QFC to close two Seattle stores, blames city’s new $4 hazard pay law

The heated debate over Seattle’s $4-an-hour hazard pay law for grocery workers escalated sharply this week.

On Tuesday, QFC announced it would close two Seattle locations by April 24 — and blamed the move, in part, on the new law.

Although QFC acknowledged that both locations — at 416 15th Avenue East on Capitol Hill and at 8400 35th Ave. NE in Wedgwood — were “underperforming,” the decision to close them was “accelerated” by Seattle’s hazard pay law, which the City Council approved Jan. 25.

That law imposed new costs at a time when grocery stores “operate on razor-thin profit margins in a very competitive landscape,” the company said in a statement Tuesday. The law applies to grocery companies with more than 500 employees worldwide and to stores larger than 10,000 square feet during the coronavirus civil emergency.

But QFC’s explanation drew a stinging response from city politicians, labor officials and some shoppers and locals generally. Some said QFC and its parent company, Kroger, have profited handsomely during the pandemic and are using hazard pay to deflect from other economic factors, reportedly including plans to eventually redevelop at least one of the locations.

“Their plans have been to close down long before COVID,” said Shari Teeple, 82, who said she had been shopping at the 15th Avenue location since the 1980s. “I’m actually not happy that they’re blaming it on $4 an hour for these people.”

The dispute comes amid a widening fight over hazard pay for grocery workers, who experts say face a high COVID-19 risk. While some grocery chains, such as Seattle-based PCC and California-based Trader Joe’s, recently offered workers pandemic-related raises, Kroger is balking. The company, which also operates Fred Meyer stores in the Pacific Northwest, recently announced it would close two supermarkets in Southern California over local pay-raise rules.

“These workers should not be pawns in a game of chess,” said City Councilmember Teresa Mosqueda, in a statement Tuesday. “It’s beyond disappointing — it’s harmful to our public health and retaliatory.”

The debate is also spreading locally. On Tuesday, the Metropolitan King County Council introduced legislation mandating $4-an-hour hazard pay for grocery employees working in the unincorporated area of King County for the duration of Executive Dow Constantine’s emergency order.

Hazard pay was given to grocery store employees at the beginning of the pandemic, but was inexplicably cut off, said King County Councilmember Rod Dembowski, who sponsored the legislation. “The pay went away, but the pandemic didn’t and the risk didn’t.”

QFC said store representatives would meet with the more than 100 affected employees at both locations “to help them with this transition and will comply with any contractual commitments and consider any transfer requests.”

Critics have noted that many grocery chains have done well during the pandemic. In December, Kroger reported an operating profit of $871 million for its most recent fiscal quarter, a 33% increase from a year earlier.

“It is unfortunate that Kroger chose to close these stores — at least one of which they had already planned to close — and then blamed it on the need to pay the very workers who brought them these huge revenues,” said a spokesperson for Seattle Mayor Jenny Durkan.  

But QFC officials said the Seattle hazard pay law imposed a 22% increase in operating costs, and that both the Capitol Hill and Wedgwood locations had struggled financially.

“When you factor in the increased costs of operating during COVID-19, coupled with consistent financial losses at these two locations, and this new extra pay mandate, it becomes impossible to operate a financially sustainable business,” the company’s statement said.

The Capitol Hill location, in particular, faced growing competition from nearby grocery stores, and even local fans of the store acknowledged they liked the location, in part, because it was rarely crowded.

“If you look at the grocery stores in this area, we have a brand new PCC, we’ve got the new Whole Foods up on Broadway, we’ve got two large Safeways within a mile of each other — it’s a very competitive environment,” said John Gallant, co-owner of The Red Balloon shop across 15th Avenue from the QFC.

The Capitol Hill location had also suffered losses from shoplifting, according to one employee.

City officials “want to mandate what we get paid — but they won’t fix their homeless problem, and they won’t fix the violence, the shoplifting, the addiction,” said the employee, who asked not to be identified because they were not authorized to speak to the media.

A QFC spokesperson could not confirm recent reports that either of the two locations were slated for redevelopment. Neither appeared to be associated with any current city construction permits.

According to a 2017 article in the Capitol Hill City Blog, a local developer who had purchased the 15th Avenue location said that “while redevelopment of this building is possible, current leases in place make it unlikely to happen in the near future.”

The assessed valuations of both locations have soared in recent years. The value of the Capitol Hill QFC parcel jumped from roughly $3.5 million in 2016 to $14.6 million in 2020, according to King County records. The Wedgwood parcel rose from $12.7 million to $21.1 million over the same period.

The grocery industry has strongly criticized Seattle’s hazard pay law. On Feb. 3, two industry groups — the Northwest Grocery Association and the Washington Food Industry Association — filed lawsuits alleging the hazard-pay law is “invalid and unconstitutional.”

The lawsuit contends that the hazard pay law was pushed for by the grocery workers’ union, the United Food and Commercial Workers (UFCW), and that it “establishes premium pay standards that … empower the UFCW or other collective bargaining units to secure a wage rate they could not otherwise have obtained from the employer at a unionized or non-union grocery store.”

But in a statement Tuesday, the local UFCW chapter denounced QFC’s announced closures as “corporate bullying” and “a transparent attempt to intimidate other local governments from passing ordinances that would provide hazard pay to front line grocery store workers.”

QFC said it has undertaken major safety measures at its stores since the start of the pandemic, and has also offered workers additional compensation, including $325 in store credit since March and a $100 payment for workers who get the COVID-19 vaccine. The company says the average hourly rate for its Seattle workers is more than $19.97 an hour, with another $5.99 in benefits.

As the debate rages, some longtime shoppers pondered where they would go once the two QFCs closed.

“I’ll really miss it,” said Amy Tullis, 66. She shopped at the 15th Avenue location for the 26 years she lived in Capitol Hill and still does after moving to the Leschi neighborhood. She said the store’s small size and friendly staff lent to the charm of a neighborhood she and her friends had dubbed “Mayberry.”

“Oh, you know there’s going to be some disappointed people,” Tullis added. “I have friends who live in Seward Park who still come here — just because it’s their store.”

Seattle Times staff reporter Melissa Hellmann contributed to this report.