Sal Vitalie, owner of the Garden Club Italian-style restaurant in South San Francisco in San Mateo County, said he’s concerned about the impacts that AB 1228, the new legislation that raises California’s minimum wage for workers of fast food for 20 dollars, is going to have on its full service restaurant.
“I haven’t seen the effects of the $20 an hour minimum wage in fast food yet, but I talk to friends in the industry and even my staff, we see it coming,” he said. told Business Insider on Friday. “We see that people are going to want to leave to make $20 an hour.”
Vitalie said he has about 24 employees. He said he “can’t really afford” benefits other than those required by the state, including paid sick leave.
Although the legislation only affects limited-service restaurant chains with at least 60 locations nationwide, it is expected to boost wages in other sectors as they struggle to hire and retain workers.
Vitalie said he doesn’t expect his tipped employees to shift to fast-food restaurants because their tips allow them to earn on average much more than $20 an hour. He is, however, considering offering $20 to dishwashers, which is “the hardest position to keep and fill,” he said.
“It’s already difficult to find dishwashers, which is a horrible job for the minimum wage,” Vitalie continues. “But why do dishes for $15 or $17 if I can go buy $20 hamburgers at McDonald’s?”
Restaurant margins ‘are so small to begin with’
The new minimum wage compounds what Vitalie describes as years of hardship for independent restaurants in California.
“Our margins are so small to begin with,” Vitalie said. “It’s really difficult, especially for freelancers, to make money.”
Vitalie said she purchased the Garden Club in 2018 after the death of its previous owner.
“Since I took over the restaurant in 2018, I haven’t paid myself because there is no profit there,” he said. “And with the rise in inflation linked to the cost of food and labor, the situation is getting really bad.”
Many independent restaurants have struggled during the pandemic due to a combination of supply chain chaos that drove up ingredient prices and rising wages caused by both a massive labor shortage. work and by higher minimum wages in certain cities.
The general minimum wage in California increased to $16 an hour in January, but many cities and counties have higher minimums to reflect their cost of living. South San Francisco has increased its minimum wage every year since 2020, reaching $17.25 an hour in January.
In 2018, when Vitalie bought the restaurant, before South San Francisco set its own minimum wage, the state minimum was $10.50 an hour for businesses with 25 or fewer employees and 11 dollars for those who counted more.
“We have increased prices a little, but the consumer will only bear limited cost increases,” Vitalie said. He said many of the restaurant’s diners were older customers who had been coming there for a “long time” — the restaurant opened in 1964 — and would not accept higher prices.
So, in addition to charging more to its clients, Vitalie has reduced its costs in recent years. He said he reduced the number of servers per shift from two or three to just one and used a combined busser and dishwasher rather than two separate workers.
“So the quality of service is not as good as it used to be, and that’s very frustrating,” he said.
One of the next steps could be to reduce the restaurant’s opening hours, or even close the restaurant on Mondays and Tuesdays to reduce operating costs, Vitalie said.
Vitalie also reduced portion sizes to save money, including stopping serving unlimited soups and salads. He said the previous owners served 16- and 20-ounce steaks, which he cut into 10- and 12-ounce portions.
“But that’s the way the restaurant has been for many, many decades, so I’ve gotten a lot of pushback and complaints about reducing portion sizes and increasing prices,” he said . “I don’t know if I can reduce the portion size any further.”
Are you a fast food worker excited about the new minimum wage? Or a franchisee or restaurant manager worried about how this will impact your business? Email this reporter at gdean@insider.com.
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