Profiles in Profit and Loss: Press Wine Caf
The regional sales manager for Charles Krug is sitting at the bar with a satchel of wine bottles at his side, a pressed white shirt and broad smile hinting at the promise of a pleasant business exchange as Mike Hamuka emerges from his office at the Press Wine Caf in Greensboro’s Southside section. “They’re talking about raising the minimum wage here to $9.36 an hour,” the 33-year-old Hamuka tells Mark McClure after apologizing for making the salesman wait. “Wow, can I come work here?” McClure asks, still smiling. “That’s insane.” Just then, MC Jones, a woman with short blond hair who handles local on-premise sales for Mutual Distributing Co. in Raleigh steps to the bar and joins the conversation. She shakes her head at the notion that a drug addict offering handyman services might earn the same wages as a seasoned hospitality professional. McClure pours wine, offering a rehearsed pitch with each sample that referenced generations of family expertise and the various attributes of taste – a commentary that blends seamlessly with talk about various locales, women and, of course, drinking. “Isn’t that nice?” Jones says, after sampling the chardonnay. “I got room in my price list for that,” Hamuka says. Then the conversation turns to the gentrification of the Buckhead section of Atlanta, where condos are sprouting up amidst the funky shops, displacing bars and prompting a real estate turnover. “Before you leave, I’m going to grab some of that pinot,” Hamuka says. “That’s my juice of choice.” The wine bar Hamuka runs with partners Aaron Jones and Michael Hand caters to a niche market: upscale, urbane and salaried. A business manager at IBM by day, Hamuka is embarking on his first independent business venture. Far from treating it as a lark or a vanity project, he and his partners opened the Press Wine Caf only after extensive research and preparation. Four months after launching in September 2006, the caf started showing a profit. “I help create businesses for IBM,” Hamuka says. “This was the same process I would do for any other venture. I did a demographic analysis. I looked at traffic flow on Martin Luther King and Gorrell Street. I did a rooftop count and figured out how many people we could get to come in here. I visited several different cities – all different metropolitan areas: San Francisco, New York, Vegas, Miami, Atlanta….” Start-up costs for a venture like the caf range from $185,000 to $250,000, he says. In the restaurant business it’s customary to spend the first three to five years paying off that debt. Hamuka takes an optimistic view of the Press Wine Caf‘s prospects, estimating that his venture will clear its initial investment within two or, at most, three years. Until recently, 28 percent of the wine bar’s costs were labor. Around the time of the traditional summertime dip when Greensboro residents flee to the beach on weekends the business sheds some employees by attrition. Consequently Hamuka expects his labor costs to come into alignment with the industry standard of about 20 percent. It all contributes to whittling down that debt. The Press Wine Caf currently keeps nine employees – all part-time, including three cooks who earn $7 to $10 an hour, a general manager who makes $55,000 a year including tips, two assistant managers who earn about $38,220 a year including tips, and three servers who earn about $25,015 a year with tips. Were the city of Greensboro to implement a new minimum wage of $9.36 – either by a vote of the city council or by referendum during the next general election – two of the cooks would get an automatic raise. Although tips make up a significant share of his assistant managers’ and servers’ earnings, whose wages are set respectively at $5.15 and $3.15 an hour, Hamuka believes that he would have to raise them all by $3.21 – the difference between the current and proposed minimum wage. Members of the Greensboro Minimum Wage Committee dispute that formulation. Co-chair Marilyn Baird said, as she understands it, wages and tips together would have to add up to $9.36, meaning the Press Wine Caf assistant managers and servers would be unaffected. Baird cited the city of Santa Fe, NM, whose living wage ordinance mandates that any tips or commissions received by a worker are counted as wages and credited towards satisfaction of the minimum wage. According to a calculation of the wage information provided by Hamuka and the committee’s formulation of tipped earnings, $8,590 would be added to the Press Wine Caf‘s labor costs per year – a 9 percent increase from its current expenditure of $92,911. That doesn’t take into account the cost of taxes on payroll or tips. While he’s friendly with Jill Williams, a member of the committee and a frequent patron of the wine bar, Hamuka is by no stretch of the imagination a proponent of the proposed wage increase. “It’d kill restaurants,” he says. “People already complain about food prices. I’d literally have to lay people off and ask my staff to do more. Play the downstream trickle effect. My folks are costing me more dollars. The truck drivers who deliver the food – they all make minimum wage – and their costs go up. The factory worker who packs the food, his cost goes up. Do you see what I mean? “If I was like a burger joint or a taco joint where I’m catering to the masses it would be different because their customers would have more money to spend,” he adds. “The majority of my clientele are salaried people who aren’t going to be impacted. You’re going to have higher unemployment, and the state is going to be stuck footing the bill for that.” The benefits of such a significant minimum wage increase would be enjoyed by the most skilled and motivated employees, Hamuka says. He foresees businesses shedding their most expendable employees, while those who demonstrate competency become more indispensable by doing the work of one and a half employees. He hesitates to speak his mind for fear that his customers will think worse of him, but Hamuka essentially hews to a belief in the free market. “I think everybody should make what they’re worth,” he says. “It should be performance-based, and at the discretion of the employer. Not to say that my views are right, but here’s what I think: It goes right to the simple thing in the restaurant industry. There are always going to be people who don’t tip right, but most of the time you really have the ability to drive it. You provide good service and you get rewarded with good tips.” For all his aversion to government interference in employers’ discretion to set wages as they see fit, Hamuka says he cares about his employees’ material needs being met, and he’s happy to give performance-driven bonuses to keep good employees around. “I keep a pretty open door with my employees,” he says. “If these guys are cash constrained, and I feel like they’re having a bad night outside of their control… like Daniel, I asked him, ‘How was your night?’ He said, ‘Not as good as I would have liked. I had a bad section.’ I gave him an extra forty bucks because I did well and I could afford to do that. That made it a good night for him.” At the same time, Hamuka takes a tolerant view of employees seeking new opportunities elsewhere. “There’s no loyalty in this business,” he says. “If they hop over to – just to give an example – Natty Greene’s, that’s okay. It’s all college kids trying to make as much money in as short a time as they can. I don’t blame ’em.” While his view of the proposed wage increase is not quite apocalyptic, Hamuka urges caution. “When the state reduced the sales tax, they phased it in, and that was only a half a percent decrease,” he says. “This is a thirty-three percent increase. In my opinion, if we’re going to do this, this is not something we should do hastily.”
To comment on this story, e-mail Jordan Green at firstname.lastname@example.org.