Boston Magazine reports on the effort by the owners of Tres Gatos and the Centre Street Cafe to try to increase the pay of kitchen workers, who don't get tips.
I don't know much about these places so I don't know if their prices lowball other nearby restaurants... but if I had to guess it's so that their menu prices don't get higher to detract from sales. What I wonder is, does a mandatory 3% fee help to cover people who never tip or will people tip less / less often now that there's a mandatory fee? (I feel like there's statistics behind this somewhere.)
So I'd suck it up and pay $0.50 more per item if I liked the food. But if you start tacking on required fees I'll assume you're becoming Verizon. That leaves a bad taste in my mouth, so to speak.
I don't shop at businesses which add fees. The cost of an item should be what you pay.
You have never worked in a restaurant.
It is some of the hardest work out there. You have no idea.
granted, not in the kitchen. I was a bus boy who got a share of the tips. But I agree with Boston Dog. The fee is silly.
Kitchen workers bust their butts for low pay. They are also often illegal labor. Enforce the employment laws and the pay of restaurant workers as well as Mitt Romney's landscapers will automatically increase.
Well, ask our kitchen crew if they think the fee is silly. We were able to give them a raise right away. And that includes our dishwashers.
Yeah, illegal labor is a big issue in restaurants, but enforcing labor laws isn't the magic bullet that's going to solve low kitchen wages. The money isn't just magically going to appear. And in our letter, we explained why we think the admin fee is a better solution than just raising prices.
We are very careful about setting our menu prices and we believe we do so fairly, acknowledging the fact that we buy only high quality ingredients (and yes, buying from small local farms costs more). We explained this in detail in our open letter to the community (see our websites or the back of our menus), but for the purpose of paying kitchen staff more, raising menu prices is not effective. The hospitality admin fee goes directly to the kitchen, so %-wise effect on our guests is small but effect on kitchen pay is immediate and large.
Their prices are higher than most other nearby restaurants, but they also serve pretty unique menus for Jamaica Plain.
I think the "look" associated with adding fees will turn some people off to these places, though probably not all that many.
I will absolutely tip less to account for the three percent fee. 17 percent for the bar staff and 3 percent for the back of the house staff.
If the prices had simply increased 3%, you would end up tipping the waiter (slightly) more, reflecting the overall increase in your bill.
The waitstaff still is being paid less than the kitchen staff. I don't know what the policy is at Tres Gatos, but by law, they do not have to pay the service staff more than $3.00/hour.
While I applaud paying the back of the house more, and doing it in a way that rewards the kitchen workers during the back-breakingly busy shifts, I don't see how it justifies shorting the waitstaff.
My response was partially emotional but, with a little more time to think about it, I probably will end up keeping my overall tip percentage at 20 percent. FOH staff at TG is fantastic. But a typical outing there for me involves spending about $70 for wine and a few shared small plates. Not sure what the true cost of my food and drink is to the restaurant, but I am pretty sure (in this case at least) it is nowhere near $70. I'll still tip at least $14, but that amount will be split between the new BOH gratuity and the customary FOH gratuity.
The bottom line for me is that I know this group has done very well with these restaurants and I assume they could afford to share more of their profits with their staff. By choosing to pass this cost on to the consumer in such a public, self-congratulatory manner (we saw a problem and we're going to have you address it for us!), they are going to make some of us re-think where we dine.
Fair enough. You have some good points.
Menu prices should reflect the quality of the ingredients and the amount of labor going into each dish. From the start, the Tres Gatos and Centre Street Cafe teams made the commitment to buy only high quality ingredients, to source from local farms and small vendors whenever possible, and to make most of what we serve in house, from scratch. We could choose to use lesser ingredients and to make fewer dishes from scratch in order to lower menu prices (as many other restaurants do), but we don't want to do that. We are very proud of our chefs and cooks and the food that they prepare every day.
Regarding tipping, we know that some guests will not change their habits (will continue to tip 20% or so on the total) with the new fee, and we also know that some will deduct the 3% hospitality fee from the total, and that's okay. Fortunately, we're lucky to work with amazing servers and bartenders who are behind this effort and who recognize that some guests may lower their tip slightly in response to the fee. We don't want to do away with tipping because we don't want to take that prerogative away from guests.
