Restaurant converts to fast casual as minimum wage increases

Posted at 11:43 AM, Jan 01, 2021
and last updated 2021-01-01 20:15:11-05

SAN DIEGO — A trendy Little Italy restaurant is making a permanent move to fast-casual as Coronavirus restrictions persist and the minimum wage rises to $14 on New Years Day.

Cloak & Petal, a Japanese sushi and tapas restaurant on India Street, will not shift back to full service even when the restrictions lift. Restaurant managing partner Cesar Vallin said in an interview that Cloak & Petal has experimented with the system four times amid the pandemic, and found that the order amounts are similar, tips increased, and labor costs dropped.

Vallin said going order-at-the-counter - with one server and one manager on the floor - allowed the restaurant to eliminate two to three staff per shift.

"I would think that most businesses are going to have to make a decision and do something because there's a lot of ground to make up, there's a lot of loss that's happened, and it's not over," Vallin said.

On Jan. 1, minimum increased from $13 to $14 for employers of all size in the City of San Diego (statewide, it goes to $14 for employers with more than 25 workers, and $13 for others). On Jan. 1, 2022, the minimum wage statewide will hit $15 per hour for larger employers before further increases are tied to inflation.

Vallin said he supports the minimum wage increases, but to a point - they have to be balanced with a restaurant's ability to survive.

Alan Gin, an economist at the University of San Diego, who has supported minimum wage increases, said there are instances in which jobs would be cut, but overall boosting the minimum helps people pay their expenses, and benefits the economy.

"It puts more spending power, then, into the hands of people, and people at that end who are making the minimum wage will virtually spend all of their money," Gin said.

Gin noted the impact would be more muted this year with unemployment elevated amid the pandemic. He said this year's increase is best paired with other aid packages to businesses, such as the federal Paycheck Protection Program loans, which are forgivable.

In November, San Diego County's unemployment rate was 6.6 percent, with payrolls down 97,700 jobs over the year. Those numbers predate the latest shutdown order.