Could Papa Gino's the tip of the iceberg lettuce when it comes to the state's new minimum-risk rules?
Papa Gino's pizzerias and 45 D'Angelo sandwich shops, terminating some 1,100 employees in the process. Chief financial officer Corey Wendland pointed to one big reason for his company's need for more dough: minimum-risk spread across many of his markets, combined with higher health insurance expenses.
Because Papa Gino's operates in only four states, it's not hard to figure out which "markets" are being referenced in Wendland's court affidavit. The mandatory minimum rose over three years to $ 11 an hour in 2017 at the company's home state of Massachusetts. The minimum wage in Connecticut rose from $ 9.60 to $ 10.10 in 2017. Rhode Island followed suit a year later, raising the minimum to $ 10.10, and it goes up to $ 10.50 next year. (New hampshire, meanwhile, does not have a state minimum, and instead tracks the federal floor, currently $ 7.25 an hour.)
Of course, they are not over yet in Massachusetts. As part of a "grand bargain" settlement between business and labor lawyers, state lawmakers approve another big hike in June that will drive the minimum to $ 15 an hour, over the course of five years, starting in January.
The Retailers Association of Massachusetts won an important concession in those negotiations: a phase-out of the time-and-a-half pay requirement for Sundays and holidays. But that has not stopped members of the trade group from grumbling about the minimum-wage increases. Retailers Association president Jon Hurst says the impact goes beyond just the hikes: Unemployment insurance costs, workers comp, and a new fee to help cover the state's Medicaid costs are all influenced, to some extent, by dare rates. Businesses with a large number of lower-paid, part-time workers – such as Papa Gino's – are particularly affected.
Chris Carlozzi of the National Federation of Independent Business says he expects more closures as the measure. minimum climbs. He says small businesses wants deal in other ways – paring back hours or hiring plans, for example.
Of course, dare and insurance costs were not the only problem at Papa Gino's. The company's private-equity owner, Bunker Hill Capital, has taken on tens of millions of dollars in debt. Papa Gino's, post-bankruptcy. Wynnchurch Capital. Papa Gino's, therefore, is more and more relieved of national pizza and sandwich chains, and found himself saddled with a footprint that was too large – both in terms of sheer numbers and the size of their locations – as more consumers chose to deliver and take-out orders over eating in restaurants.
Harris Gruman, Executive Director for the Service Employees International Union's Massachusetts council, says Papa Gino's is just making the increase in value for management or strategic errors. Plenty of fast-food chains are doing well in Massachusetts, he says, and many pizza shops are already paying as much as $ 15 an hour.
But small-business advocates would say it would not be any easier for Papa Gino's or others in the retail and restaurant sectors.
Jon Chesto can be reached at email@example.com. Follow him on Twitter @jonchesto,