Editorial: Why Chicago has a restaurant crisis

Chicago Tribune

2 days ago

The hit TV show 'The Bear' chronicles an independent restaurant's existential struggles and celebrates Chicagoans' determination to survive. But you need only traverse one of the city's real-life arteries, such as North Broadway through Edgewater or along 26th Street in Little Village, to see the the state of one of Chicago's most celebrated and artful industries: shuttered restaurants pockmark almost every block.
Chicago's storied restaurant business is mired in crisis.
If you doubt our word that this is a dire emergency, we suggest you swivel your head from road or sidewalk and look for yourselves.
Fine dining. Trattorias. Taquerias. Vietnamese cuisine. Italian beef. It seems not to matter. Chicago has never been a locus of chain restaurants, unlike many cities in the south. The fame of the city's restaurants has sprouted from the creativity of independent operators, some craving (and winning) James Beard Awards and international acclaim, and others merely wanting to serve and nourish their communities.
We hardly need to tell you that many locally owned restaurants are the foci of their neighborhoods, which accounts for why there was such a howl of anguish in recent days when the cozy Gale Street Inn on Milwaukee Avenue in Jefferson Park announced its closure. Its famously genial operator, George Karzas, had owned and run the restaurant since 1994. Among his many other good works, he supported his local Jefferson Park theater, The Gift, storefront theaters and storefront restaurants sharing much of the same homegrown DNA in this city. At the Gale Street Inn, you always knew you were in Chicago.
The problem? The current headwinds are many in the restaurant business, including the well-documented rise in food costs. But top of mind of those in the hospitality industry in Chicago is the high cost of labor and the city's shortsighted decision to get rid of the so-called tipped minimum wage following a campaign by an out-of-state activist group, One Fair Wage, which had worked its agenda on Mayor Brandon Johnson and enough of the aldermen in the City Council. Karzas' decision to close the Gale Street Inn comes as the tipped minimum wage was set to increase again Tuesday, rising from $11.02 to $12.62 an hour as part of a phased-in approach that has been a progressive nightmare for restaurants.
One Fair Wage is led by Saru Jayaraman, a Yale University-educated lawyer, activist and academic who runs the Food Labor Research Center at the University of California at Berkeley. Back in Chicago, Christina Gonzalez from Taqueria Los Comales told us this past week that she worries not about political campaigns, but the price of her burritos at a family business with a 50-year history.
'I can't charge $24 for a burrito,' she told us. 'My customers won't come.'
Gonzalez thus defined the Catch-22.
While fine-dining establishments that attract the wealthiest customers can raise (and have raised) their menu prices to eye-popping levels, restaurants that appeal to ordinary Chicagoans know that they have already hit the ceiling of what their customers can afford to pay. Their only option often is to close.
'You raise prices, you lose customers,' Sam Toia, head of the Illinois Restaurant Association told us. And that is exactly what has been happening, Gonzalez said. Counter service is looking to her like the only way to go, which means laying off servers and defeating what the rise in the tipped minimum wage sought to achieve.
Anyone who attended the National Restaurant Show in Chicago last month was smacked in the face at booth after booth by a single agenda wrought from desperation: how to harness technology to find ways to use fewer human workers. But while fast-food joints can and will have a robot flipping burgers, independent, table-service restaurants are all about human interaction.
We think there is a preponderance of evidence that the end of the tipped minimum wage, which Johnson has consistently defended using racially charged language, is a major cause of the current crisis. Even some servers agree, because their hours are being cut and they're being cross-trained to juggle multiple roles as owners try to cut costs. They can see that their workplaces are on the cusp of going out of business. 'None of us want this,' said Jose Garcia, a veteran server at The Dearborn in Chicago's Loop.
In Massachusetts, hardly a conservative state, a ballot initiative that would have eliminated the tipped minimum wage was defeated by voters last fall by a margin of roughly 2-to-1 after the state's Democratic governor, Maura Healey, came out against the proposal, saying she was convinced it would lead to the closing of restaurants.
The arguments for the drastic rise in labor costs hardly make sense because it forms only a relatively small portion of servers' actual income.
Hard as it may be for some in City Council to understand, the health of their restaurants matters more to most servers than the size of their base paycheck, because the bulk of their income comes from tips. Most servers of our acquaintance have no interest in being paid a flat hourly wage that discourages tipping; they know that will hurt their earnings. What they most want is to be working in a dynamic restaurant where they can offer excellent service so that the tips flow.
It long has been state law that in the event tipped employees such as servers and bartenders do not at least make the prevailing minimum wage, their employers must make up the difference. Few need to do so but still, most do. And, even in the case of the few bad actors, fairness demands that the law be more strictly enforced, rather than forcing all restaurants to increase their wage bills. Toia told us his group would support the prosecution of those who do not do right by their workers.
It's axiomatic in the restaurant business that servers make better money than those in the so-called back of the house. Korina Sanchez, vice president and general counsel at Third Coast Hospitality, told us that information from point-of-sale systems tells her that her servers typically make $40 an hour (good, this is hard work). Elsewhere, Toia said, it can be far more. Restaurants generally now know what their servers are making because cash tips have become rare.
The change in the law is causing yet harsher inequity with non-tipped employees.
Before these changes, servers were making significantly more than line cooks and dishwashers, who are more likely to be immigrants shouldering the support of a family. If Congress passes Donald Trump's tax-and-spending bill, which contains new tax breaks for tipped workers, that will tip the balance (no pun intended) even further in servers' favor. Sanchez said that one of the saddest aspects of the crisis is that it is preventing her from doing more for her kitchen workers.
So what to do? Simply put, City Council should stop this craziness before we lose any more restaurants.
Muriel Bowser, mayor of Washington, D.C., proposed last month to repeal Initiative 82 — the three-year-old law that eliminates D.C.'s tipped minimum wage. She knows it did not work. 'We think our restaurants are facing a perfect storm with increased operational and supply costs, higher rent, and unique labor challenges,' she said, arguing that it was part of her job to 'ensure our restaurants can compete, survive, grow and employ D.C. residents,' Axios reported. Amen.
Meanwhile in Chicago, Mayor Johnson has made no such statements, insisting that the city will push ahead with its increases. His mouthpieces on City Council have been arguing that the sector is doing just great.
This is nonsense. Only restaurants funded by chains and private equity groups are growing in Chicago. For independents, it's an existential crisis.
At a bare minimum, City Council should stop the increase in the tipped minimum wage and leave it at its current rate, $11.02 an hour. Most likely, it would need to take this action with a two-thirds majority, so as to prevent a veto, given that the pleas from Chicago restaurants so far have fallen on unreceptive mayoral ears. There is an ordinance waiting in committee, as proposed by Ald. Bennett Lawson, 44th, that would repeal this entire misguided mishegoss. Ideally, City Council would listen to fellow Democratic leaders in Washington and Boston and admit this did not work.
When pressed by us, Toia said that the Illinois Restaurant Association, which he described as 'progressive and pragmatic,' could live with a pause rather than a repeal.
It is the least City Council should do to save Chicago's restaurants.