Owner of pizza shop says new Seattle minimum wage law is forcing her to close

SEATTLE -- It may be one of the first casualties of Seattle’s new minimum wage law. The owner of Z Pizza says she’s being forced to close her doors, because she can’t afford the higher labor costs.

Devin Jeran was happy to get a raise, when Seattle’s minimum wage went up to $11 an hour at the beginning of the month.

“I definitely recognize that having more money is important,” he says, “especially in a city as expensive as this one.”

Unfortunately, he’ll only enjoy that bigger paycheck for a few more months. In August, his boss is shutting down Z Pizza and putting him and his 11 co-workers out of work.

“Fortunately she keeps us in the loop, she didn't just tell us last minute.”

Ritu Shah Burnham doesn’t want to go out of business, but says she can’t afford the city’s mandated wage hikes.

“I’ve let one person go since April 1, I’ve cut hours since April 1, I’ve taken them myself because I don't pay myself,” she says. “I’ve also raised my prices a little bit, there's no other way to do it.”

Small businesses in the city have up to six more years to phase in the new $15 an hour minimum wage. But Shah Burnham says even though she only has one store with 12 employees, she’s considered part of the Z Pizza franchise -- a large business. So she has to give raises within the next two years.

“I know that I would have stayed here if I had 7 years, just like everyone else, if I had an even playing field,” she says. “The discrimination I’m feeling right now against my small business makes me not want to stay and do anything in Seattle.”

We reached out to 15 Now Seattle, the organization that pushed for the higher minimum wage. Director Jess Spear hadn’t heard about Z Pizza’s decision to close. So she wouldn’t comment specifically on that, only saying: “Restaurants open and close all the time, for various reasons.”

Jeran wonders about all the rallies that were supposed to be about making life better for people like him.

“If that's the truth, I don't think that's very apparent. People like me are finding themselves in a tougher situation than ever.”

Shah Burnham is concerned about where her employees will end up when she does close.

“I absolutely am terrified for them. I have no idea where they're going to find jobs, because if I’m cutting hours, I imagine everyone is across the board.”

We asked Seattle’s mayor and City Council members if they had anything to say about this closure or the other business owners who might be struggling to adapt to this new wage law. But we have not heard back from them yet.


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199 comments

  • ekdikeo

    Poor owner lady, doesn’t understand how business works.

    Also, why shut down in August, if this doesn’t happen till April?

    Willful idiot.

    • Steve

      “Sean

      One store closing out of the entire city? So we will form a conclusion on one data point? Make’s sense.

      Typical flawed logic.

      1. The business owner stated why she decided to close so the conclusion is based on more than “One store closing.”
      2. There’s nothing in the article or anywhere else to indicate that this is the only store closing, that’s just your baseless assumption supported by nothing whatsoever.

      It’s no wonder people like yourself can’t understand the effect of minimum wages increases on the commodity of labor. As your post demonstrates, you have zero logical reasoning ability.

  • B

    I’d be curious to know how her business was doing prior to this? Possibly she made a bad investment in signing into the ZPizza Company, there are a ton of them throughout the US and it looks like she signed a contract to open 3 in Seattle in 2009 and had hoped to have all 3 open by 2012. Clearly that didn’t happen. Pizza is a competitive market. She is unfairly blaming the wage increase on her business failing, when I bet her business was failing long before.

    • Steve

      It’s not doing well enough to take a whopping 36% increase in the cost of labor, and neither are many other small businesses. People like you just don’t get it: Restaurants and many other businesses operate on small profit margins. What you call “already failing” is operating on the normal available margins. On top of that you expect it to be able to compete against other pizza places on a completely different phase in schedule which adds unfair competition to the picture. Unemployment of low skill and no skill workers will triple and people like you will still be grasping everywhere to explain it. Anything to avoid acknowledging the simple fact that every business owner knows: Labor is a commodity and businesses cannot afford to pay more for it than what it is actually worth. Good luck to the people in this business as far as getting other jobs. At $15/hr to make pizzas or wash dishes only the best and the hardest working with the best references will be hired. The rest of the applications will go straight in the round file.

  • mrharris660

    Pizza price is 3 dollars above the Seattle price average for a large according to the National Index. Americans spend 37 billion dollars on pizza a year. About 1 in 8 Americans eats pizza any given day. Consumption is up 41% since 1995. If this chain isn’t making ends meet during this pizza craze and her prices are 3 dollars higher than the Seattle average then there is something else wrong, it’s not the salaries. Second review on Yelp mentions numerous health code violations. “Pizza slices available are so-so.” “Salad is awful. Very plain and not worth the $$” “Waited two hours for a cold pizza. ” These are from the last month alone. Research is your friend. It seems they have a different problem and it’s not wages.

