It’s funny how such a well-intentioned gesture can turn into something not intended.  Here’s how my current situation unfolded….  Because I’ve owned and operated restaurants in Washington state, specifically the greater Seattle area for more than two decades, I’m often approached by the media for my views on anything from ‘Farmed Salmon’ (which I’m totally against as you know) to ‘Tipped Restaurant Wages’ since we have more than 232 employees that fit the state’s description of ‘Tipped Restaurant Wages’.

So Wednesday I’m approached by KING TV and they want to know where I stand on the issue that pertains to thousands of businesses just likes Duke’s.  Like any business, we watch the bottom line while we deliver an amazing dining experience, second to none and always fun to visit.  That’s our goal, and that’s why Duke’s has the best waiters and waitresses in the country bar none.

Five thirty PM comes along, the story airs, and while it covered what is scheduled for public hearing in the House Committee on Labor & Workforce Development on Tuesday, January 31, 2012 it left out some key background information…the information my opinion was formed from.

This was a good news story because it highlighted something vital to thousands of restaurants,  But what I’ve found out is that people are confusing Minimum Wage with the Minimum Wage for Tipped Restaurant Employees.  It is understandable. Let me explain…

Ever since the Minimum Wage Act was passed in 1998, the minimum has risen from $5.15 an hour to the current amount of $9.04 an hour. Tipped employees at Duke’s make anywhere from $21.00 to $40.00 an hour, including the highest minimum wage in the United States.  Some make as much as $50 per hour.  They are in a different category than True Minimum Wage employees.  I don’t believe the legislature intended to augment the wages of people who already made three or four times the minimum wage in tips.  I don’t believe that the legislators realized or understood that those jobs existed.  Had they considered it, it is my opinion that the tipped employees in this state would not be receiving increases in the minimum wage.

The Minimum Wage Act was intended for entry level people who were having a hard time making ends meet with truly minimal wages.  With every increase, Duke’s has been forced to raise prices which in turn actually increases tips for our tipped employees. We have also reduced our income, cut other expenses, and reduced benefits for management and reduced staff.  We have also held off on increased wages for our kitchen team members who make one-third the amount as our tipped employees.  We don’t have much else we can cut in order to fund the ever increasing minimum wage.

The annual escalation is now threatening the survival of our restaurants.  Profit margins in restaurants are surprisingly small.  Believe me, we are not alone.  Most, if not all, restaurants in this state support some type of adjustment.  There are 43 states that have a tip credit, allowing for a different minimum wage for employees who receive a gratuity.  86% of our country recognizes that tipped employees are in a different category than True Minimum Wage employees. The bill being introduced in the Washington State Legislature calls for a tip credit up to $1.79 an hour just for tipped employees, not True Minimum Wage employees.  We don’t know what that adjustment should be.  It is not our bill. Although they might want to consider including a line to stop future increases.

We just know that something has to be done or we will be out of business someday and that is very concerning to me and my family. We have worked hard for 40 years to build a respected brand and take care of our employees.  We value our team members and recognize they work hard.  We just ask that we be allowed to remain healthy enough to stay open for business.  We also ask that everyone keep an open mind and do some research so they understand that every restaurant is in the same situation.  This is not about Duke’s, it’s about all restaurants in the State of Washington.  And we all need help.  The Minimum Wage Act wasn’t intended to help people making the kind of money they make in restaurants like ours.  I have chosen to speak out and I am taking some heat for it but I have the support of the restaurants in this state.  We are all trying to stay in business and we are of one mind on that.  This isn’t about greed.  This is about survival.

21 Comments

  1. After reading all the comments on Facebook yesterday on post about this topic, I’m glad that you have this space to clarify what led you to this discussion. I have always been impressed by your wait staff and your food. I think the restaurant business must be one of the hardest professions to be in. I really appreciate what you have to say. Thank you.

  2. Restaurant owners often give an incomplete description of life as a server.
    I waited tables at two restaurants over a period of about 6 years. At one of my jobs, I had a constantly-changing schedule that was announced as late as Friday (and started Sunday). The owner only had to pay minimum wage, so he sometimes over-staffed (which means I made less in tips). I had no benefits or job security. Yes, the hourly wage was good – but the hours and the tips were inconsistent.

    I am a free-market capitalist libertarian-leaning Republican, so I believe that any minimum wage law is wrong. But restaurant owners DO NOT have the moral high ground. They created a business model where they advertise artificially low prices, pay minimum wage, and guilt their customers into making up the difference.

    Duke, I support your right to say and do whatever you like. But you get no sympathy from me on this issue. You are the cause of your own problem.

    • Kyle
      Thanks for your reply. All of the things you discussed about your previous employment are not in operation at Duke’s. Come and ask our servers. They enjoy their jobs and we treat them well. See my latest posting on this subject.
      Duke

  3. Articulated very well! Most people do not realize the economics of a restaurant.

    • Good to hear from other restaurant people. Thank you.

  4. Just because all restaurant owners support your stance DOES NOT make you right. It just means all of you want to make more money at the detriment of your employees. It means you are the 1% — or rather — you hope to ONE DAY be the 1%.

    Your comment that your employees make $21.00 an hour at the lowest is absolutely wrong. I’ve been in your restaurant as the only person with four people working (not including the manager or kitchen staff) and I sure as HELL did not tip $84.00 every hour I was alone. Sure, some of your employees make great money; MOST OF THEM do not. What about them?

    When you include cost of living in Washington state and having to pay for health and dental insurance out of pocket, that $21.00 an hour shrinks down below minimum wage. That’s why Washington State has a high minimum wage.

    Let me share a bit of management wisdom. If you want to support something like this, tell your employees BEFORE you do it. Explain to them that Dukes is having a hard time making ends meet, show the numbers to explain that, get their consent, THEN travel to Olympia with their blessing. But the way you went about this was absolutely wrong and I hope you own up to that.

