- - Monday, January 27, 2020

Employees of the New York City restaurant Colors received unwelcome news this month. Six weeks after the celebrated grand reopening, the restaurant is closing again following their first collapse in 2017. As New York Yankees catcher Yogi Berra once famously observed, “It’s deja vu all over again.”

The restaurant is operated by the union-affiliated advocacy group Restaurant Opportunities Center (ROC). Although the organization claims to fight for the well-being of restaurant employees, ROC has a poor track record of practicing what they preach. While ROC’s advocacy for paying low-skilled workers with high wages is clearly unsustainable in labor intensive operations, it didn’t take ROC long to find out the hard way what textbook economics dictates. The whole staff was fired by text with 72-hours’ notice. So much for their “high road” business model. 

In 2017, ROC received more than $2.2 million in outside support, including financing from the Ford Foundation, W.K. Kellogg Foundation and many others. They also enjoyed an atypical amount of positive press helping to attract customers to their new restaurant. Despite those advantages, a ROC spokesperson in a classic understatement reported their revenue had “not met the business plan projections.” 

A 2019 Congressional Budget Office report estimated that raising the federal mandated minimum wage to the ROC-supported $15 an hour would cost the country up to 3.7 million jobs as employers sought to adjust. Raise the price of employment high enough without the ability to keep total costs and consequent consumer prices in check and you start losing customers. It becomes a trap you can’t escape. Today, many restaurants have automated their service using kiosks where customers order and pay without speaking to an employee.

But ROC was not only arrogant in the belief they could stand up a business with their own version of a cost and pricing structure. They coupled their elitist attitude to the ultimate examples of brain-dead Hollywood surrogates. Jane Fonda and several other have-beens or wanna-be’s couldn’t resist the lure of defending the defenseless waitresses of America — until they were told to stay in their lane. Thousands of restaurant servers have taken ROC and their celebrity know-nothings to the woodshed. To quote one bartender in New York “Thank you for your concern. But we don’t need your help and we’re not asking to be saved.”

January’s closing is only the latest example of ROC’s failures. They’ve been sued for stiffing restaurant workers on payday. A former restaurant board member has called Colors “one of the most abusive [restaurants] in the city.” On an operational note, the New York City Department of Health flagged the restaurant for “evidence of mice or live mice” in food preparation areas. You can’t make this stuff up.

Advocacy groups on the left frequently tell businesses how best to operate. Seldom do they seek to prove the point via leading by example. Doing so successfully would give credibility to the reforms they demand. However, it only appears to be a clever idea as long as you’re playing with other people’s money. 

Saru Jayaraman, the founder of the ROC group and flak for their restaurant operations, no longer lives in New York. She spends much of her time in Berkeley. Perhaps her decision to live in a community plagued with similar economically illiterate ideas was all you really needed to know.

• Richard Berman is the president of Berman and Co., a public relations firm in Washington, D.C.

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