Oakland’s minimum wage increase from $9 an hour to $12.25 was passed this November by an overwhelming 82 percent of the vote. Potentially, this means more money circulating within our local economy, more tax revenue for our schools and public programs and a break for the tens of thousands of Oakland residents who are struggling to make ends meet.

For local restaurants, the sudden jump to $12.25 poses some tricky scenarios. Without the kind of mechanized production that most franchises and chains use, an increase in wages can’t just be absorbed by restaurant operation.

The raise won’t officially go into effect until the beginning of March, but Oakland eateries have already begun adjusting for the change. If you’re planning on dining out this Valentine’s Day, here are five things to consider to help adjust your change:

 

1. Oakland restaurant owners totally support the minimum-wage increase

“The Bay Area has always been very expensive and now Oakland’s cost of living is getting out of hand. We lose employees regularly that decide to move away because they cannot find housing here. It’s just sad,” says Chris Hillyard, owner of Farley’s cafes.

It’s indisputable that the $9 standard was flat out impractical, especially if you’re supporting a child or relative. Without employer-provided medical benefits, the living wage in Oakland is $14.10. A study by Berkeley indicates that the median wage for Oaklanders is $22.64 per hour, and while raising the minimum wage doesn’t solve economic disparity alone, it’s a leap in the right direction.

 

2. You might be encouraged not to tip

Some restaurants have begun implementing a flat service charge in lieu of a tip, which helps to generate more revenue for the restaurant as a whole and distribute earnings to both front-of-house and back-of-house staff.

Charlie Hallowell, owner of Penrose, Pizzaiolo and Boot and Shoe Service, adamantly argues in favor of tipless service. “Even though all my waiters get paid $9 an hour, they actually make closer to $40 an hour. The people who really need the raise are the dishwashers and prep cooks — people who don’t get to participate in the waiters’ tips.”

The tipless dining model is something that local eateries have been considering for years as a way to establish wage equity, but have been nervous to implement given our firm societal customs with tipping.

“Everybody is essential in getting a customer’s plate from point A to point B. Waiters are part of a team of people that all make service happen. The tipless model is culturally and politically more appropriate,” Hallowell says.

 

3. A possible 5-7 percent increase in the cost of your meal

That same Berkeley study provided Lift Up Oakland, the community coalition that pushed for minimum wage increase, with information regarding the effect $12.25 would have on local businesses. The study and coalition argue that customers would pay 2.5 percent more for their food/drinks.

Sal Bednarz, owner of Actual Cafe and Victory Burger, makes a counterpoint: “For all the small businesses, price increase will be much more than 3 percent, which is most likely an offset because places like McDonald’s won’t raise their prices at all.” Bednarz has been an avid contributor to the dialogue surrounding increased wages in the restaurant business.

Hillyard agrees. “We need additional revenue to pay the higher wages, otherwise we won’t last. We are working very hard to minimize the price increases, but it’s simple economics: if our costs go up, we need to raise prices.”

 

4. High-end restaurants don’t necessarily equate to rich owners

With payroll absorbing between 30 and 40 percent of a restaurant’s revenue and the cost of food at another 35 percent, that’s nearly 80 percent of a restaurant’s money just to be able to self-sustain. Not to mention the cost of rent and utilities.

“There’s a perception that a busy restaurant means a wealthy restaurant owner. All of us are firmly middle class people. We’re not getting rich off this,” Bednarz says.

Although Hallowell’s three establishments are doing incredibly well in Oakland, with 120 employees to oversee, a hike in minimum wage and all of its implications is nerve-wracking. “A decision to go tipless or raise prices of food isn’t something you can take lightly. If we lose 10 percent of our customers, that’s all it’ll take for us to not be able to pay our employees.”

 

5. The domino effect Oakland’s minimum wage increase will have on neighboring cities and their local restaurants.

Emeryville’s minimum wage is still at the state minimum, but City Council is looking to raise their standard to a possible $14.03 by the end of this year, which would pass up Berkeley, Oakland and San Francisco’s current minimum wage. Berkeley plans to incrementally raise its minimum wage to $12.53 by 2016, and San Francisco will raise theirs to $15 by 2018.

The Emeryville branch of Farley’s cafe will mirror the pay and costs of its Oakland location. “It would be too complicated and unfair to our employees at Farley’s in Emeryville to have a significant wage discrepancy than their co-workers just a few miles away,” says Hillyard. The menu items at Farley’s in San Francisco are more expensive due to their already higher minimum wage.


Interested in joining this conversation as a local restaurant worker or diner? Share your experiences, hesitations, or excitements about Oakland’s minimum wage increase in the comment section. Have a more lengthy opinion on the topic? Email simonelarson@oaklandlocal.com for a chance to submit your thoughts to our Community Voices section.

About The Author

Simone writes about the currents circulating beneath mainstream, with a focus on non-profit developments and at-risk youth enrichment. Outside of freelancing for Oakland Local, she works in the foster care system of Contra Costa County and nerds out on literary magazines. Simone also spearheads the Community Voices section of OL. Contact her at simonelarson@oaklandlocal.com

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