Multi-unit operator pulls plug on ‘living wage’ surcharge

Multi-unit operator pulls plug on ‘living wage’ surcharge

Restaurants Unlimited had added 1% line to checks in Portland, Ore.

Restaurants Unlimited CEO Jim Eschweiler said the company decided to discontinue its 1 percent '"living-wage surchage" due to customer feedback. Photo: RUI

Restaurants Unlimited Inc. this week discontinued a 1 percent “living wage” surcharge it had added to checks at restaurants in Portland, Ore.

Seattle, Wash.-based Restaurants Unlimited, which has 45 casual-dining restaurants in 10 states under such names as Henry’s Tavern, Kincaid’s, Palomino and Stanford’s, had added the one percent surcharge with the notation “LWageSC” on checks.

On July 1, Oregon took the first tier of a minimum wage increase, raising it to $9.75 an hour from $9.25 in mixed urban-rural areas like Portland. The federal minimum wage is $7.25 an hour.

The Restaurants Unlimited units discontinued its short-lived surcharge this week.

"We truly appreciate all of the feedback from our loyal guests regarding the one percent living wage surcharge policy," said Jim Eschweiler, CEO at Restaurants Unlimited, in statement to The Oregonian.​

"After further consideration we have decided to discontinue this policy,” Eschweiler said.

The company, which had not replied to Nation’s Restaurant News emailed questions by press time, said in its statement that the surcharge policy was launched to “support employees and their earnings while addressing rising labor costs.”

Oregon’s minimum wage increase to $9.75 an hour is the first of seven annual increases that will raise the minimum wage by summer 2022 to $12.50 in nonurban areas, $13.50 in mixed areas and $14.75 in Portland.

Over the past year, states from California to New York also have enacted minimum wage increases.

One worker at a Restaurants Unlimited eatery in Portland told the local KPTV station that explaining the surcharge to customers put the staff in an uncomfortable position.

“We’re the frontlines,” the unidentified worker said in a report. “We’re having to talk to the customers and explain what the charge is, even if we don’t agree with it. Yeah, I’d like them to come down here and talk to the customers themselves.”

Restaurants Unlimited is not the first multi-unit restaurant group to pull back from policies to deal with wage pressures.

Joe’s Crab Shack, the division of Houston-based Ignite Restaurant Group, earlier this year cut back its no-tipping program to just four restaurants from 18 after encountering customer and worker disapproval of a 10-month test.

Surcharges have also become an issue at independent restaurants as well.

A Los Angeles Superior Court judge this month cleared the way for a price-fixing lawsuit to proceed in a case involving a group of restaurants that instituted a three-percent surcharge to cover employee healthcare costs.

The antitrust case began last year after a group of restaurateurs, including some of the city’s most popular restaurants, were charged with colluding on price in establishing a three-percent surcharge to address the costs of providing healthcare.

The restaurants cited in the case include Animal, AOC, The Hungry Cat, Lucques, Melisse, Rustic Canyon, Son of a Gun and Trois Mec.

Restaurants Unlimited is owned by private-equity firm Sun Capital Partners Inc.

Contact Ron Ruggless at [email protected]
Follow him on Twitter: @RonRuggless

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