"We don't want to do away with tipping because we want to continue to reap the benefits of having our guests pay our waitstaff for us."
I find it hard to believe that the market even notices 3% - that would turn a $12 dish into a $12.36 dish. But... calling it out as being used to fund better pay for the back of the house, probably makes people feel better about paying it.
So why not raise the price of the items and then include a disclaimer at the bottom saying the menu price reflects the cost of paying the back of house a living wage?
How do we know they didn't simultaneously cut the cook's hourly wages by 3% and tell them the customers will be making up the difference?
Thanks for your comment, Bob, and it's a great illustration of the issue here. We chose 3% because it is only pennies on the dollar, but because it goes directly to the kitchen, it doesn't get allocated among all the other costs that the restaurant bears so it has a sizable effect. And immediate: both kitchen crews got raises yesterday because of the new hospitality admin fee, and as owners who have deep respect for the work they do, that makes us happy.
Exactly. This was a calculation targeted to give specific across the board raises, so how do we implement 3% and not have the prices look screwy? Also, the whole point of raising prices in this manner is that when other costs go up in the future and we need to cover them, both tipped and non-tipped employees will see their wages move up in tandem. There is a core issue here that I know is not familiar to people, and it is extremely difficult to find a solution that works and is fair to 2 entirely different types of employees, with completely different sets of legal rules.. It's not a simple problem, and this policy is the reult of almost 4 years of searching for a the most streamlined approach that addresses the core issue and has the greatest chance of success.. We have handed out raises and allowed that to come from the bottom line right up until the business becomes unsustainable and threatens to destroy the 45 jobs that we are responsible for, not to mention our own livelihoods and the obligations to banks and investores and our mission in the community.. If it were an easy solution no one would be talking about it or hearing about it and we wouldn't be exposing the business to this enormous risk.. yet in the restaurant industry it is front and center and a major source of dialogue.. It is a complicated issue that we are glad to talk about in detail, but if the response to our sincere attempts is "we don't believe you and we think you are lying" then there isn't a whole lot of room for us to try and share the vision.. Our teams are 100% behind us and we can only hope that our guests and community will choose to support us as well. It's scary.
When they gentrified the hell out of the place, they jacked prices and cut portion sizes among many other changes. It basically has no resemblance to the old place; they mostly kept the name so that people wouldn't scream blue-bloody-murder about them killing off the old place and putting in a south-end wannabe restaurant.
So yeah, this is just puffery- their profit margin has shot up compared to the old menu. If they wanted to, they could have easily given 3% more to the kitchen staff all on their own, but that'd cut into their profits, and we can't have that. So a surprise hidden fee. We'll see what the state thinks of listing prices; in the meantime, I encourage everyone to tip so that your bill is effectively the menu price, plus tax and 20% tip.
It's a whole new restaurant, just the same name. It's not the same product, so costs aren't the same. Saying they "jacked up the prices" implies that they took the same ingredients, menu, etc. and just raised the prices. It's apples and oranges. Not all restaurants have the same overhead. I doubt their profit margin is much different at all.
Thanks anon for the comment, and clarification. It's absolutely not the same restaurant. My partner and I loved the previous Cafe, and were friends with the owner, but our intention was not to redo the look and reopen with a similar restaurant. We share many of Felicia's values (such as sourcing as much as possible from Stillman's and other local farms), and we loved the idea of continuing her diner-style weekend brunch, but our goal was to introduce an entirely new dinner menu (Italian), and we were lucky enough to attract one of Boston's top chefs, Brian Rae, to execute it.
Referring back to some of my earlier posts on this thread about menu prices: we price our dishes at the Cafe as competitively as possible, but it's important to point out that Brian's crew makes everything, including the pasta, from scratch. We make our doughnuts from scratch, we make our dinner bread from scratch. We use the highest quality ingredients. So anon is right, the difference in overhead, the cost of goods, etc varies a lot from restaurant to restaurant, and a whole host of factors need to be taken into account when evaluating whether a place's prices are reasonable or not.
