RE: DEAR WEHO: Bar owners are *not* milking the minimum wage increase?

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It is amazing that some of our neighborhood bars have managed to turn the increase in minimum wages into an additional profit center. Once wading through the crocodile tears, our Weho bar owners have an opportunity to make even more money. It’s simple math.

As an example, when a popular bar & restaurant (let’s say on Robertson Blvd, just south of Santa Monica) raises their drink prices by another $1.00 (as they all do on holidays and pride weekend), the net windfall to the bar is large.

While I think that having a “politically correct” increase in minimum wage is silly and ill-thought, it is an advantage to a big volume bar business at the expense of the customers, that is until such time as the tipping point creates a decrease in unit sales, otherwise known as customers buying fewer drinks.

The math is as follows: If a bartender at any popular bar in West Hollywood sells about 1000 drinks in an 8-hour shift, which is only 125 drinks per hour (considered to be low on many days/nights in popular bars such as the example above), the bar picks up $1,000 per bartender, per day. The increase in wages amounts to $12.64 per bartender per 8-hour day. Adding in the support bar staff of barbacks and/or cooks of an overly huge working staff of 50 people per day only totals $632 per day. If a popular bar has 10 bartenders, that means there is an increase in revenue of $10,000 per day with an additional expense of only $632. That means that the increase in revenue for a high-volume bar is very significant, regardless of the corporate handwringing.

For small, low-volume businesses, the result is the opposite. It is not possible to sell enough t-shirts, lube, or pizza slices to overcome the increase in wages to this unprecedented level. However, our entertainment/bar partners are taking full advantage of this perceived crisis. It works even more if your bar is for sale and possibly selling for a price based on a multiple of revenue.

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Our council has done a disservice to very small businesses and created a windfall for large volume/revenue businesses in West Hollywood. The losers are low-volume businesses and, more importantly, the West Hollywood resident consumers.

Out-of-town visitors and those living in outlying areas will not be affected in a meaningful way because they are low-volume individual users. Like all tourists, they come and go, and the extra dollar per drink is not as significant.

The result will be that we will lose critical small, low-volume businesses in West Hollywood while the large-volume businesses will whine and cry those crocodile tears.

Lawrence Taylor
West Hollywood

 


 

Dear Mr. Taylor,

Thank you for your letter. I took some time to digest your thoughts and respectfully have to disagree with your math. I reached out to two bartenders and one bar manager to verify your stats and to be honest, you are way off. None of these bartenders said that they serve 1000 drinks on each of their shifts.

The peak hours 2-3 nights per week are not every shift. It is highly unlikely a bartender can take the customer order, mix and pour the drink, serve and collect the payment or give change, 1,000 times a night.

Your understanding of what these rules do to small businesses is correct, but your letter seems to conflate the minimum wage with the other parts of the ordinance provisions. And please don’t forget that bartenders are tipped workers making well above the minimum wage. On the other hand, the bar owners are responsible to pay the tips to the staff, which is a money loser on the charge card. The bar owners do not get to deduct credit card fees, so please add that into your calculations of 1,000 drinks per night at $10 a drink, that is another $300 cost to the bar owner, or even double that.

The ordinance also calls for a month paid vacation and sick leave per employee. No other district, municipality, city, state, or federal law has forced this type of mandate upon any employer.

The bar owners had to weather 3 years of Covid closures but still had to pay rent. It’s unfair to think that the bar owners are riding high when all are struggling. A rising tide lifts all boats, and a lower tide affects all too. But there seem to be many who want to demonize bar owners, or landlords, or developers. Without those investors, there would be no jobs, or housing, or social services that are paid for with an array of property taxes, hotel taxes, billboard taxes, that also provide affordable housing for many. A thriving business community is an essential building blocks for a thriving city.

 

Thanks,
Larry

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Kiss it
Kiss it
10 months ago

These bars have been raising prices for the same drink for the past several years and apple martini is now $22 at the Abby I remember when they were eight dollars, then $12 and then $15 for the same drink! Well the drinks in Palm Springs are $3.50 for the same drink and they are two dollars during happy hour for the same drink and they’re making money to pay their rent ! these Weho bar owners of had it too good for too long… We need the drinks to go back down to six dollars maximum with a one… Read more »

SeeMe
SeeMe
10 months ago
Reply to  Kiss it

While I agree prices are crazy, I’m not sure exactly where and at what hour you are getting a top shelf apple martini in Palm Springs for $3.50. Pinocchio’s and Street Bar have happy hour well drinks that are extremely cheap – and taste it. Yes, far less expensive there, but I believe Chill Bar and Hunter’s charge $12-$16 for top shelf martinis, $8-$12 during happy hour – can’t be certain, but definitely not $2-$3.50. And there are very few places in the U.S. where $6 is the going rate for top shelf liquor…All that said, I am equally disgusted… Read more »

Uron
Uron
10 months ago
Reply to  SeeMe

Abbey uses “well” vodka unless the customer is upsold. Many bars use name brands as the “well” booze but not in WeHo. We know that Larry loves talking about 0.015 percentages and other detail but $13-16 for crap booze is just greedy. Let’s also remember that some of the numbers of drinks poured includes nothing more that opening a beer bottle cap or a white claw tab. How long does that take and what should be the tip on that?

