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Minimum wage increase impacts local restaurants

KIMBERLY NICOLETTIsummit daily newsSummit County, CO Colorado
Summit Daily/Brad Odekirk
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SUMMIT COUNTY Before Amendment 42 passed in November, some restaurateurs weren’t concerned about a minimum wage increase, but as it turns out, the law is impacting restaurant budgets significantly.”It’s a huge change,” said Barb Richard, marketing manager for the Dillon Dam Brewery. “We’ve had to tighten our belt everywhere, from ads to raises, and cut costs dramatically. (But) there’s no way to absorb it completely.”Eric Mamula, owner of Downstairs at Eric’s in Breckenridge, said he’s paying his waitstaff $75,000 to $80,000 more annually because of the amendment, which calls for waitstaff to earn a minimum of $3.83 an hour, up $1.70 from the previous minimum. When the Dam Brewery’s management team analyzed the additional cost, it came up with tens of thousands of dollars a year, Richard said.Many restaurants have slightly increased the prices on their menus in an attempt to recoup some money. Owners such as Dick Carleton, a partner in Hearthstone Restaurant, Hearthstone Catering and MiCasa Mexican Restaurant in Breckenridge, are staggering schedules and watching waitstaff hours more closely. The Dam Brewery canceled its 10-11 p.m. late night menu to save on waitstaff and cooks’ hours. But restaurants don’t have a lot of options in managing the additional expense burden the amendment created, Carleton said.”In the past, we’ve been an industry that’s managed itself,” he said. “Now the marketplace determines the wages we pay, and every year there’s a forced increase.”That increase is based on the consumer price index for Greeley, Boulder and Denver. Some High Country business owners think the economics in the mountains are far removed from those in the Denver area, so the same cost-of-living increase should not apply.

“If we run into a series of years like the late 1970s and early 1980s, where the Denver and Boulder CPI might be skyrocketing while ours in the High Country is stagnating, it could create some real problems for the industry,” said Bobby Starekow, owner of Silverheels at the Ore House in Frisco and Incline Grill in Copper.As it is, Mamula and Starekow believe the amendment will eventually put restaurants especially marginal ones -out of business. Mamula isn’t worried about his place folding, since it operates on such high volume, but as prices increase, he thinks customers will stop eating out as much.”It’s already expensive to go out, and it’s going to be even more expensive,” Mamula said. “I don’t know if people realized that when they voted.”Meanwhile, the waitstaff isn’t benefiting much.”They’re paying much higher FICA, and we’re paying much higher FICA. And the capital for raises isn’t there anymore,” Starekow said. Carleton pointed out that servers made more than minimum wage with tips and automatically got raises in the past as menu prices went up, keeping pace with inflation.

Perhaps most concerning is the fact that the increase is tied to the Constitution, which means it’s no longer in the hands of policy makers.”To us, it was not well conceived,” Richard said. “We could not understand why it belonged in the Constitution, tied to an index that’s in Boulder.”Amendment 42Amendment 42 increased the minimum wage by 33 percent for non-tipped employees, taking them from $5.15 to $6.85, with an annual increase adjusted for inflation. Tipped employees saw a raise from $2.13 to $3.83. Annual adjustments will be made at the same rate as for non-tipped workers.

High Country customers expected to increaseDespite the minimum wage increase, restaurants in Colorado’s mountain region are expected to lead the industry’s growth in sales this year, according to the Colorado Restaurant Association. The organization predicts restaurant sales to surpass $8 billion in 2007, a figure supported by a 6.7 percent growth rate in mountain regions that include Summit and Eagle counties. Growth is expected at a 6.4 percent rate statewide.Restaurant owners are hopeful last season’s plentiful snow and a continued strong local economy will provide a good year for the industry, said Dick Carleton, vice president of the Breckenridge Restaurant Association.


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