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Hospitality group warns Spokane restaurants face shrinking margins, safety and cost pressures
Summary
Representatives of the Spokane chapter of the Washington Hospitality Association presented national and state restaurant financial data showing very low net margins (1.5% average in Washington), higher labor costs in Washington than national averages, and local concerns including crime, waste disposal costs and regulatory burdens.
Representatives of the Spokane chapter of the Washington Hospitality Association told the committee that local restaurants continue to face tight margins, higher labor costs and operational pressures coming out of the pandemic.
"What's shocking here is that this is the first time ever that we've been under 3% on our net margin," Derek Baziotis, representing the Spokane chapter, said while summarizing the National Restaurant Association's "Restaurant Dollar" report. He said Washington full‑service restaurants reported a 1.5% net margin on average and that labor costs in Washington are higher than national averages (Washington reported roughly 39.4% labor share in the presentation, versus national averages cited by the presenter).
Baziotis and Chris Simons (Mustard Seed Management Group) said rising operating costs — steep waste/garbage fees, minimum wage increases, B&O tax burdens and vandalism/ break‑ins — are compressing margins. Speakers said many independent owners take home about $16,500 on average after expenses (presentation figure cited) and that unexpected capital calls (e.g., broken windows, equipment replacement) can push small operators into closure.
Speakers asked council members to consider local policy impacts; council members and staff discussed public‑safety investments (real‑time crime center, mobile camera units), garbage costs and state tax and wage policy. Several council members expressed support for efforts to address downtown safety and for engaging on state‑level tax issues such as B&O reform.
Speakers noted competitive pressures from nearby Idaho (lower minimum wage and different retail pricing) and said franchised operators face different cost structures but are not immune to margin pressure. The speakers said industry groups are working with state policymakers and requested the city consider the local effects of safety and fee decisions on independent restaurants.