And finally, profit margin: for restaurants in general, it is razor thin. For restaurants that choose to buy high quality ingredients and make everything from scratch, it is especially challenging. Our margins are in the mid single digits, meaning we have very little cushion during slow times, such as winter.
What do you pay BOH? What do you estimate FOH makes? I don't think most comments and reactions to your open letter disagree that restaurant work can be challenging both in terms of labor and profit. It also sounds like the majority enjoy the food and service at Tres Gatos. What most people are reacting to is that instead of just honestly communicating the pay discrepancy, you're asking the customers to plan on adding 3% (or 7%) to every receipt to pay for BOH - how do we know what this amount boils down to for the BOH? I think you should just pay your BOH staff what you need to (sounds like 3% of sales is what you need to do to make them whole) and factor that into the menu prices. $8 for potatoes tapas becomes $8.25 with the $0.25 allocated to BOH pay.
Instead of "just raising our prices" we are doing so in a way that allows us to make a fundamental change in the industry. We already pay our staff more than we "need to" by industry standards and have not suffered the same turnover and talent issues as other restaurants. Treating our team with deep respect is what makes this possible. This isn't a problem in our restaurants, it's a problem in our industry. The "smart" thing for us as owners would be to do nothing. Smart and short-sighted. Once you know there is a problem how long should you wait before you do something about it? Even if you're succeeding is it worth it? But that isn't the right thing to do. I'm sorry if people find this corny but we are on a mission to make a difference. Haters are gonna hate, and we'll just keep answering. It's the right thing to do. Change is hard, also necessary and inevitable. If you know anyone else involved at the operations level with restaurants, I think you should bring this up with them. They may disagree with the solution but there's no way they disagree about the problem.
You really think the profits are just so massive on a small restaurant? Even a small restaurant group? Newsflash--running a restaurant isn't exactly the kind of thing you take up after your investment banking gig falls through. And sorry, but I don't think the grade of "gentrification" is quite as steep as you claim. CSC has always been a lovely place but IMO having a really good Italian place where I can go occasionally as a treat (we've had several really wonderful meals there) is preferable to having a spot where I'd have to stand in line for twenty minutes for a biscuit and omelet I could make at home. Really delicious and unpretentious food--no whiff of South Endery that I can detect.
But I wouldn't put it past Tres Gatos. I like the restaurant, but it's at least a touch "foodie".
To the topic at hand, wouldn't the line item for the fee be easily to separate out into raising wages for the cooks/kitchen staff? If you're just raising prices on the food/beverage, you're just factoring in more for tip, as your 20% will be affected by the higher product prices.
TG absolutely fits in with a lot of the places I assume you classify as "South Endery." Toro most notably. I love the place but let's not act as though TG would have survived in JP 15 years ago, before it started it's transition to South End by the Arbs.
I've worked and/or lived in JP for over twenty years, and with luck I'll live and work here another twenty more. JP has changed a lot since I moved to Boston, and will continue to (that's good, neighborhoods that don't change die). Most of our employees live in JP, so we as restaurant owners are as concerned about the consequences of gentrification as anyone else in the community. The mission of our restaurants is not to contribute to gentrification, it's to provide a great place to work, and eat, for local residents. We fully understand that our style, menus, playlists, etc are not for everyone, and that's okay.
What's not that okay is spreading misinformation with negative intent on-line. Believe me, our profit margin has not "shot up," and we could not "easily have given 3% more to the kitchen staff all on (our) own." Do your homework, and don't make statements you can't support.
They answered this question in a Tweet (https://twitter.com/centrestcafe/status/671463970008637441) but basically it amounts to this:
The stated goal of the fee is not to raise all wages, but to reduce the gap between the front-of-house wages and the back-of-house wages. If they were to just raise prices overall, the front-of-house wages, which are mainly tips, would also increase, undermining the whole point of the operation.
My question to them, which they only sort of answered, is if they're so upset by the disparity that the tipping system imposes on their workers, why not do away with tips altogether? I'm with Bob below in that I think mandatory "fees" are intellectually dishonest. If they want back-of-house workers to be paid better, they should just get rid of tips completely, pay everyone what Tres Gatos thinks they're worth, and be done with it.
