Restaurant Operator Blames Bankruptcy On Wage Hike

Restaurant Operator Blames Wages For Bankruptcy

Restaurant Unlimited Inc., an eatery operator with 35 restaurants, has filed for bankruptcy and is blaming the misfortune on a recent minimum wage hike in court filings, according to a report by Bloomberg.

The company operates restaurants ranging from high-level fine dining to more “polished casual” places, including notable names like Kincaid’s, Stanford’s and Henry’s Tavern. The company filed for bankruptcy protection on Sunday (July 7) in Delaware.

A few factors affected the filing, including the lackluster opening of two new restaurants and a growing trend of people moving away from casual dining. However, the biggest culprit, the company said, was a rise in the minimum wage.

“Over the past three years, the company’s profitability has been significantly impacted by progressive wage laws along the Pacific coast that have increased the minimum wage,” said Chief Restructuring Officer David Bagley. “As a large employer in the Seattle metro market, for instance, the company was one of the first in the market to be forced to institute wage hikes.”

Restaurant Unlimited’s geographic area is around California, Oregon and Washington. “We believe this path offers the greatest potential for stability and future growth,” the company said.

There have been some offers to buy the company as well, and a sale could be completed as soon as Sept. 30.

The wage increases in Portland, San Francisco and Seattle carried wage expenses to $10.6 million through the fiscal end of the year on revenue of $176 million, which is down 1 percent from the previous year.

The company has around 1,885 part-timers and 168 full timers. Approximately 50 workers are on salary at its Seattle headquarters.

The company previously tried to both sell itself and also refinance its debt load, but failed. It has worked out a $10 million debtor-in-possession loan to help it continue operations while the bankruptcy process works its way through the courts. The firm has $150,000 in cash on hand and has not paid debts since January.