Mokka to close: Minimum wage rise a major factor

Mokka Photo Jed Schmidt — Berkeley’s Mokka coffee shop will likely close in June, a victim of rising minimum wages. Photo: Jed Schmidt

The owners of popular Berkeley coffee shop Mokka are keen to stress that they are not against the principle of increased minimum wages. However, a recent hike, and future planned increases, have played a significant role in their decision to close the business at 3075 Telegraph Ave., probably in June, 10 years after they opened.

“We have decided not to renew our lease primarily as a result of the rising minimum wage in Berkeley. The increase from $10 in September 2015 to $12.53 this October, coupled with the continuing rise to $15, requires a new business model for us. While we are not opposed to higher minimum wages, we are not confident that we can profitably operate on this timetable,” Michael and Susan Iida told Berkeleyside after we asked them about the “For Lease” sign that was recently put up in Mokka’s window.

Many readers got in touch with Berkeleyside when the sign first appeared, and expressed concern at the possibility that the coffee shop might be on its way out. “Drove by Mokka on Telegraph and saw a For Lease sign in the window… I hope they are OK. We are very fond of them in the neighborhood. Nice people and very good food!” wrote one.

Michael Iida, owner with his wife Susan, of Mokka. Photo: Tracey Taylor — Michael Iida, owner, with his wife Susan, of Mokka at 3075 Telegraph Ave. Photo: Tracey Taylor

Another reader speculated that the opening in the summer of 2014 of a much-contested Starbucks two blocks north of Mokka might have contributed to its demise. But the Iidas, who campaigned against the coffee chain’s arrival, said Starbucks was not a factor in their decision. “It only had a minor impact on drink volume,” they said.

The primary reason they decided not to renew their lease was, they stressed, the rising minimum wage in Berkeley. Not that they haven’t tried to find ways to accommodate it. “We have tried a number of strategies to increase our revenue and profit in anticipation of $12.53, but have been largely unsuccessful,” they said. “We introduced new offerings and as a last resort, raised prices. The result of the price increases has been lower volume and relatively flat sales revenue.”

The Iida’s lease expires in June and their landlord is asking for a large rent increase and a minimum five-year commitment, they said. “Given the uncertainty, we might have considered continuing if the rent remained static with a shorter lease extension,” they explained. “But there was no room to negotiate. At that point, the decision to close Mokka was an easy decision to make.”

Many Berkeley business owners have made it plain that they feel minimum wage hikes could drive them out of business They have expressed their views at City Council and special meetings that addressed the subject. At the same time, some merchants have privately said they worry they will appear politically incorrect for opposing a higher minimum wage.

The current minimum wage in Berkeley, which took effect on Oct. 1, 2015, is $11 per hour. In 2014, the Berkeley City Council voted to increase the minimum wage annually to $12.53 by October 2016. In November 2015, under pressure from local businesses, the council voted to increase it to $15 per hour by 2018 for larger businesses employing more than 55 full time workers, and allow smaller businesses to phase in “tiered” increases, reaching $15 in 2020. But the city’s Labor Commission is calling for a higher wage than that (annual increases up to $19, to take effect in 2020) and has called for local enhancements to California’s new paid sick leave amendment.

Another Berkeley coffee and food spot, Café Clem on Kittredge Street, has been reeling with the pressure of the minimum wage hike, as well as the increasing price of food. The café’s owner, Dorothée Mitrani-Bell, who also owns La Note restaurant, also downtown, recently shuttered the café for several weeks while she figured out how she could continue operating the business faced with the financial stresses. In September last year, Mitrani-Bell addressed the Berkeley City Council and said simply: “I can’t survive,” explaining that the café’s margins were too small.

As for the reaction to the speculation that Mokka might be closing, one loyal customer, posting on a neighborhood list-serve, said he would miss Mokka dearly: “Their café has been a favorite spot, and they’ve been wonderful neighbors,” he wrote. The coffee shop was a popular neighborhood haunt, and a favorite for both staff at, and visitors to, the nearby Alta Bates hospital. Another customer emailed Berkeleyside to say: “It [will be a] hard loss for the neighborhood, they have been a beloved spot for many years.”

Michael and Susan Iida, who say they have no plans to open another business locally, are not going anywhere quite yet, however. “We intend to stay open until June or whatever works best for staff,” they said.

Mokka is at 3075 Telegraph Ave. (at Dowling Place).

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Tracey Taylor