Why No One Goes Out to Eat in D.C. Anymore
Author: Michael Saltsman and Rebekah Paxton
Publication Date: January 2024
Newspaper: The Wall Street Journal
Topics: District of Columbia
The restaurant scene in the District of Columbia is dying, and public policy is to blame. As recently as 2016, the nation’s capital received its first Michelin Guide and accolades from the country’s top food magazines. In 2018 the editor of Bon Appétit declared that Washington was “having a moment,” with some restaurants so popular that patrons would wait an hour to get a bite. But that was then. Rising crime and last year’s mandated increase in tipped wages have restaurateurs lining up to leave town.
In a December social-media post announcing the closing of Pursuit, a 10-year-old wine bar and restaurant, owner Adam Kelinsky said doing business in the city “is no longer sustainable.” Aaron McGovern and Arturas Vorobjovas shuttered both Washington locations of their seafood restaurant Brine in November, saying that the combined effects of the pandemic, the sputtering economy and “the spike in violent crime” had made it “impossible to survive.” Others focus on the second-order consequences of crime: With homicides in Washington up 35% in 2023 and car thefts up 82%, restaurant operators report that people are choosing to eat elsewhere.
Perhaps the sharpest blow was the December announcement that two of Washington’s major-league sports teams—the Wizards of the National Basketball Association and the Capitals of the National Hockey League—plan to leave for a more business-friendly environment in Alexandria, Va. The teams currently play at the Capital One Arena in Chinatown, where a once-vibrant restaurant scene catered to sports fans and concertgoers. The area has been plagued in recent years by robberies and shootings. Things got so bad that Ted Leonsis, owner of both teams, was forced to hire off-duty police to keep visitors to the arena safe.
Falling foot traffic would be bad enough on its own, but Washington’s restaurants have simultaneously faced a sharp rise in labor costs. In November 2022 the city’s liberal voter base overwhelmingly approved Initiative 82, a ballot measure to more than triple the base wage for tipped restaurant workers. Tipped workers in most states can be paid a lower base wage, with their tips bringing them up to minimum wage or more—often two to three times the required minimum. Initiative 82, which eliminated this system, was opposed by tipped workers who worried that it would destroy an industry that worked well for them.
It looks as if they were right. According to Federal Reserve data, full-service restaurant employment in Washington grew roughly 17% in the year before the tipping changes took effect. Since Initiative 82 came into force in May 2023, employment has fallen 4%. This is just the start: The tipped wage will continue to rise for the next three years, when it meets the regular minimum wage that is increased every year for inflation. An April survey published by the Employment Policies Institute of more than 100 local restaurants in D.C. found that most planned to lay off workers. Half planned to expand into lower-cost states such as Maryland or Virginia, and nearly 1 in 3 planned to close locations.
To offset costs, hundreds of restaurants have opted to add fees or other surcharges to customer checks. Diners are responding the way you’d expect: A National Restaurant Association poll of nearly 1,000 D.C.-area adults found more than half are dining out less because of higher prices. Some said they’re choosing to patronize restaurants in Maryland or Virginia instead.
Customers paying sharply higher prices or mandatory surcharges are understandably reluctant to leave an additional tip for their server. Cornell economist Michael Lynn has found that gratuities are lower for workers in states with higher tipped wages. This seems to be what’s happening in Washington: Local news outlet DCist reports that some servers are earning less in take-home pay despite the higher base wage.
Still, there is modest reason for optimism. Washington’s Mayor Muriel Bowser, a Democrat, this week endorsed an aggressive package of safety laws that would increase the penalties for certain crimes and offer grants to improve safety in commercial areas. One of the district’s soft-on-crime council members is facing a primary challenge from a law-and-order Democrat; another is the subject of a recall campaign. And unlike other localities that are hamstrung by ballot measures, the D.C. Council has the power to modify voter-approved measures such as Initiative 82. All this could help, though it’s sadly too late to save businesses that have already closed their doors.
Voters in Ohio, Arizona and Massachusetts may be asked to eliminate tipped wages this fall. They should take note: Washington’s experiment with lax crime enforcement and high labor costs has caused a dining disaster.