  • alice smith

    For many of us watching, from outside of Seattle, the minimum wage protesters, we couldn’t help but wonder what was wrong with their basic logic skills. It’s not rocket science, in fact, it’s a no brainer, that if a small business is fighting to stay afloat, this minimum wage would likely push them out of business. It’s almost unbelievable to me that any adult would not have the ability to reason out that they may be pushing for the elimination of their own job with their protesting. It will be interesting to see the coming results from the minimum wage push.

    • TheMojoMan

      Very simple ALICE SMITH,,,businesses will raise prices and many will fail,,,,and those workers will be on the Food Stamp roles. Bigger businesses that can stick it out will raise their prices and then those people will want more and then they will want more etc etc NOBODY REALLY WINS. They just “think” they got more. I bought a brand new car once when I was younger for $3300,,,same model,same brand now is $33,000.

      • KeithsSalami

        It is simple, but apparently that simplicity is too complicated for you mojoman. The majority of new businesses fail the first year without any change in the minimum wage, so your claim that raising it is the cause of failure is a fantasy. While there are many reasons that can cause failure the one I see from most people that live in the area and could frequent her Z Pizza is that it’s overpriced for low quality compared to her nearest competitors. Quality is what most customers are looking for in food, cost is secondary, then service, as well as other factors coming in after that, and apparently she lacks in the first two that are most important. On a side note, wages must keep pace with prices or else you get slow economic growth because people can’t buy what they can’t afford.

        • Steve

          What’s a fantasy is the belief that raising wages 36% plus isn’t going to increase unemployment and result in business closures. You are babbling about the large number of business that fail the first year and now want to add a massive increase in labor cost on top of the factors that already cause failure, ram your head in the sand and pretend it will have no effect. Your last silly claim would be true if minimum wage employees were not a small minority of all wage earners and if a substantial portion of their wages were actually spent patronizing other businesses paying minimum wage. Unfortunately for you neither is true so the relationship you are talking about has little relevance to an increase in the minimum wage.

          • Cherie Capri

            Labor has not increased 36%. Even the large business time frame. Annual inflation rates are 3.5%, the raise is about 12% a year for 3 years. That is an annual increase of about 9.5%. Seattle had a 9.00 an hour minimum wage before this. First, I would ask the question if this lady had the business since 2009, did she raise prices by 3.5% each year? She should have as others do and that is how the inflation factor is made. Second, why are her employees still making minimum wage and she has not adjusted for inflation? They should have been given raises all along, or maybe she didn’t have a good business or isn’t a good business woman. If 15.00 an hour is such a failure, why only one example? And the lowest margin area also. Restaurants fail every day in every major city. This is nothing new, just a new thing to blame. Why are you not suggesting that she and her employees get a better education and then they wouldn’t have to work minimum wage jobs? That is the usual go to reply. You are on their side now that these are the only jobs or path available?

    • Steve

      Minimum wage employees don’t have a lot of basic logic skills or they would develop skills to make more than minimum wage. With this increase they are going to need them just to keep a job because only people with at least some skills are going to get to have one a $15/hr. Better skilled workers are going to flock into the city for the artificially increased higher wages and the lower skilled workers that can’t compete are going to find themselves living under a bridge.

  • Gayle

    If she is not charging her customers enough to cover her costs, she doesn’t know how to run a business in the first place. If the parent corporation dictates her menu and prices, she can always reopen as a real independent business. Since people are certainly willing to pay a fair price for a good product, her products apparently need improvement, either way. This is how competition works. If there are too many pkayers in the field or if their products are better than yours, your biz will fail. And a biz that can only survive by fobbing their wage costs off onto taxpayers deserves to die. Biz owners have no right to make taxpayers foot the bill for underpaying their employees.

    • Steve

      “If she is not charging her customers enough to cover her costs, she doesn’t know how to run a business in the first place. ”

      You are an ignorant one.

      1. There is no guarantee under the best of circumstances that an increased operating cost, especially an arbitrary completely artificial one, can be 100% covered by price increases.

      2. If you could actually read you would see that her business is on a faster phase in schedule and would have to compete against other businesses on a slower phase in schedule meaning that competition alone prevents covering the increased cost with price increases.

      You think you know it all but you know next to nothing and couldn’t get through a single sentence before you proved it.

      “nd a biz that can only survive by fobbing their wage costs off onto taxpayers deserves to die. Biz owners have no right to make taxpayers foot the bill for underpaying their employees.”