Well it's a step toward that direction. That may just be too big a shift at once. You dont't want to completely flip everything on your front of house staff so quickly.
So make the FOH divide the tips with BOH and say so on the menu. Raise prices too if you need to bump up the amount collected by tips. (And also pay BOH better.)
Any way you look at it this fee sounds scummy.
That is completely illegal. Raising prices alone is not a long-term solution, if it were none of this would be an issue.
We as owners, our staff, our guests, many other commentators and industry and personal role models, have managed to find ways to look at this and have it not sound "scummy." It's not an easy problem, there isn't an easy solution, and I'm sorry you find our best attempt to fix to be so.
Thank you for reading some of the other sources and obviously also giving them some thoughtful consideration. Regarding doing away with tipping, we think it is too large and emtional of an issue for servers and guests alike to try and confront and dismantle. There is a practicality here to try and chart a course that makes a financial difference for our kitchen crew but does create an inordinate amount of risk and put us out of business. You can see what this small fee has incited already, we have an obligation to protect the jobs of our team, the local events and charities we support, the vendors we buy from, and the people who loaned us their hard- earned savings so that we could even exist. I consider it practical, others will think it cowardly.. Judging from a lot of comments here, I think getting called a coward is relatively low on the scale of insults that will be lodged against us..
Everywhere I have worked has had a tip pooling arrangements.
Front of House "tipped out" Back of House.
What was different was who was included in BOH - bus person, dishwasher, line cook, chef etc.. and percent of the night's tips went to back of the house.
Please do not mention any of the restaurants that you worked at! Tip pools can legally only include tipped employees such as servers, bartenders, bussers, runners.. Chefs, cooks, managers, dishwashers cannot be part of the pool.. Servers can of course voluntary hand over money if they decide to, but it absolutely cannot be part of a tip pool or controlled or dictated by the restaurant in any way.
For one thing, cost-based pricing is one of the "five deadly business sins." You set your prices according to market conditions. You pay your back of the house staff according to either market conditions, or more, as your conscience dictates. One doesn't really have anything to do with the other.
For another, unbundling is intellectually dishonest. If it isn't something that the customer can choose whether or not to buy, it shouldn't appear as a separate line on the bill; it should be rolled into the price. Instead of adding a 3% "back of the house decent wages" surcharge, a 1% cost-of-energy surcharge, a 0.5% regulatory compliance surcharge, and a 2% environmental surcharge to recover the cost of trash recycling and water/sewer bills, just raise the prices by 7.5%.
That doesn't really apply here. That's about business in general, not the unique situation restaurants are in. The problem is the current market wage for back of house mixed with our tipping system is unsustainable long term.
That's about business in general, not the unique situation restaurants are in.
Restaurants aren't unique. To put it another way, every business is unique. Don't use "unique" to justify a bad way of doing things.
that face this kind of conundrum?
Someone mentioned a comparison with Verizon in a post above. I agree.
Any utility bill. Gas, Cable, etc. all have a shitload of stupidassed fees added on. I don't want restaurants to follow that model.
There's also FedEx, which (last I checked, admittedly a while ago) still has a goddamn fuel surcharge despite fuel prices taking a nosedive.
Not remotely the same unless your cable guy gets paid in tips every time he shows up at your house while the guy who answers the 800 number gets $15 an hour.
"fuel charges" have nothing to do with fuel costs - they're actually just surcharges for delivering to residental addresses instead of businesses (one of the reasons I have packages delevered to my office). But I'm sure some PR hack in Marketing told them to call it a fuel charge instead.
"I figured out how we can make 10% more revenue without raising our advertised!"
Give how cheap is nowadays I think UPS/Fedex should be including a "fuel discount" equal to the peak of the surcharge.
Restaurants are unique. Name another type of business where half the employees are paid by the hour and the other half are paid by tips.
I'm not saying it is a good system. You can get better service in some other countries where people don't tip. We should do away with this dumb tipping system and just pay all employees a decent wage.
name another business where half the employees are paid by the business and the other half are paid directly by the customers.
