By Andrew Kerr – Re-Blogged From Western Journalism
The CEO of Apple-Metro Inc., a company that operates about 40 Applebee’s restaurants in the New York metropolitan area, said he’s been forced to cut at at least 1,000 servers in the past year as a result of New York’s recent minimum wage hike.
“We have 1,000 less servers this time this year than we did this time last year,” Zane Tankel told Fox Business’ Stuart Varney on Monday.
That amounts a two-thirds reduction of his total workforce, Tankel said.
Tankel said the minimum wage increase has forced him to adopt a “concierge” type model of having servers help customers operate self-serve tablets and make them feel “warm and comfortable.”
“I’ve always said increasing minimum wage is technology’s best friend,” Tankel said.
“The model now that we’re heading towards where we had one server for three or four tables, we’re moving towards one server for ten tables, eliminating about two thirds of our labor ultimately,” Tankel said.
He pins the blame on New York Governor Andrew Cuomo, New York City Mayor Bill de Blasio and “the liberal agenda.”
New York state began implementing a series of minimum wage increases in 2016 that will eventually mandate some employers in New York City to pay their employees at least $15 by 2018 for some employers in New York City. The wage hike will take place more gradually in other parts of the state.
On Dec. 31, 2015, the minimum wage for tipped restaurant employees in the state rose from $5 an hour to $7.50 an hour, a 50 percent increase. The minimum wage for fast food workers rose as much as 20 percent, from $8.75 to $10.50.
On Dec. 31, 2016, the minimum wage for fast food employees in the city rose again to $12 an hour.
Tankel’s challenges in the wake of New York’s minimum wage hike is not unique to his Applebee’s franchises.
The state lost 1,000 restaurants in 2016 alone, according to a report by the New York Post.
Employment growth at fast food restaurants in New York City fell to 3.4 percent, less than half of the seven percent growth seen from 2010 to 2015. So far in 2017, employment growth has shriveled to just two percent through May.
Full-service restaurants like Applebee’s have been hit even harder in the city . Employment growth at full-service establishments plummeted to 1.3 percent in 2016, compared to 6.5 percent from 2010 to 2015. This year, it’s fallen even further, to 1.2 percent growth through May, the Post said.
“This is a drop-off in restaurant growth that didn’t even show up during the great recession,” said Michael Saltsman of the Employment Policies Institute. “It’s compelling evidence that something big is going on.”
Some economists say the drop-off in restaurant growth in New York is due to the state’s minimum wage hike.
“We are beginning to see the harmful effects of drastic minimum wage increases that previous studies have predicted,” said Mike Whatley, head of the National Restaurant Association’s State and Local Government Affairs.
“It’s a miserable business at the moment,” Andrew Schnipper, the owner of five burger restaurants in Manhattan, told the New York Post. “Most restaurateurs are far less profitable than they were a year ago.”
Other experts say the restaurant industry’s growth in the first half of the decade was unsustainable, and that the slowdown has little to do with the minimum wage increase and more to do with high rents and oversaturation in the Big Apple.
“It’s unusual for growth like that to be sustained forever,” said James Parrott, a former analyst at the Fiscal Policy Institute. “Restaurant employment (in New York) overall is still increasing and average wages grew about six percent in 2016.”
Tankel said the minimum wage increases in the state are “all really good if you have a job.”
But the wage hike didn’t do much good for the 1,000 employees he’s been forced to let go in the past year.
“Stuart, if you don’t have a job, $100 an hour doesn’t help you out a whole lot, does it?” Tankel said.