      They aren’t “underpaying” anyone. They are OVERPAYING them the existing $11/hr min wage which is far more than the fair market value of low to no skill jobs in the first place. Contrary to what you think, businesses exist to make a profit not to act as some sort of secondary welfare system for people to lazy, stupid, or both to develop skills which are actually in demand.

      • Koch Industries for Pres, 2016!

        You’re correct regarding the different schedules of incremental raise between ‘big biz’ and ‘small biz’, but “OVERPAYING them the existing $11/hr min wage which is far more than the fair market value of low to no skill jobs in the first place” is your error which makes everything other of your “conclusions” incorrect.

  • coffeeandfog

    A Z Pizza spokesperson said this on their Facebook yesterday:

    “The Seattle store closure was the decision of the local store owner and we are disappointed in the closing. We did offer suggestions to help the store stay open but ultimately the decision is not ours to make.”

    The owner was already struggling to keep her business afloat, and it seems that she didn’t use any of Z Pizza’s suggestions to keep its store running. I’m investigating into that.

    The way this report frames the story makes it seem like the wage law is what hurt their business, but it is definitely more complicated than that.

    Ashley Dobson: Hi. In case you’re confused as to why I’m typing this, you are clearly taking a complicated issue concerning the closing of a business and reconstructing it into a story people are more familiar with (“big gov’ment is hurtin’ small businesses!”. This is not how you report the news. Rather than offer us an exposition, you have given us a narration and primed us with a misleading title. Jeran didn’t even say in the interview that he “loved the new wage law”. He doesn’t even seem to be in any kind of shock either.

    Also, why didn’t you investigate into any other possible issues the store was having? Why didn’t you make any comparisons to any of the countless other pizza places in Seattle? Did you know that Pagliacci’s on Broadway in downtown Seattle is hiring delivery drivers…at $18 an hour with benefits? Where is your investigation?

    • Steve

      You can write 10 paragraphs trying to minimize it. An eventual 36% labor cost increase, relative to the already excessively high $11/hr, is not helping any business with minimum wage employees stay in business. Some of them will close. Some of them will downsize their payrolls and simply demand that the employees who get the increased wages do more, a lot more. They will be able to demand it, because with the increase in unemployment coupled with the higher wages they are going to be flooded with applications and will be able to pick and choose who to hire and simply ignore the rest. All of them that stay open will also pass their remaining costs along to the consumers so consumers will subsidize a wage for a small percentage of the population that is simply more than they are worth. This is all really very simple and quite easy to understand. It’s amazing how many people can’t grasp it.

  • Ruth Replogle

    New businesses fail frequently, mostly due to under capitalization There are many costs of doing business that the new business owner has to consider and be prepared to pay even before the first dollar is earned. Obviously, this franchisee made poor decisions, and most likely would have closed anyway. The living wage she had to pay her employees might have hastened the process a few months. If a business can’t afford to treat its employees right, it needs to close. I, for one, am tired of paying the external costs of businesses that don’t pay their employees enough to keep them off of public assistance.

    • Steve

      “New businesses fail frequently, mostly due to under capitalization There are many costs of doing business that the new business owner has to consider and be prepared to pay even before the first dollar is earned. ”

      LMAO And a 36% increase in labor costs is going to be super helpful in regard to these things huh?

      That 36% is relative to the already high $11/hr minimum wage.

    • Steve

      My guess is you’ve never actually made a payroll in your life. Businesses don’t exist to pay a “living wage” whatever that is. They exist to make a profit for the people who invest in them not as some sort of secondary welfare system to pay people vastly more than their labor is worth as you seem to think. In any event the “living wage” earned by many of these low to no skill employees is going to be zero soon as businesses cut payroll, close altogether and choose to hire only the best and hardest working. They will be buried in applications too. At $10 an hour for a clerical job requiring moderate word, excel and general computer proficiency, the least number of applications I have ever gotten for a single Sunday run is over 200. At $15/hr to wash dishes or make pizzas they will be slammed with constant applications and will be hiring only the best and kicking the rest hard to the curb.

      • Koch Industries for Pres, 2016!

        guess is you’ve never actually made a payroll in your life
        Our sense is that you haven’t “made a payroll in your life”. But you do often enjoy “guessing” (attempting to insulting people while being incorrect).