Generally contractors break out material and labor costs even if the installer works directly for the supplier.
Thank you. Very apt and succinct. We don't expect everyone to support us or even take the time to understand. For those that do, we are absolutely here to explain and be transparent. This is a scary decision that we really think is the best ethical way forward. We can't live with ourselves at leaders if we don't at least try to make a difference.
This comment is about the letter itself, and not about the goal of paying the back of the house better, which I fully support. In the open letter they point out the necessity of paying the back of the house better, and then they list and dismiss anumber of possible options to close the financial gap -- cut total hours, buy vs make, switch from local suppliers to megavendors, give less to charity, etc... I think it's disingenuous that they didn't include "reduce our own profit" as one of the options. I'm not suggesting that they should necessarily do so -- they run good establishments and certainly deserve to make good money for their efforts and risk-taking. I just found the omission of that option from the list presented in the letter to be annoying.
I always find it curious that "reduce our own profit" really never factors in with these folks. I guess it is a human nature thing. I am all for business' making a profit but at the expense of your employees well being is a no-go for me. (Not saying either of these establishments do this; just a general observation).
I always like to say if you can't pay your employees a living wage and reasonable benefits to cover them when they are sick and allow them some time off to recreate, then you should perhaps rethink the situation.
Reminds me why people fought over a goddamn supermarket and a CEO so hard. It is to be such a rare gem for an entity to choose profitability with everyone getting a decent wage (in other words, wages are people getting a fairer cut) versus maximizing profit that it almost went down (and one day may inevitably become that way) with all its typical ungenuine PR front with sleek looks and short sighted cost cuts.
I will note that I do hold sympathy if a business just don't have the money - saying if a business model can't pay their works decent wages makes the business questionable, at least in many of those cases, you can't really fault the ownership. But way too many are just choosing larger margins.
What if Market Basket would add a "Fee" to fund maintaining employee wages while he paid for buying out his cousin?
In fact MB did the opposite just before their incident: took 4% OFF the bill for an entire year. An anti-fee.
RhoninFire: thanks for your comment. I have to point out that our profit margin at both restaurants is in the middle single digits, so if our main intent all along has been to maximize profit, we've done a pretty dismal job at it. Restaurant failure rate is so high because restaurants operate on VERY thing profit margins. We're proud that almost five years in, Tres Gatos is still around, and we plan to be around for another twenty years. But we won't be able to unless we make adjustments, and what we don't want to do is stop buying from small farms, stop donating to local charities and supporting local nonprofits, and stop making our dishes from scratch.
Again, our long-term goal is not to maximize profits, it's to make sure we have a sustainable business model that allows us to treat our employees well (with job security) and to run our restaurants with integrity.
As I just noted in another response (we'll be doing a lot of this today, which is great, we're happy to explain ourselves), the profit margin for many restaurants is in the single digits, and the margins for our two JP restaurants are in the mid single digits. We could probably increase our profits if we bought more ingredients from mega-producers, made fewer dishes from scratch, and donated less to the community, but we don't want to go in that direction.
Needless to say, a mid single digit profit margin does not leave a lot of cushion for hard times. We would be irresponsible to our employees to reduce that margin even more in an effort to pay the kitchen team higher wages, because that would increase our vulnerability during slow times and increase the chance of failure.
We are proud of the benefits we offer our employees, and the fact that we go out of our way to help every employee with time off, and finances, when there is a family emergency, etc. We believe the small hospitality fee is the most responsible and effective way to keep our teams strong and healthy, to keep our business model sustainable, all the while remaining true to our vision of what a neighborhood restaurant should be.
The restaurant industry pay system has been grossly out of whack for as long I can recall, glad to see a few places starting to address it. It pretty much works like this - cooks and servers both work hard on your feet and in your face stressful jobs, but servers typically take home 5 times what a line cook makes. Part of this is because owners have long depended on cheap Latino labor, but the other half of it is people grossly over tip for average to poor service as part of some peculiar social contract. I always wished there was a kitchen tip line so I could show some love to the people who really made the meal. Ever go back to a place that had crappy food and great service?
