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The Tipping Point

When Oakland's new minimum wage kicks in on March 2, many restaurants plan to raise prices — and, in a few cases, eliminate tips altogether.



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Growing public awareness about those bleak realities, thanks to a strong campaign by Lift Up Oakland and its affiliated organizations, played a role in generating broad support for Measure FF and similar minimum wage bills that passed in San Francisco and Berkeley.

It's also worth noting that a handful of Bay Area restaurant owners were some of the loudest initial critics of the proposed minimum wage hikes, asking, variously, for a more gradual wage increase or an exemption for tipped employees, or some combination of the two. These alternative proposals, while widely disparaged by labor activists, did point to the fact that California is one of seven states that have no a "tip credit" provision — meaning that unlike in the other 43 states, it's illegal for a restaurant in California to pay tipped servers a sub-minimum-wage rate, which can be as low as $2.13 an hour in states in which the federal tipped minimum wage is the baseline. In that sense, a waiter in, say, Texas or New Jersey is in a much more precarious position — dependent almost entirely on tip income to scratch out a living — than those in California. Of course, even in California, a tipped waiter at a chain restaurant such as Olive Garden or Applebee's likely pockets only a small fraction of what the servers at places such as Homestead take home in tips.

During interviews with more than a dozen Oakland restaurant owners in recent weeks, all of them expressed support for the minimum wage increase — at least in principle. But even among the restaurateurs who backed Measure FF before it passed, there's a certain amount of angst. Sal Bednarz, the owner of Actual Cafe and Victory Burger, penned an essay declaring his support of the ballot measure in the weeks leading up to the election, but said that his belief in the principles behind the law won't make the transition any easier for his business. There's just too much uncertainty about how customers will respond to higher prices.

"It's a really difficult and long-term project for me and for every restaurant that's going through it," Bednarz said in an interview.

Preeti Mistry, chef-owner of Juhu Beach Club, a hip, pink-interiored Indian restaurant in Temescal, argued that restaurant owners such as her, who are also chefs, are even more inclined to sympathize with their lowest-paid employees' need for a living wage. After all, she works with them side-by-side with them on a daily basis.

Mistry, a Temescal resident, said that sometimes her neighbors will ask her why she didn't just pay her employees what they deserve even before the minimum wage increase went into effect. Like Delany, Mistry flips the question around. "Because you wouldn't have voted to pay $3 more for your curry," she said. "You guys don't realize you benefit from the minimum wage being as low as it is."

According to Mistry, the new minimum wage law evens the playing field. Now, she feels she has "permission" to raise her prices, not only because she has a concrete reason to point to if customers complain — but also, of course, because many other restaurants in Oakland are going to raise their prices, too.

Of the restaurateurs I spoke to, only one — Taiwan Bento's Stacy Tang — said she didn't plan to raise prices immediately after the minimum wage increase goes into effect. But even in that case, Tang said she's only putting off the inevitable price hike for fear that a relatively new restaurant such as hers can't raise prices without losing a big chunk of its customers. She said for the time being she'll operate without any profit — or even at a loss.

Among other restaurant owners interviewed — some of whom operate high-end eateries, others casual neighborhood cafes and budget-priced takeout joints — the amount they plan to raise prices varied widely, based on such factors as how expensive their establishment was to start with, how much of its business consisted of tipped table service, and the extent to which owners planned to extend raises to back-of-the-house employees who already make more than $12.25 an hour.

For instance, Bednarz said he will raise prices at Actual Cafe and Victory Burger by roughly 5 to 7 percent. And both Chop Bar and Lungomare, co-owned by Delany and Chris Pastena, will implement a 5 or 6 percent price increase.

Mistry, on the other hand, said she hadn't yet decided on prices at Juhu Beach Club, but she expected the increase to be significant — definitely more than 5 or 10 percent. Jay Porter, who owns the The Half Orange — a restaurant in Fruitvale that's been praised for offering a good value — said he has already raised prices by 12 percent, and may have to increase them again.

The owners of FuseBOX (in West Oakland), Grand Lake Kitchen (near Lake Merritt), and Kingston 11 (in Uptown) all said that they, too, are planning to raise prices, but didn't specify, or had yet to decide, exactly how much the increase would be.

Ultimately, Kingston 11's chef and co-owner Nigel Jones said that regardless of what approach restaurateurs take, they're all going to be forced to tackle the same fundamental issue: "the fairness in terms of how you pay people, based on work that they're doing and the importance of that work to the restaurant."

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