  • TheMojoMan

    We had a feet of Ice Cream vending trucks for 35 years. We did very well until the fuel cost and the economy put us outa business. (Our customer’s parents are the ones out of work) We had to “slowly sell out” starting in the Spring of 2011. Gas went from $1.84 a gal to over $3.50 a gallon after Obama and this administration went in. You can only sell say a Nuddy Buddy or Sno-Cone for so much. (We sold 44 different items) Sponge Bob being the all time favorite. Sales went DOWN DOWN DOWN. You can only charge so much. We sold items from $1.00 (popcicles) up to $3.00. It became cheaper for the parents to buy at Walmart or Sams. NOW I will say this ONE MAN with his own ONE TRUCK can do OK but not really good.

    • KeithsSalami

      Ah, now I understand why the other comment by you showed you didn’t understand simple concepts, it’s because you’re actually just a liar. Your claim that Obama is the reason you had to sell your fleet because gas rose to $3.50/gal from the $1.84/gal it was when he took office is totally false. Seven months before he took office the average was $4.16/gal and had been over $3,50/gal for at least a year prior to the start of the Great Recession caused the plunge in gas prices. During the whole of Obama’s time in office gas prices have never risen as high as they were under the previous administration, so please take responsibility for your actions and stop trying to blame the president.

    • Jim B

      The taxes on the businesses are going up too. Inslee’s forcing the special session to pass his cap and trade carbon tax before he will sign any other agreement.

  • Bunny

    I can see that none of you have tried to run a business or you would get it immediately. There is no real space in small business for expansive raises for the employees. My husband and I cannot even afford employees. This means that prices are going to go up, up, up and that employers are going to lay off to skeleton crews, so you can forget about customer service. It also means that if I as a business owner have to pay 15.00 an hour for an employee, plus all the additional costs associated with that, I am only going to hire the most qualified candidates for any position that I hire for. That means that those without education and skills training are not going to be able to get hired. Goodbye summer jobs for teenagers and goodbye jobs for the unskilled, unschooled. If employers have to pay these wages, they are going to hire college graduates only.

    • SeattlePerson8374

      This owner never gave her employees raises anyway. In fact, she hired people telling them upfront that she will only pay them minimum wage and that it would be supplemented by the tips from her customers.

      Here’s where it gets worse, though: she never gave raises when she promoted employees either. An associate would “move up” to a shift lead with more responsibilities, but the owner didn’t actually pay them any more than minimum wage. It’s abusive, and as a business owner, you have to use positive reinforcement on your employees with raises or they begin to lose morale for their job.

      You’re also terribly misinformed about the hiring process in restaurants–a college education means nothing if you have no experience in the kitchen, as a line cook, etc. They’ll still hire based on the experience required for the job.

      Also, who cares about summer jobs for teenagers when we have unemployed adults looking for work? Boo hoo, they don’t get to save up for a new Xbox because an actual adult with actual responsibilities has actual bills to pay. Combined with the restrictions from child labor laws, most businesses aren’t really that crazy about hiring minors in the first place.

      Stop spreading fear when there’s no reason for it, thanks.

      • Steve

        He’s spreading reality. You are spreading fantasy. Unemployment will absolutely positively rise as a result of this increase. You also clearly don’t know much about profit margins in the pizza business. The minimum wage there is already at $11/hr. There is no room for raises above that for most low to no skill employees. At $15/hr only the best and hardest working will even have jobs after a few years. Higher unemployment plus increased interest in the jobs from people not previously working or looking will drive the employees with no skills in to pretty much permanent unemployment unless they develop some marketable skills. If you think any employer in their right mind is going to pay some mediocre employee $15/hr to wash dishes, you’re dreaming. The mediocre employee better get used to being permanently jobless. The defacto effect of this is going to be near 100% unemployment for no skill workers.

      • Steve

        Sorry, she not he and she is a actually a business owner. I don’t see any indication you are. Lots of people who have never run a business in their life seem to think they know all about it when they really know nothing.

        • Sad

          So the fact other pizza places down the street higher delivery drivers, an occupation that’s arguably unskilled, at $18/hr is just something you’re going to ignore here or what? Also the majority of your arguments rest on the assumptions that the people you’re replying to don’t know enough about business to state their opinion on this lame pizza place closing. In your mind, everyone who does know how to run a business would flat out agree with you? You’re either delusional or suffering from Aspergers if that’s how your mind processes the logic of debate.

  • Mike Morales

    I am all for people making a proper living if they lace up their boots every day and work. The way Seattle handled this will hurt smaller businesses in addition to being inflationary. The only way I can counter this on my next Seattle visit is to pack my own food as much as possible and augment meals by staying at Residence Inn or Extended Stay and cooking my own meals.
    To the City Council of Seattle; tourists come and go all the time, but sometimes they quit coming.