There's a trained, well-regarded chef in my family with solid experience and a culinary degree. He's currently working at a restaurant that's the hottest reservation in his major US city.
Actual skilled, trained chefs working in trendy restaurants aren't getting paid any more than the average entry-level administrative assistant, despite the fact that they work erratic schedules (two non-consecutive days off per week, if they're lucky), have a workday that's usually 10-12 hours long and ends so late at night that they can't have a social life beyond after-last-call bars, generally get no vacation time, often don't get benefits, and are in a work environment that leaves them exposed to risk from burns and repetitive stress injuries from standing and chopping all day.
Yes, there's tons of people using cheap immigrant labor...but the people with the specialized training aren't getting paid all that much better. I've put in significant career time being completely taken advantage of in the nonprofit sector, and chef-ing seems massively exploitive to me even in comparison to anything I've ever seen.
I agree that being a chef may be a challenging job often underpaid but there is a serious disconnect in the restaurant world between people who aspire to be chefs and go to CIA, etc... and wrack up huge debts vs what the actual market calls for. Just because someone has gone to some culinary institute that doesn't really entitle them to a particular job or wage at a restaurant vs. some guy from Peru who also wants that job.
There was an episode of Bourdain's old TV show where he went back to his old restaurant, Les Halles, to work the line and it was pretty much all Latino guys who were not just cooking but generally running the line and doing well at it. I don't buy your theory that these guys aren't actually skilled and actually trained- they just learned on the job vs sitting around in a classroom. Specialized training is vital for say, a person running an MRI machine. Chopping vegetables, not so much.
But I think that, ultimately, the cooks who learn by apprenticing can't break into the upper echelon of trendy restaurants and the "foodie scene" the way the ones who have the degrees and the grooming can.
It's just like any other job: you don't REALLY need a degree to do most jobs, but hiring managers won't look at you twice without it.
I've worked front & back of the house. Both are tough. However, front of the house is tougher. I cannot even begin to address why right now-- I'm on a break at work-- but suffice it to say the worst nights I ever had waiting tables stand out as some of the worst nights in my life: dealing with people who use waitstaff as lightening rods for everything shitty in their lives, or who grabbed my boobs/ass, who thought a waiter was their own personal servant, etc etc.
The worst night in the kitchen, I was in the weeds. Worst night on the floor, I was in the weeds and putting up with bullshit from patrons while smiling.
I worked in hotels and kitchens from 15 til 40, in all sorts of capacities - we could compare war stories I'm sure. If you're making money as a server it's because the cooks and the barstaff are pumping out good product at a rapid pace. The difference is you walk out with more money on Saturday night than the grill cook makes all week.
When things go well, a server is serving "good product at a rapid pace." I worked with and in many great kitchens, but I also dealt with my share of slow, mediocre or worse cooks. If the food sucks, the chef makes the same amount, but the server is often punished with a lower tip.
When I had a table waiting 25 minutes for a cold app that was delayed in the kitchen, I either had to charm the hell out of the patron or accept that they would likely shaft my tip. On a busy night, time to charm is rare. If someone's steak was overdone, or half the entrees sat under a heat lamp congealing while the rest of the plates were still being made, or even if the food was, through no fault of the chef, simply not to someone's taste, then it could effect my tip.
The chef makes the same as he always would.
I mostly worked in mid-range, neighborhood places, though I worked high end and dives as well. I liked my work, was a very good waitress, and a consistent high seller where I worked. In a typical week, I wouldn't have a night in which I made as much as the cook or chef did for the week. It happened rarely, but that wasn't the norm. And in the better restaurants where I worked, the waitstaff made quite a bit less than the cooks/chefs-- maybe as much as the garde manger or sous chefs, but without health insurance or any other benefits.
I don't know why, but I seem to be one of the few people here who thinks the 3% kitchen charge is a good idea. I think the kitchen staff deserves it, and they should receive more money. But as I've written elsewhere under this story, having spent about 5 years working in kitchens, and about 16 years tending bar & waiting tables, in my experience waiting tables is the toughest of three tough jobs.
