Applebee’s Franchise Owner Forced To Cut 1,000 Jobs After New York’s Minimum Wage Hike

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.

CONTINUE READING –>

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9 thoughts on “Applebee’s Franchise Owner Forced To Cut 1,000 Jobs After New York’s Minimum Wage Hike

    • It’s unfortunate that many people don’t understand that the Number 1 focus for any business is to make enough money to stay in business.

      In the first year or two after startup, most businesses go out of business. When that happens, then not o0nly does the owner/investor lose part or all of the capital put into the business (some of which may have been borrowed), but also any employees lose their jobs, and customers lose a possible choice of goods/services and location to trade.

      When a business is able to stay in business, then these three natural constituencies (owners, employees, and customers) share in the benefit. Owners make a profit – sometimes a lot. Employees get job security, better working conditions, and higher pay. And, customers get better value with some combination of good prices, better service, a better product, a good location, etc. All three natural constituencies of every business benefit, not because of some misplaced sense of altruism but because all three are REQUIRED for the business to succeed.

      But, government has inserted itself as a fourth constituency. Government takes an cut of the sales and of the profit at each step of the process from creating the raw materials until the final sale. Government imposes needless regulations, either through some misplaced desire to improve on the Free Market or just through lust for Power. Each of these interventions come at the expense of the other three constituencies – lower profit, lower wages, and higher prices, etc.

      The owner might try to rebalance his use of capital, labor, and prices in order to bring back the best good for himself (and incidentally for the three natural constituencies). If interest rates are pushed way down (as today) or way up, the owner will adjust. When incandescent light bulbs are outlawed, more expensive LEDs will be offered. And when the Minimum Wage goes up, some employees may be laid off or replaced with automation.

      It’s a shame that schools today, from the lower grades through advanced degrees, mostly teach socialism rather than how a Free Market works. Business has zero to do with making the world a better place – even though that always is the end result. Business is about making a better life for the person who will risk everything to do it. Though others benefit greatly from the owner’s efforts, that is incidental to the effort.

      I suggest that you work up an idea for risking your own money , and see what is required. See what choices you have to make to stay in business. Then determine for yourself whether you like having government determine the “Rules of the Game.”

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      • The debate is mostly that big businesses need to pay a fair wage. Your comment implies all businesses are only a couple years old.

        So, okay, no taxes either? In that case, companies will have to pay more to repair the roads they use to ship products and protect itself from crime.

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      • Moreover, your rather academic way of calling me stupid is not a smart idea. There are businesses that pay a fair wage. But don’t worry. I know people like you. Keep enslaving people and telling everyone else they’re stupid. Just be honest about it when you try to make friends so they know to stay away from you.

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      • I’ve worked in financial services. I know the #1 focus is profit for my employer and my clients. Whether I agree with that is a different story. There’s something called social income, and you should look it up, but in short, it means what goes around comes around.

        FYI most startups don’t fail because they pay their secretary too much. They fail because they’re the type of people to hire a secretary when the business is brand new instead of answering the phone themselves.

        The discussion here is about large businesses that employ hundreds upon thousands of minimum-wage workers and complain that the minimum wage is still too high.

        Oh, but they have to compete with wages in China! They could’ve solved that problem by not sending all the jobs to China in the first place! If the GOP loves FREEDOM, why do they support big businesses that send jobs to a place with no freedom?

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  1. So, the judge said to Mae West, “Are you trying to show contempt for this court?” Her reply was, “Oh no, your honor. I was trying my best to conceal it.” Yes, I was – nicely – trying to show your misunderstanding of business, so that maybe I could bring you around.

    In the real world, people make agreements which – at least at the time – benefit both parties, or else there would be no agreement. They continue the agreement only so long as both parties benefit. It’s the same in the realm of jobs. Nobody forces anybody to hire, and nobody forces anybody to accept a job. Neither party “enslaves” the other, except maybe in your mind. If a better opportunity shows itself, either party may make a change (either hire somebody else/automate or take a different job).

    The whole idea of a Fair Wage is socialistic nonsense. People either accept the deal the other side wants, or they don’t. Would it be nice if every job could pay $100 an hour? Sure! But wishing doesn’t pay the rent.

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  2. Applebee’s never sent any jobs to China, so that shouldn’t even be part of this discussion.

    Look, I get that you’re a Socialist and I’m a Capitalist. Let’s agree to disagree.

    I think that the government, whether federal, state, or local has no business screwing with the Free Market which has created the wealth in the first place. People, as potential or current employers – in big, medium, or small businesses – have the right to agree with other people, as potential or current employees, on a wage and benefits package which benefits both. That the business always will want the package to be less costly, and the employee always will want it to be better, is an obvious given.

    You’d like to pay people more (and give better benefits packages) at the expense of the owners (and the customers). You’d like to feel good at the end of the day. Maybe you’re thinking that they’re better off with no job than an unfair wage job. Or that Welfare and Food Stamps are better than their settling for the best they can get. Or that automation or foreign outsourcing should not be allowed. Or that profit is a dirty word, and that owners should be happy just to make anything at all. (If you owned your own financial services company, you might gain a different perspective.)

    We disagree on basic Economics and Individual Liberty. You’ll fight for your ideals, and I’ll fight for what I think is best, and neither of us will get all of what we want. In the meantime, let’s enjoy the discussion and remain civil. Take care.

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  3. If a business does not focus on profit – especially as its main concern – then it’s not a business. Saying that a business should not have its #1 focus on making a profit shows a lack of understanding – possibly a willful lack of understanding.

    Now some organizations indeed do have some other #1 focus. Non-profit hospitals, although they do generate a lot of revenue are a good example. So are churches, chambers of commerce, political parties, and a favorite of mine Barbershop Choruses. This is all well and good, since the participants choose voluntarily to have a different focus. But none can be considered a business.

    Now, a business, to successfully earn a profit worthy of the investment, MUST provide a product or service that others value more than the cash they’re willing to lay out. And, in fact, it’s the for-profit businesses which have advanced the well being – the standard of living – for all of humanity. Most of the myriad tools we use just in this online conversation came about from somebody wanting to make a profit (despite Al Gore’s claims that he invented the internet). And yes, a few were provided by some people working for little or nothing, volunteering their time. (A web favorite of mine – and multiple winner of best science blog – is http://www.WattsUpWithThat.com – despite the CAGW Alarmists’ claims that oil money pays for the blog).

    You may resent people wanting to be paid for their time, whether they toil for others or as an employer, but so what? You may rail at the high price (to you) of what suppliers charge, but too bad. You may think as Obama said, “You didn’t create that,” but this is the world that’s better for all the inequity you see around you. Socialism stinks! Capitalism brings a better life!

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