  • Mort

    Don’t worry. All of you as tax payers will pick up the tab on this one. It really doesn’t matter what the reason for shutting down is. Food stamps are being printed by the bale on your nickel to cover this Quagmire.

  • mrtapeguy

    It’s funny that so many of the comment immediately assume this is the owner’s fault or that she’s lying.

    Right wingers are often accused of ignoring science – and in the case of religious ones, that is sometimes the case. The very same liberals who accuse them of this seem to have an aversion to math.

    Every time I have drawn out a scenario based on an actual real business model that demonstrates what a draconian wage increase will due to a small business, they simply avoid the argument, acknowledge that it might hurt someone (and if it’s the mean ol’ owner, who cares) but are certain it will work out in the end, or say that if you can’t pay a living wage you shouldn’t be in business.

    I have drawn out the actual numbers many times and yet to get a salient answer. The owners I know in the franchise I refer to, some of whom are Democrats, basically apologize for that when discussing this because they KNOW that if the minimum wage takes a huge jump they will HAVE to reduce hours – period – or they will not be able to earn a living themselves. End of story.

    The people advocating this have their heads planted firmly in the sand, so i say let them have their way and see what happens. It is the only way they will learn.

    • Steve

      The average person supporting these minimum wage hikes has never run a business and couldn’t tell you the actual cost of an employee at a given wage in a given state at a give state employment security tax rate if you put a gun to their head. They wouldn’t even know how to begin to figure it. Hell they probably think the wages paid to the employee are the total cost to the business. The ones that have run businesses run one that does not now and never has hired a minimum wage employee and never will. They operate on completely different payroll scales and profit margins and can’t relate to the narrow margins many businesses with min wage employees operate on.

  • RTJ

    To be able to make any conclusions from this story we need to know the income/profit profile for this store before the wage increase and after. Otherwise it’s totally meaningless. Can your reporters supply? Or is it enough to just take is as a confirmation of a priori certainties?

  • Andy Hrehorovich

    A general increase in disposable income will tend to keep businesses open, open new business and create a positive multiplier effect.

    • Steve

      Your is one of the more absurd arguments. You are not adding any more money to the economy local or otherwise by increasing the minimum wage. You are just redistributing it, at least temporarily, from the deep end of the pool to the shallow end. Sorry to tell you but the water level is not going to rise. To make it even worse there is an added payroll tax burden on the extra wages so you are effectively taking money away from consumers whether the consumer be a business owner or the employee.

  • Handsome Jack

    I’ve actually noticed an increase in Bulgarian/Middle Eastern workers since the raise. Especially small franchises owned by Middle Eastern /Muslim owners letting go of white workers and hiring more of their own. The parlor I live near has gone from irritable to super-annoying with the influx of Bulgarian Muslims (I fb’d their page, most of their recent 5 star ratings were shills by their own new workers, who had ‘full speed ahead’ islamic images on their pages)

  • saminia

    These politicians are complete morons. And cheap besides.
    If they think they can raise wages simply by fiat, why are they so cheap? Why settle for a paltry $11/hr, when they could make everyone rich by demanding businesses pay their employees $50/hr?
    Many more businesses in Seattle will close their doors as a result of this ignorant policy. And those who need the jobs the most will be the ones who suffer the consequences of blind actions by ignorant politicians.

    • James Blair

      Hey! I have an idea! Let’s make EVERYTHING 10 times what it is right now! Oh wait! That will only make those behind in their bills with no income 10 times more in debt. Hmmm

      I know! Let’s make wages and everything worth only 10% what it is now! Won’t that fix everything? It’ll take away 90% of the Ultra Rich’s money and cut the national debt 90% too! It’ll make 90% of everyone’s debt disappear too!

      *blink* Blink*

      (if you think I’m serious, I have a bridge to sell you)

  • Peggy Hazlett Goldberg

    When there are no jobs, or few hours the wage hike helps no one. May sound good on paper but in reality, jobs are a choice, if you cant live on what you make then get a different job. If your skills are lacking or non existant, then get some schooling and change that. Forcing someone to pay higher wages when ya cant make increases in product to match those rises, well close down. Move to a cheaper economy.

  • Norman

    I believe the City or state thinks that by raising the minimum wage they will get more tax money from low income people, but that is never said by politicians. it is always people can’t live on this low wage so we need to force employers to give them raises. tell the people what they want to hear.

    • Alice Smith

      Not when one of the repercussions of increased wages requires owners to let people go and they end up on unemployment.