I think the kitchen staff deserves it, and they should receive more money.
Absolutely agree. And if they deserve it, then the owner can pay them.
But none of this hokey surcharge crap.
cscott: thanks for your feedback. In our opinion, the days when restaurants can rely on cheap kitchen labor to sustain their profitability are winding down. In fact, in a competitive market like Boston, even restaurants with strong reputations (including paying their cooks fairly) are having a hard time hiring.
You're right, tipping is an odd (and quite flawed) social contract. Given the laws that prevent a traditional gratuity from being directed to the kitchen, we believe the admin fee is a great way to allow guests to show their appreciation to the folks who prepared their food. Thanks for your perspective.
I normally give a 25% tip. I'm just going to reduce my tip to front of house by 3%.
...who said the same thing.
First, raise prices (no separate fee BS). Then, either increase the hourly wages of the back-of-house workers, or include (non-management) back-of-house in tip pool.
Their open letter reads quite opaque to me. They should communicate what they're paying their BOH staff versus what they think their FOH staff is making. Any internal discrepancy in pay is a purely function of the business owner's choice in how to run his/her business. It sounds like the owners are doing quite well with two existing restaurants and a third about to open.
Why not come up with a fair hourly rate for all your staff, add it to your bottom-line costs for running the restaurant and adjust your menu prices accordingly? There's no rule that says you have to pay your back-end staff the lowest hourly rate you can get away. The same is true for your front end staff (and hope that tips make up for the ridiculous low rate). If your business can't operate profitably by paying for what it costs to operate then your business model is possibly broken.
I won't patronize a restaurant with forced percentage fees like this added on top of the prices. I want to be able to read a restaurant's posted menu and get a sense of what a meal there might cost for me as part of deciding whether or not to go into a restaurant. While I can do math just fine, I'd rather not have to keep a table of percentages in my head based on whatever permutation (total food cost, size of party, etc.) I represent on an evening.
the reason they don't do the quite sensible things you suggest is because restaurants are starting to take a page out of the airline playbook -- suck people in with lower "advertised" prices and then make up the difference with a fee structure that is byzantine enough that people will just say "screw it" and pay whatever.
First, I don't even agree with this way of doing things.
Even if they implement this method of paying people, it's a sleazy way of getting money that may or may not even get to the people it's intended for. I've heard of businesses that charge "service fees" intended to be distributed to employees, but somehow, some of the money gets diverted elsewhere.
I don't trust them. Pay your help what you think you should pay them and charge for your product accordingly. If you can't make a buck, then you have a business problem.
Right on point: "If you can't make a buck, then you have a business problem."
So let's have them shut down and open a Dunkin' Donuts franchise in the spot instead.
Can we just acknowledge for a moment that running a small business--even a good, successful one--is challenging in myriad ways? I don't know ANY lazy or talentless people who are doing it but all of them to a one struggle with these questions of balancing their books, compensating their staff fairly, trying their best to provide health care, etc. It is incredibly difficult and I don't know any of these folks who are making big money--some barely break even.
I agree with you 100%. Wedding venues do the same thing. They tack on "service" or "admin" fees anywhere and everywhere and say it's to compensate "non waitstaff personnel". In the end who knows where and who it's going to. I dealt with this recently and was getting charged an admin fee on "incentives" that were told to me were complimentary or free. To me it's just another money grab.
I think service or admin fees of the like come off as sleazy as merlinmurph stated. Just charge one price for the product and you the business figure out who gets what on the back end - not the consumer. Seems like lazy business practice to me.
Echoing a lot of the previous comments here, I also think this is the worst possible solution to a real problem. If you genuinely think your back-of-house staff are underpaid, then the problem isn't that the front of the house makes too much by comparison (which only happens because of a completely insane cultural norm of tipping to pay an employer's labor costs for him), and it's certainly not incumbent on your customers to make up the difference. It's on YOU, for not paying your cooks and dishwashers whatever amount you've decided is "fair." You can do that a bunch of ways: you can just give everyone a flat wage and eliminate tipping (either by dipping into you own profit margin to make up the difference, or by increasing prices), you can enforce a shared tip pool, or you can quietly build a surcharge into your menu and pass it on to your back-of-house staff. What you shouldn't do is a stunt like this, which manages to piss everyone off: folks on the right side of the political spectrum will see it as acquiescing to the $15/hour crowd, folks on the left will be wondering why they aren't actually paying their staff enough to live and work around here, and they (or rather their front of house staff) are going to have to deal with dozens of irritated customers who want to know what this surcharge is, because Bob Leponge is totally correct: if you add a line item that isn't a tax to a bill, it should be something that you can opt out of.
