Lake Orion restaurant owner fears for locally owned operations

State Rep. Donni Steele on Monday issued the following statement after a Michigan Supreme Court ruling that will raise the minimum wage and eliminate the tip credit for servers, bartenders, and other workers who frequently make more with tips than they would with a higher minimum wage. The changes begin to take effect Feb. 21, 2025.

“This ruling will wreak havoc on our businesses and their employees. We must not treat California like a roadmap for Michigan. We need to learn from their mistakes and stop this before food prices are so high that families can’t afford to go out to eat,” said Steele, R-Orion Township. “The businesses that will suffer most are local restaurants like we see in downtown Lake Orion. These operations are owned by our friends and neighbors and employ thousands of people. We won’t just be losing businesses. The most vulnerable among us will be losing their primary source of income if lawmakers don’t make a stand and stick up for the people we represent.”

During the 2018 session, the Legislature adopted two citizen-initiated laws that increased the minimum wage and created a new paid sick leave rule. During the same legislative session, the Legislature then amended those laws to ensure they reflected the purpose of the initiatives and would not result in mass layoffs and shutdowns throughout Michigan small businesses. Later, a collection of progressive groups sued the state, arguing that the “adopt and amend” practice was unconstitutional.

“We own restaurants in California and Michigan. With laws like this in effect, it becomes difficult for the owners and employees to operate and expensive for our patrons,” said Drew Ciora, owner of 313 Pizza in Lake Orion. “If these changes go into effect, the average bill at my restaurant will rise from $22 to $30 a person. This will be devastating for our industry. Large national franchises may be able to weather this storm, but it will be extremely difficult for smaller operations to survive. Thousands of mom-and-pop restaurants that have been around for generations will close, just like we saw during the pandemic.”

A recent survey by the Michigan Restaurant and Lodging Association illustrates the dire consequences we’ll see if the radical changes in the 2018 proposals are allowed to stand:

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• 66% of restaurant owners say they would be forced to lay off employees.
• 20% would be forced to shut their doors.
• 42% would be forced to cut operating hours.
• More than 92% of restaurants would be forced to hike prices, with many anticipating increases of 20% to 25% by early 2025.

Another survey found that 82% of Michigan restaurant servers wanted to keep the tipping system in place, and 79% worried about losing their job if the tip credit were eliminated.

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