(From the article):
"In fact, Richardson says,
".....And people always have ‘L cubed’:
making Leftovers Last Longer.”"."
Posted on 04/11/2016 8:07:57 AM PDT by SeekAndFind
‘This is something that’s become a bumper sticker,” Jamie Richardson tells me. “But it hasn’t really been thought through. There is a better way to get people out of poverty than hiking the minimum wage.”
Richardson is a vice president at White Castle, the chain of famously white-painted and turreted burger joints specializing in slider-style hamburgers in the Midwest and Mid Atlantic. (Let me pause for a moment: If you’ve somehow made it through life without visiting this family-owned American treasure, stop reading this article, make like Harold and Kumar, and get yourself to the Castle . . . I’ll wait.)
White Castle, established in 1921 in Wichita, Kan., now operates more than 400 locations, with many in the New York City metropolitan area, which makes the news of New York governor Andrew Cuomo’s signing a bill that steeply hikes the minimum wage deeply personal. The wage will go from $9 to $15 an hour by 2018 in New York City, with the rest of the state seeing a more gradual phase-in schedule.
“We’ve been in New York for a long time,” Richardson says. “Castle No. 2 over on Fordham Road opened in 1930.”
Unfortunately, despite the Castle’s Empire State history, the road ahead may be difficult: “We’re disappointed. What this means for White Castle is we really have to evaluate how we manage our business,” Richardson tells me. “About 30 percent of every sales dollar covers the pay of our hourly workers, and that doesn’t include management.”
“It’s our biggest investment, our biggest cost. And it’s one that if we see increase dramatically through fiat, and we don’t do anything — it’s unsustainable,” Richardson says. “We are in uncharted waters.”
Of course, Cuomo, California governor Jerry Brown, Hillary Clinton, and minimum-wage activists across the country think that dramatically raising the minimum wage will be a boon to workers and that business can handle the cost increases without too much trouble.
“By moving to a $15 statewide minimum wage and enacting the strongest paid-family-leave policy in the nation, New York is showing the way forward on economic justice,” Governor Cuomo said after signing the minimum-wage legislation on April 4. “These policies will not only lift up the current generation of low-wage workers and their families, but ensure fairness for future generations and enable them to climb the ladder of opportunity.”
But Cuomo’s idea of “economic justice” is a long way from the dollars-and-cents reality of running a burger business. If labor costs rise dramatically, White Castle will have to balance its books by raising prices or changing its business model so that it needs less labor.
“Is there any room to raise prices to cover costs?” Richardson muses. “We think we’d need to increase menu prices by something like 50 percent. It’s not something we’ve done before. It’d be catastrophic.”
In fact, Richardson says that White Castle has historically seen its customers react noticeably to even slight increases in menu prices. “Some people think that we can just raise menu prices to cover the increased labor costs,” he says. “But it’s a ripple effect. We’re not the only place to eat, we compete with other restaurants. And people always have ‘L cubed’: Making Leftovers Last Longer.”
Richardson says — and common sense dictates — that if menu prices at fast-food chains shoot up by anywhere near 50 percent, many people will stop eating out as much, replacing trips to White Castle with trips to the grocery store. Customers can always vote with their feet and their dollars.
But thinking through the implications of raising prices to cover increased costs, which could reduce sales, isn’t what irks Richardson the most: To him and to White Castle, New York’s minimum-wage hike is a threat to a culture of opportunity in the neighborhoods that they have always called home.
“Candidly, this could create a whole generation of kids who won’t get their first job,” Richardson laments. “We’re in tough neighborhoods — and White Castle hasn’t abandoned those neighborhoods. On the surface, higher pay seems noble, but it’s not – because it denies the reality of the free-enterprise framework that has allowed small businesses like ours to thrive.”
White Castle is very proud of providing what for many of its workers is the first rung on the ladder of employment. And it loves to promote from within. Richardson tells me that of White Castle’s 450 top employees in restaurant operations, “444 of them started out behind the counter in an hourly job.” Susan Milazzo, the regional director in charge of the 35 Castles in the greater New York City area, is a prime example of a worker who started out on the bottom rung and worked her way up.
But some of White Castle’s successes are even more exceptional: Richardson tells me the story of Jahangir Kabir, a Bangladeshi immigrant who came to America without knowing a word of English. He got a job as a cook at a White Castle and learned the vernacular by interacting with customers. In four years, he was a general manager. On the way to being promoted to district supervisor in charge of eight Castles, Kabir went to school, earning an MBA from St. Joseph’s College in Brooklyn in 2005. Recently he completed a Ph.D. in business administration — and it all started at White Castle, cooking fries.
That’s Jahangir,” Richardson beams. “That’s what we’re all about. It’s a virtuous circle if kids can get that first job. We really believe that. Maybe Jahangir’s story is exceptional, but Suzy’s isn’t — hers is actually pretty common.”
White Castle knows that not all of its hourly team members will, like Kabir and Milazzo, make careers out of White Castle — and it’s just fine with that.
“We know that Millennials aren’t thinking they’ll stay at White Castle for 30 years,” Richardson says. “We view it as the start of the path. That’s true if you stay at White Castle or move on to something else. The skills you gain, you can take to the next role: learning how to apply for and get a job, learning how to show up, learning a work ethic, making a paycheck, and having fun.”
All of this might be in jeopardy if White Castle and other similar business couldn’t afford to hire many entry-level employees. In the hyper-competitive restaurant industry, margins are slim — Richardson says that, in a typical year, White Castle hopes to achieve a net profit of between 1 and 2 percent — and if labor costs go up, many restaurants will turn toward labor-cost-cutting automation or business models that don’t require many employees. That means a lot of kids won’t get that first job. After decades of baggage check-in kiosks at airports, ATMs, and self-check-out lines at the supermarket, is it really so hard to imagine automation replacing the kid behind the counter at burger joints?
