QFC To Close 2 Seattle Stores, Citing City's Hazard Pay Ordinance

SEATTLE — QFC plans to close two Seattle locations in late April, saying Tuesday that a new city ordinance requiring workers to receive hazard pay during the pandemic had accelerated its plans to shutter both "underperforming" stores.

The stores, located at 416 15th Avenue East on Capitol Hill and 8400 35th Avenue Northeast in Wedgwood, will remain open until April 24.

In January, the Seattle City Council unanimously approved legislation requiring large grocery stores to provide employees $4 in hourly hazard pay until the coronavirus crisis is over. The measure's lead sponsor noted that many stores voluntarily provided extra pay early on in the pandemic, but most stopped last summer, despite the continued and disproportionate health risks to frontline workers. The ordinance had widespread support at City Hall, including from Seattle Mayor Jenny Durkan.

In early February, two grocery groups filed a lawsuit against the city, saying the ordinance unfairly and illegally singled out large employers. The ordinance applies to all grocers who employ at least 500 employees internationally. Seattle leaders also encountered blowback from PCC Community Markets, whose CEO wrote a letter to Durkan asking for an exception for smaller, independent grocery chains. Last week, PCC announced it would provide the extra pay across all its stores, including locations outside Seattle city limits.

After the ordinance passed in Seattle, Trader Joe's moved to voluntarily extend $4 hazard pay to employees across the United States.

In a news release Tuesday, QFC repeatedly criticized Seattle's hazard pay requirement, calling it "misguided" and unfair to grocers.

"Unfortunately, Seattle City Council didn't consider that grocery stores — even in a pandemic — operate on razor-thin profit margins in a very competitive landscape," QFC wrote. "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."

While QFC said both locations had long-term financial struggles, recent reports have shown soaring profits for its parent company Kroger, which owns QFC, Fred Meyer, and more than a dozen other supermarket chains across the country.

In November, the Brookings Institute published a report on the nation's top grocers, finding massive gains during the pandemic, including a 90 percent surge in profits at Kroger in the first half of 2020. Kroger's own accounting for the third quarter showed another 33 percent increase in operating profits. Brookings found similar gains for Amazon, Walmart and others, amid marginal increases in compensation for employees.

QFC's announcement Tuesday was met with swift pushback from city and union leaders, including at the mayor's office. In a statement provided to Patch, a spokesperson for Durkan wrote:

“Kroger is a huge conglomerate that has made billions in profits during COVID because its frontline workers continued to show up every day, despite the risk to themselves. It is unfortunate that Kroger chose to accelerate closure of stores they had already planned to close, and then blamed it on the need to pay the very workers who brought them these huge revenues.”

The president of UFCW 21, one of the state's largest unions representing grocery workers, called the move an intimidation tactic.

UFCW's national leadership condemned the move Tuesday afternoon, calling QFC's closures the latest salvo in a wider "war on essential workers."

Marc Perrone, president of UCFW international, writes:

"Kroger has literally made billions in pandemic profits off the sacrifices of grocery workers in Seattle and across the country. Kroger’s action today not only threatens these workers, but it also threatens the local food supply. Instead of doing what is right, protecting the community and providing the hazard pay for these essential grocery workers, Kroger is once again trying to intimidate local and national elected leaders. It will not work. Threatening frontline workers with ruthless job cuts and endangering the community’s access to food in the middle of a public health crisis is inexcusable and will only serve to strengthen this movement to provide hazard pay for frontline workers."

QFC said Tuesday it would provide the required pay to employees at all 15 of its Seattle stores, including the two locations slated for closure in April.