Over the last month, four Genesee County restaurants closed for good in what could become a statewide trend if lawmakers do not take action on minimum wage changes by February.
Since Oct. 11, four Genesee County restaurants have announced closures for a variety of reasons, from owner illness to a focus on new endeavors, highlighting the continued struggle for Michigan restaurants years after the pandemic.
The recent closures include BD’s Mongolian Grill in Flint, which closed on Oct. 11 after nearly 20 years in business. The abrupt closure followed the closure of other locations in Novi, Dearborn, and Royal Oak in recent years that were tied in part to Gov. Gretchen Whitmer’s edicts during the pandemic.
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Joe’s Garage Sports Pub in Clio also closed for good on Oct. 18.
“Due to Joe’s unfortunate decline in health, we have decided to move forward focusing on our family and our future,” the restaurant posted to Facebook. “We have been so blessed over the past 17 years to build so many relationships with our community and are so grateful for the outpouring of support over the years.”
The business “has been sold,” according to the post. “So there will be something new and exciting to look forward to.”
Other Genesee County closures include Mug Shotz in Clio on Nov. 2, and Burger Bar & Tap in Flint on Nov. 4, with few details on what drove those decisions, Banana 101.5 reports.
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“Well, it’s time to acknowledge the bear in the room,” Mug Shotz posted to Facebook. “We will be closing our beloved Bar…. Mug Shotz is for sale and we are moving on to our next adventure. We as a growing family decided to downsize into a food trailer so the good news is you don’t have to say goodbye to Mug Shotz food. We will still be Mug Shotz, Grilling on the run.”
While the closures came as a surprise to many local patrons and employees, they’re a symptom of a much larger dynamic in Michigan that has weighed heavily on restaurants since Whitmer shut them down for months in 2020.
A Michigan Restaurant & Lodging Association survey of members in June found only one in four experienced sales growth over the prior year, as inflation has driven up menu prices and 45% experienced sales declines.
The survey also found 89% are struggling with commodity inflation of greater than 5%, 60% have less traffic than the year prior, 55% are operating with inadequate staffing, and 40% are not profitable.
“Michigan’s restaurant industry is in a far more precarious place than we had anticipated,” MRLA CEO Justin Winslow said in June. “The residual impact of the pandemic has had a long tail, particularly for independent, full-service restaurants, as protracted inflation and workforce challenges have made it exceedingly hard to sustain even a modest profit.”
In the months since, the Michigan Supreme Court ruled in favor of moving forward with minimum wage increases and the elimination of the state’s tip credit, which allows employers to pay a lowered minimum wage to compensate for tips.
The MRLA survey predicted the ruling’s financial impact on Michigan businesses will result in one in five permanently closing, two thirds laying off an estimated 40,000-60,000 employees, and higher menu price increases of 25% or more at 94% of remaining operators.
The MRLA, tipped workers, and others have rallied to lobby Democrats in control of the legislature to step in to minimize that damage before the changes go into effect in February, but that hasn’t happened.
On Tuesday, outgoing state Reps. Nate Shannon, D-Sterling Heights, and Graham Filler, R-Duplain Township, introduced bills to keep the lowered tipped wage and amend other aspects of the Supreme Court ruling that mandate paid sick leave, The Detroit News reports.
“There will be many that are opposed to it,” Shannon, a former server, told the news site. “But there will be a bipartisan effort, which is a great thing to be doing in lame duck” session that runs until January.
Without change, the state minimum wage is set to go from $10.33 to $12.48 per hour on Feb. 21, with gradual increases for the tipped wage to eventually match the regular minimum wage by 2029.
“This is the number one issue facing Michigan right now,” Filler said in a statement. “If we don’t act fast, these changes could devastate small businesses and the restaurant industry, leading to closures and job losses across the state. I’ve been working hard to find a common-sense solution that gives businesses room to adapt while still increasing wages for workers.”
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Republicans flipped control of the Michigan House last week, and will regain a majority in January. That means Republicans can approve changes in the House without Democratic support, but will still need approval from the Democratic controlled Senate and Democrat Gov. Gretchen Whitmer to avoid the devastating impact to the state’s fifth biggest employer.
“These changes need to be fair, balanced, and thought through,” Filler said. “I’m confident we can come together in a bipartisan way to find a solution that protects both our businesses and the hardworking Michiganders they employ.”
House Bills 6056 and 6057 are currently pending in the House Regulatory Reform Committee.