But this is about more than wages — White Castle has offered benefits and retirement programs for decades. It’s about the opportunity to work, to take the first step up the ladder of life, to get started.
“Out-of-work kids who don’t have an opportunity to work get in trouble. We want to offer kids jobs, offer kids work,” Richardson says. “There’s dignity in that.”
But if restaurants and other business can’t stay in the black, they won’t be offering many jobs to anyone — short-circuiting the process of building the skills that young workers need to take the next steps in life. New York’s minimum-wage laws purport to offer equality — but at the cost of offering workers opportunity. And minimum-wage hikes mandated by state and local governments aren’t happening in a vacuum: The federal government is unilaterally changing overtime-work rules, also driving up costs. The common theme is that governments at the local, state, and federal levels are presuming to know more about how businesses run than do their operators.
“As a family-owned business, White Castle has been around a long time — but now we have to assess things and ask: Where do we need to be at, by when, to make sure our business remains viable?” Richardson says. “New York says, ‘We’re open for business,’ but sometimes it seems like the only door that’s going to be open is the exit door.”
— Mark Antonio Wright is an assistant editor at National Review.
I don’t know why they took it down; it’s a gravel parking lot outside IMS now. It was a major cultural loss for the Speedway, similar to closing the A & P Supermarket at 30th and Georgetown. But the post-apocalyptic future can still be seen in the A & P parking lot just before the barbarians storm the gates at 5:00 a.m.
“...making a paycheck, and having fun.” “
I don’t think I want people having fun around (or with!) my food.
Well, you made more than I did. Good on you. In 68 I couldn’t get a decent job, was up for the draft and finally went to get that 1A crap out of the way that kept me from a decent job. Eight + years, GI Bill and Georgia Institute of Technology after that. I swore I’d never work those kinds of jobs again. Never did.
This issue best demonstrates the complete ignorance of the American public. But the same idiots will complain when they go to the grocery store and only 2 out of 15 lanes are open! The same idiots will complain when the “value meal” costs twice as much. The same idiots complain when their teenager who just wants to get a little spending money and experience working in the real world can’t find a lousy job. This country is so flipping nuts right now I can’t stand it. Every day feels like I am on some hidden camera show or the Twilight Zone! The minimum wage is completely pointless! The people who should be out there marching against this are the employees who have shown they can do the job, who make more than the minimum wage and now will have to work part time, you know, to “spread the wealth” with lazy and new, unproven employees.
The sliders will now be the size of a half dollar and the price will be 3 bucks apiece :)
I am not defending the NY move by any means, but the article does engage in a bit of static analysis.
If low-wage workers are making more money, they WILL spend more of it on fast food. (it’s kind of a target market for fast food actually). So sales will increase.
The old Henry Ford-Model T thing again.
On balance I’m sure the restaurant still loses.
You have to apply the Sam Kenison method..
take it out of the box and throw it in the toilet. saves a step.
That is a very cool story about your dad and White Castle in general. Personally, I love White Castle burgers, especially the jalapeno cheeseburgers. Too bad the nearest one to me is around 25 miles away. I have a crave! :)
Same here. Went to WC after 4 years and did it TWICE on separate times. I said WTF!? At least In N Out never changes.
” Will “Black Castle” be a better name? /s “
If they ever do a remake of “Coming to America” maybe it can be a “Black Castle” instead of a rip-off of McDonald’s. :)
(From the article):
"In fact, Richardson says,
".....And people always have ‘L cubed’:
making Leftovers Last Longer.”"."
‘Automation.’
Hard to train people who are used to people. I prefer people. Maybe you are used to “press 1 for directory” when you want the operator? Easier said than done..
Went to McD’s in an “urban” hood in downtown and almost everyone was skipping the cashier kiosks. As long as there’s a human in front, they’ll skip the machine..
You might not be far off. If you ever watch the movie “Demolition Man” the only restaurant in the future is Taco Bell.
White Castle in Brooklyn is where I dwelled in my youth because they had a drive through and open late.
Everyone has their noses up in the air when it comes to the middle class, and White Castle is right these entry level jobs teach you valuable skills when you’re young.
Now we’re engineered to abhor fast food and these entry level jobs aren’t for American teenagers. They’re careers for illegals, underemployed skilled workers, and those supporting families.
I will be a minority of one with my thought about this. Raising the minimum wage to $15 so quickly is too much, too soon. Maybe to $12 an hour over a two year interval. Also there should be COLAs on Social Security. Why? Increased minimum wage and Social Security COLAs are money that goes almost 100% directly into the local economy. It would be the quickest way to boost economic activity.
The root of he problem is that fast food restaurants are now seen as “careers.” The industrial jobs that should be the basis of careers are gone, so fast food is all that’s left. It’s what happens when you convert a powerful industrial economy into a nation of waitresses and busboys.
“I don’t think I want people having fun around (or with!) my food”
Ya better stay home then. I used to have roommate that worked in an upscale steak restaurant. He says it doesn’t matter if it’s fast food or upscale dining, things happen in ALL restaurants from time to time and you don’t want to know about it. We like Carrabba’s Italian Grill because the kitchen is out front and you can at least sit and watch the food prep if you want to. Other than that I would suggest monitoring the local restaurant health inspections.
If I owned a fast food restaurant, I would make it a policy that my manager was a certified electronic technician, then I would fully automate. You could run the place 24/7 with a handful of employes. One person to load the machines, one to fix them, one to keep the place clean.
Probably factoring in lost business related to the increase in prices.
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