    • Tom,

      You have the right to your opinions and I respect that. You have certainly been successful with all your new restaurants and I congratulate you on your success. I know it is hard earned. Not to be argumentative but I did want to mention that I double checked with our in-house CPA and she verified the average hourly rates of $21-$40 per hour. My further thinking on this issue is that the legislation put in place in 1998 was flawed and is now catching up with us all. It was never intended to compensate people who made substantially more than minimum wage. It was just a mistake. I think the legislators know that but they just can’t figure out a way to politically correct it. They’re stuck trying to keep from irritating the different interests. Like I said before, it is not my bill. Had I been able to write the law in 1998, I would have done something to keep the minimum wage from going out of control. I know that makes sense to everyone. It’s just a reasonable thing to do. Servers wouldn’t have any issue with that either. I would also have added a tax credit for restaurants for every employee hired. This would have given incentive to hire more, open more restaurants and increase employment in this state.

      Anyway, thanks for listening. We should probably figure out a way to have some fun in a friendly cooking contest instead of talking on a blog. We could have the Tom Douglas Challenge with Duke’s offering a recipe for some Wild & Sustainable Seafood item to taste against your version. I’m sure we could come up with something fun and interesting. Let me know what you think!

      Duke

  5. In my restaurant experience, the wait staff has had to tip out the kitchen staff. Is that not true at Duke’s?

    • Actually, it is not true at Duke’s. It might happen some day but currently no. See my latest posting.

  6. One thing that is clear to me is that your employees are wonderful (as well as the food, of course) and they truly like working for Duke’s. That speaks volumes. Thank you for weighing in on the subject.

  7. TV melts minds Duke. Sorry the uproar happened, but your logic here is pure. Heading to Alki tonight, and I’ll tip big because they’re worth it!

    • No problem Lyle, and thanks for your time in reviewing this. I wasn’t expecting the feedback I got, but I welcome the opportunity to tell the whole story.

  8. Duke, what a great explanation. Thank you for taking the time to explain. It makes all the sense in the world. I hope people can open their minds.

  9. Duke,

    You may not remember me, but we have met, at least twice. I know, and have spent some time around your son and one of your regional managers. I have 6-8 friends and previous co-workers who work(ed) for Duke’s. I have helped with the beer garden during Freedom Fair, even though I didn’t work for Duke’s. I believe you to be a reputable businessman. You may not be the author of HB2497, but you are (and have been) a supporter of the idea for some time.

    I also believe that it’s the restaurant’s responsibility to manage their business, without taking away from those they rely on to produce results day-in and day-out. As taxpayers, we have all had to bail out Wall Street and the auto industry. Why now, must tipped workers take a pay cut to futher someone else’s bottom line?

    Several times now you have thrown out that number of $21-40 per hour. That’s a very wide distribution; almost a $20 difference. Your accountants couldn’t get a more exact number?

    Also, you never mention how many hours your employees are receiving. If they’re only working 4 hours a day, their income is not as impressive as you make it out to be. $40/hr on an 8 hour day is $320, but $21/hr on a 4 hour day is only $84! Quite a difference, no?

    I work approximately 25 hours a week. If the maximum reduction is made to my pay, I will lose about $200 a month in income. Where do I make a $200 cut in my budget? Food? Risk going without car insurance? Cancel dental insurance?

    When you make a $40,000 donation to SeaFair in the middle of a recession, and that money could have paid for a couple of part-time employees for a year, I don’t have much sympathy for your situation. You also opened two land-locked locations, less than 7 miles apart. One or the other I could understand, but Tukwila and Kent? Really? All I’m saying is maybe things could have been handled differently in the past. Smart decisions make for a successful business.

    Taking away from your employees, your Duke’s Family, should be the absolute LAST AND FINAL option you have. Have you really exhausted every possible other option(s)?

    • Kent
      Thanks for your reply. The reason for the wide distribution is seasonal and experience. Our business creates more income for tipped employees in the summer. Some servers are just able to sell more and get more tips. Our experience is that tipped employees get the hours they need from us and/or other restaurants. Some just cannot work more because of school or some other job. The Seafair Donation was offset mostly by a raffle. We had minimal exposure. We were just doing our part as a member of the community. Much appreciated, according to the emails i received. Our two land locked locations are doing quite well, although every restaurant has been affected by the recession to a certain extent. Check out my latest posting.

  10. Duke,
    Your caring ways, as well as your communication & people skills, are what set you apart from so many others. The explanation you provide here makes perfect sense to anyone who is willing to read all that you are saying, including the fact that your company is not going to be one that is reducing the hourly wage of your servers. That point seems to be missed by many who are making negative comments.
    I applaud you for the jobs you provide to so many in the Seattle area. Often people choose these types of positions because it serves them to have the flexibility in their schedules to do other things (i.e. go to school, raise families, etc.). To be able to work in a fun & quality restaurant where the tips are going to be better than average, to have flexibility in your work schedule & to have a management team that does care, as you do, would be a real gift to most employees and it does seem obvious to me, that the majority of your employees would agree.
    Thank you for clarifying your position & I wish you great success in all that you do.

    • Cathy
      Thank you for your comments. I appreciate your thoughtful response.
      Duke

  11. Thanks for stepping into deep waters and articulating the reality of running restaurants in a difficult economy. Not something most would choose to take on via a public blog, especially when you’re warding off sideways rants. I LOVE DUKE’s, and we’re I’m heading over to Duke’s Tacoma tomorrow to support you, your staff and your gorgeous fish. (Well, not so much support the fish as just gobble them up…)

    • Thanks for the kind words. Have fun gobbling up those great tasting fish. Love it!
      Duke

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