Kiss it
Kiss it
10 months ago
Reply to  Uron

Thank you For your comment! Drinks need to be brought back down to $6.50! And you are right about the white claw that drink that can those drinks should be two dollars at the most and tips since you mentioned tips it should be a dollar a drink not 20% 25% and 30% like they put on the receipts

Kiss it
Kiss it
10 months ago
Reply to  SeeMe

Hello precious baby….I did not say one thing about top shelf in my comment. You’ve been sed it two times in yours. A top shelf drink at the Abbey is $25. I never ordered top shelf drinks and pay the premium because once the mixers are in I’m gonna get buzzed anyways… My apple martinis are always 350 at Stacy‘s and at hunters I don’t know what they charge the other bars but black book is trying to compete with the Abey black book better stay in his lane black book is in Palm Springs on Arenas just like the… Read more »

Blackred
Blackred
10 months ago
Reply to  Kiss it

Gurl……you’re full of it. #1. Stacy’s bar has been closed for years. #2. Palm Springs is not putting parking meters on Arenas Road. #3. You’ve obviously aged out of WEHO a long time ago…but please don’t come to Palm Springs. We have enough tweaked out broke hustlers.

Alan Strasburg
Alan Strasburg
10 months ago

The original author’s math is fundamentally flawed in that it relies on a statistic that an individual bartender makes 125 cocktails per hour consistently throughout an eight-hour shift. While simple observation would refute such a number, a study by the National Restaurant Association suggests that an average bartender is capable of making 36 cocktails per hour. A grotesquely flawed starting premise points to trash math for the rest of the analysis.

Kevin
Kevin
10 months ago

Larry, so if the estimates are overstated by 100%, and the added revenue was just $5000 versus the $634 expense increase, still not bad. As for expenses during Covid, many of the businesses were given PPP loans that mostly have been forgiven and are currently getting the ERC credit. This represents a lot of monies to the business. In addition, they were allowed to expand seating capacity increasing revenue and many still do have that seating.

Larry Block
Admin
10 months ago
Reply to  Kevin

Do yourself a favor, dont count somebody else’s money.

Kevin
Kevin
10 months ago
Reply to  Larry Block

Yikes, that’s one of my major businesses.

Larry Block
Admin
10 months ago
Reply to  Kevin

for non business owners they dont realize the fees, the add ons, the taxes, the costs, employers have to match the 6.2% fica deduction, pay another 6.2% of the wage for unemployment insurance, medical and other. Alarm permits, the county even sends you a bill if you have a scanner, $20 fee. Counting revenue without expenses presents a false narrative, and that bartender, the one or two serving those drinks have to cover the barbacks, the rent, the taxes, the managers, and if there is anything left over the owner is paid last, not first.

Gimmeabreak
Gimmeabreak
10 months ago

California may be the least business friendly state in the nation (note, greeneyedguy, I said may be, and no, I haven’t done a state-by-state analysis), but West Hollywood finishes off what Newsom never even dreamed of. Our city council regards WeHo with contempt and has this passive-aggressive way to destroy us and to feel completely entitled to do it.

Kevin
Kevin
10 months ago
Reply to  Gimmeabreak

California is ranked as the 25th best state to do business in by CNBC. This is a ranking done every year and well respected. Link attached.
https://www.cnbc.com/2023/07/11/americas-top-states-for-business-2023-the-full-rankings.html

Gimmeabreak
Gimmeabreak
10 months ago
Reply to  Kevin

I have started businesses in three states; Michigan, New York, and California, and all within less than twenty years. New York (City) was tougher than Michigan, but California puts up every roadblock and disincentive one can imagine, and much of it with no logic at all. I sold my businesses in the other two states at a decent profit, but California did me in.

Enough!
Enough!
10 months ago

Due to the rising cost of goods and services in West Hollywood – which is a direct result of the increase in the minimum wage to the highest in the country along with the highest sales tax, I have definitely cut down on going out in West Hollywood. I certainly don’t dine out here, it’s actually cheaper to dine in Beverly Hills now. I also do more shopping online with the prices are much less expensive. A bottle of conditioner and Pavilions I found to be six dollars more per bottle then the same bottle on Amazon! So build all… Read more »

Failed City
Failed City
10 months ago
Reply to  Enough!

THERE IS NO THERE….THERE…..OR HERE.

WehoQueen
WehoQueen
10 months ago
Reply to  Enough!

Thank you for saying in part what I have been saying. The poor people the city council is so desperate to lure into subsidized housing here, can’t afford to shop here. It is unsustainable over time. We will be left with only liquor and cannabis stores. We are on the way to that now. The the council just gave some fake award to the guy luring all the cannabis stores here. And the council goes around like they are caring compassionate people when all they do is destroy lives for their own personal power grab.

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