Owner says Capitol Hill pizza joint closing because of $15 minimum wage rules for franchises

These restaurants weren’t closing because of Seattle’s new minimum wage — but this one is.

The owner of the Broadway location of Zpizza — a franchise chain with locations in 14 states, Washington D.C., and three “international” outlets — has announced she is closing her shop across from Seattle Central this summer after five years of service because Seattle’s new minimum wage law makes it too expensive for small-time franchise owners to do business.

“I’m a franchise. The law states that if you’re a franchise, you have to accelerate your minimum wage just like Amazon or Chipotle,” Ritu Shah-Burnham tells CHS.

Shah-Burnham said the timing of her announcement — she decided to share her decision with Q13 Fox News earlier this week — has more to do with her lease and the next stages in Seattle’s minimum wage law implementation than the April 1st initiation of the march to $15 per hour.

In the sixth year of a 10-year lease, Shah-Burnham said she had the option to do a cost analysis and opt out of the remainder of the contract for her space in the Broadway Building at Broadwayand Pine.

“When I saw what I had to do — if I had seven years, it was doable,” she said. “But to do it in 24 months, it was going to be too much.”

Looming for Shah-Burnham was 2017’s deadline for large “Schedule A” employers to reach a full $15 minimum wage in Seattle. Some types of businesses will have until 2021 to reach $15 under the law’s phase-in schedule.

Zpizza certainly isn’t the first chain to call it quits on Capitol Hill. The neighborhood –especially Broadway — has attracted a steady flow of attempts by specialty chains and franchises to establish a beachhead in the indie-leaning community. Mod Pizza, another pizza concept with success in other locations and cities, fizzled out on Broadway in 2013, for example, and a business analysispredicted an unpromising environment for “limited service” restaurants on the street.

Zpizza’s building, however, has much of its retail space filled with chain stores including Blick Art Supply, GameStop, and a Panera Bread location. We’re told the space formerly home to theYogurtland chain is also still being lined up for a new fro-yo provider after another yogurt business planned for the space fell through. A spokesperson for Capitol Hill-based developers Hunters Capital firm that built and manage the building said the new yogurt business will not be a franchise, however.

Even with Zpizza’s planned closure, Broadway is home to many if not most of Capitol Hill’s franchise businesses. Shah-Burnham said she doesn’t know if we might see a wave of similar closures on the street because some retailers and shops will have small enough overall labor costs to be able to transition to higher wages.

The Broadway restaurant is Shah-Burnham’s sole investment in the company. She doesn’t own multiple locations. Shah-Burnham said she doesn’t regret choosing to build a franchise business — she only regrets that she tried to do it in Seattle.

With 22 years of restaurant experience, Shah-Burnham said that she chose to open a Zpizza franchise because most of her experience had been in “front of house” work and she hadn’t operated a commercial kitchen on her own before.

“The goal was to open up a business where I didn’t necessarily have to grow from the ground up,” she said.

“I don’t feel like I made the wrong decision. I didn’t realize that we’d be attacked.”

Capitol Hill has seen an explosion in new restaurants and bars — we counted 100 in three years — with 30 or so more that were planned to open in 2015. Most of the new openings won’t be subject to Schedule A. We asked Shah-Burnham why she doesn’t take the 500 East route to transform her business from chain to independent. For one, she said, she is limited by contract. But Shah-Burnham also said she would be concerned about building a new business in Seattle again.

“I don’t know what’s coming next.”

In the meantime, Shah-Burnham said she and her 12 employees will continue working through the summer until she closes the pizza shop in August.

UPDATE 9:30 PM: We didn’t detail on key element of the story: the pizza. We’ve heard from a few fans with a shared lament — Z was the only place serving vegan pizza by the slice. If you’re looking for a new venture on the Hill, consider the opportunity.

http://www.capitolhillseattle.com/2015/04/owner-says-capitol-hill-pizza-joint-closing-because-of-15-minimum-wages-rules-for-franchises/