concepts, they began strangling established, well run operations with a glut of new openings. The hype of five new “must try” establishments a week devastated regular business while diluting the available pool of experienced workers until it seemed the only requirement to be a bar manager was owning a stack of cocktail books and having a year or two of experience changing kegs. Many places would open and shutter within the same quarter, but the damage they did to the economy of food and beverage operations in their cities was severe and lasting.

We are a creative people by nature, restaurant people, and we take pride in it. So, if the cost of labor doubles we find ways to make it work. If we’re paying the highest liquor tax in the country for the privilege of serving the people of Seattle, we make it work. If we’re losing good cooks to construction jobs as opportunistic developers turn our cities into lands of cranes, we find ways to be competitive employers. I’ve worked with multiple restaurants in Seattle to institute insurance for full time staff. I have learned to manage my staffing levels to account for last minute absences without using on-call shifts. I have used almost every tool in the kit, myself included, to outwork, outsmart and outlast the prevailing conditions of the industry. I have also gone home so tired that all I could do is sit in a chair and whimper as my partner helped me take my boots off my swollen feet on more occasions than either of us care to count. But there is a limit to what bootstrapping can accomplish without aid from legislation. When the cost of living has risen so high in a city that your average bartender cannot afford a one bedroom apartment without spending half their income on rent, that is not the fault of bars and restaurants, nor can their owners be expected to enact the solution from thin air. My tool kit does not contain a torque wrench that can be used on local and federal tax codes.

Those of us in the upper levels of management and our owners have had a clear picture of this for a while now. We know things need to change. Surely none of us have settled yet on exactly how they should change. I am in favor of aggressive solutions such as doing away with tips and hourly pay for as many employees as possible, perhaps entirely. There is no logical reason that anybody’s wage should be tied to the inexpert opinion and mood of a person they are required to serve. But this step, which a month ago would have been dangerously controversial now seems positively tepid. The truth is that we must go much further.

I want to train my floor staff to work multiple positions which they will rotate through in order to expand their skills and knowledge while reducing boredom and repetitive stress injuries. I want to pay each employee a salary based on their experience and contribution, rather than the role they perform. I want to see “bar keeper” as a career again. I want to do away with the idea that serving food is something you do to get through college or grad school. I want our general economic structure, even more than our general population to recognize that great food and great drinks are a service rather than an entitlement. I believe this is a viable possibility, but I also know it will require a reimagining of our state and national corporate tax structures in order to be possible. I believe job-providing businesses should receive tax credits based on the number of full-time, living wage workers they employ. I believe that we need a legal definition of a living wage. I propose that definition should be based on cost of living calculations done by the Economic Policy Institute and managed on a county-to-county basis. I believe that the living wage definition should assume single income, two-person, two-child homes so we can begin to get away from what Elizabeth Warren defined as the “Two-Income Trap”. A city where one-bedroom apartments cost $1,500 should mandate that employers pay a $100,000 a year wage to its employees. If that wage seems outrageous to you, I agree, but so does that rent.

I believe that if you want to employ a large number of people who can reliably pay their bills, seek healthcare without fear and contribute to the modern economy without suffering by it, our country should make it easier rather than harder for you to do so. And if you operate a publicly traded company, be it in tech, manufacturing, hospitality or anything else, every one of your stakeholders should be a shareholder and stakeholders should by law always make up a majority voting bloc of the company’s interests. The bevy of labor lawsuits against CKE Restaurants (Carl’s Jr, Hardee’s) and the over 13,000 child labor law violations for which Chipotle restaurants were just fined for , while their CEO’s continue to pocket staggering payouts should be proof of that need.

If these seem like extreme suggestions to you, it is only because of how far to the opposite side we have become inured in this country. In the 1950’s, during the boom which would make the United States the world’s foremost economic power, a CEO at a company made twenty times what their typical worker took home. That’s a lot of money, and a fine incentive for the rat race and economic growth if you want it. The fact that the modern CEO makes 120 times their average worker’s salary has nothing to do with value or incentive and everything to do with avarice. The COVID-19 crisis has laid bare how appallingly inadequate our modern economy has become at serving the citizens of the United States, ostensibly the people whom it exists to support. We need bold, perhaps terrifying reforms to bring ourselves back to a place of sanity and some modicum of equality.

I will tell you this much, though: After watching nearly every one of my colleagues lose their job or close their business with no certainty of reopening them, we aren’t going to allow ourselves to be this vulnerable again. Most of us, owners, chefs, managers, on down the line aren’t going to continue to operate in an environment where we watch companies like Boeing commit corporate malfeasance only to receive an apparently endless supply of bail outs. We aren’t going to watch companies like Amazon use financial loopholes that they wrote on their own behalf to continue to avoid paying taxes. Not if it means that our bars, restaurants and our employees, bellwethers of our city’s successes and chips in every bidding war for new corporate headquarters, are the first to have the rug pulled out from under them each time our government or our banks engage in a new round of intolerable negligence and criminal mismanagement.

The rule used to be that you don’t talk politics at the bar. I believe that has kept us out of the conversation for too long. Bars and restaurants used to be places of community discussion. They were forces in their neighborhoods, their cities and their states. And if you think when this is all over, we’re just going to open the doors back up and tell Sam to play it without having our say, you are out of your f**king minds.

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