How to pay everyone who works in the restaurant a living wage – People’s World
“The restaurant industry can be seen as a class struggle between the neat, rushed, articulate charmers who work in the dining room and the blistered, stained, profane grunts in the kitchen.” -Pete Wells NYT restaurant review
In 2015, a movement began making waves in the restaurant industry – a movement to educate about the class disparity prevalent in restaurants in our big cities. The first big love at first sight came from famous New York restaurateur Danny Meyer when he abolished tipping in all his restaurants and instituted a flat service charge.
From there, longtime anti-tilt advocates added their voices, pointing out class issues that remain unseen in the labor statistics department.
Atlantic and Washington Post both published detailed articles about the problem and potential solutions that year. The revolution was coming; we were all going to get decent wages and equality in our little part of the world. But the revolution died down and for many of my fellow line cooks at that time, their dreams of cooking professionally died with it. Talented people somehow seemed to lose interest in working in stuffy high-end kitchens for mere peanuts.
Aspirations to open innovative bakeries and restaurants – concepts we used to enthusiastically share with all who listened – have now been replaced by the terrified silence of workers suffering from burnout and financial insecurity.
This disparity stems from the different income sources of front-of-house (FOH) and back-of-house (BOH) employees. The agreement stipulates that the restaurant pays BOH employees an hourly wage according to stagnant minimum wage standards.
Meanwhile, individual customers mainly pay FOH employees through the “tip pool” or a similar system. These employees earn less than half the local minimum wage before tips, leading to financial instability as the business fluctuates through the seasons and even weeks. The company then becomes unable to pay quality labor and will suffer from high turnover and loss of training as the market continues to weaken. In other words, everyone loses.
The system I describe below provides a way to ensure a viable base rate of pay for all employees. Additionally, it provides all employees with equal access to bonus earnings on a busy weekend or holiday.
These revenues increase when restaurants retain the skilled labor needed to take advantage of these peak periods. All facets of the operation improve individually and create an overall better performing restaurant.
A minor restructuring that marries the notions of salary and gratuity is the simplest solution. Rather than having the business pay the BOH and the guests pay the FOH, Vincent Bistro combined the two systems to give everyone maximum net tip revenue coupled with the stability of standard payroll revenue. After reviewing our means and general salary expenses, we have decided that $20/hr is a reasonable base rate of pay for ALL employees at our company – a fair wage that is often unattainable through traditional means.
To achieve this seemingly unrealistic level of compensation, we use the same strategies developed by predatory business owners that normally maximize profits for the company and its investors, and instead use them to redistribute value to workers.
The first step, as unscrupulous as it may seem, is to legally qualify all gratuities received by the company as donations, allowing our employees to share more equitably.
At the end of the night, the FOH staff calculates the total of all tips received and distributes it among all working employees. This amount is equivalent to an hourly rate of pay, usually $10-15/hr. Payroll funds are then paid out by the company to ensure that everyone earns at least $20/hr for their time. If, on the busiest nights, tipping exceeds $20/hr for employees, the hourly pay rate increases to account for these earnings. For example, on Saturday, September 19, Vincent was able to pay all employees, from the reception desk to the dishwashing pit, just under $34/hr for a standard 7-hour shift. That night, our dishwasher earned about $238 instead of the $105 he would have received at Chicago minimum wage for the exact same amount of work. On slower nights with less activity and therefore less tipping, we offer “shift cuts”, a common practice of eliminating working hours when less labor is required.
So far we have found that most of our employees are able to appreciate an extra day off rather than worrying about missing out on an unneeded day of income.
So we can clearly see the advantage from the BOH perspective, which is where I’ve spent most of my career. But let’s not forget our essential counterparts up front who take care of our guests and serve our food to the clean plates in the crockery tray. Normally, a server at Vincent’s earns the city-mandated minimum wage of $6.40/hr. That’s considerably higher than the federal minimum of $2.13/hr, but still a negligible rate compared to the cost of living, especially since much of that disappears in payroll deductions such than taxes.
In addition to this salary, the FOH also accounts for an average of 20% of sales in the form of tips. Standard weekend nights will see approximately $5,000 in food and drink sales, earning an additional $1,000 tip shared by a staff of five tipping employees, each earning $200 in tip plus $44.80 in salary for this busy shift, which corresponds to the Saturday example above.
Under the new system, servers can still expect this kind of compensation for busier nights with an increased tip, but they can also rest assured that all of their time on the clock is paid at a minimum rate. of $20/h, even during a downturn. This compensation system creates a sense of teamwork within the house, increases the sense of unity of income, and inspires pride in one’s place within the microeconomics.
By combining the sources of income for all employees, we have both stabilized and equalized the income of our employees. Sure, paying employees $20/hr on down nights might sound risky, but according to our latest P&L analysis, over the past three months, direct payroll has averaged about 34% of business expenses, only 4 points above 30%. Industry standard % labor spend.
This percentage shows that while revenues have stabilized and increased for staff, salary expenses have remained largely unchanged from more traditional models. From the worker’s perspective, BOH employees are able to earn their fair share of gratification and FOH employees are able to plan their finances more reliably, making the best benefits of both systems available to all. employees with fewer potential pitfalls.
Our revenue stream integration system allows employees to choose and even specialize in the tasks they enjoy doing rather than those that pay the most or demand the least. This system motivates the individual simultaneously to become a larger part of the community and to take more pride in their work. Clean dishes, great food and drink, and charming service are all equally important factors for a quality restaurant experience. And when every employee has a stake in the success of every part of that experience, we all win. It’s time for restaurants to all pay reliable, decent wages at both ends of the house.