The road to hell, good intentions, etc. etc. I won't stop eating at Tres Gatos, because it is frigging amazing, but I don't think this is going to win them many friends.
Maybe they should decrease their profits by 3% and give it to their workers. The place is already expensive.
Expensive is so suggestive. We could use sysco, operate at industry standard wages which is substantially below what we pay, eliminate prep and serve frozen food, charge a lot less and make a lot more.. This happens plenty of places, and frankly they are places I like and support but not what we are trying to achieve. Our margins are razor thin, in the mid single digits depending on the restaurant and the year. Frankly I don't think we should be ashamed if our profits were much higher, but that's another issue right? The point is we have absolutely allowed profits to stay at their lowest level that keeps us going and have steadily increased pay. There is a core issue here that your suggestion doesn't address. It's not a problem in our restaurants, rather a problem in the whole industry, and we're trying something new to try and change it.
Restaurant ownership and/or management needs to work out the 3% increase for kitchen staff without patting themselves on the back about it. Going out to dinner is already quite expensive. As a diner, my job is to be eat, pay and tip 20% for a good meal and good service. As a restaurant owner/manager, your job is to run your business and not tack on extra fees to your customers' bills -- this is the restaurant industry, not the airline industry. Figure it out and run your business like a professional. If you can't retain good emoyees at their current salary, then take 3% off your take-home pay and add it to theirs without fanfare and going to the press as if you're some sort of Robin Hood of restaurants.
And I'm going to leave a 35% tip with a note saying (For Kitchen Staff Only!).
This is a convoluted response to a convoluted system set in stone by the wage laws.
Tipping has long been a reality for restaurants. The law recognizes this by allowing employers to pay front of house staff a reduced minimum wage, the balance of which is made up by tips. In MA in 2015, a restaurant can pay a waiter $3.00 / hour instead of $9.00 / hour, with tips making up the rest.
But, the law also says that tips can't be shared with anyone except people actually doing the serving. If there's any tip sharing with the back of house, the restaurant is strictly liable. So you get this weird two-tier structure, front of house and back of house, with a legally imposed wall between them.
So from the perspective of the employer, front of house are paid $3 / hour, but can make (theoretically) unlimited amounts in tips. Back of house cost $9, but can't share in the tips at all. Screwy.
The whole reason our proposed solution needs to be new and unusual is that the problem is very difficult to solve and you have described one of the main reasons that is the case. I think most people have seen enough articles and comments about the sustainability of restaurant kitchen culture to know that there is something going on that isn't easy to solve. Hoping to serve our community for a long time, this is our best attempt to do so. Wage laws for two types of employees with varying economic factors has made the "status quo" seem more like the "way of the dodo".
The city and state are not going to be happy about this pricing structure. I'm guessing part of the reason for this is to avoid the extra meals tax they would have to charge if this were part of their pricing. It's not huge for an individual meal but is probably millions of dollars across the whole industry and could be applied to so many other things. My guess is that the DOR steps in and makes them put taxes on this and perhaps eventually on server's tips as well once they think of it.
Our one and only reason for doing this is to financially benefit our kitchen staff in a lasting manner. We do everything above the board financially and legally and try to do the same ethically as well.
Why the social chicanery ? Just implement a good old profit sharing plan, and don't try to cook the books!
It is a profit sharing plan across two sets of wage laws. One big difference: we are sharing revenue before it even has a chance to become profit, and we're doing it upfront before we even receive the revenue. It's a tough problem, this is our best attempt to correct, and I think in the medium term you will either see more different approaches or less small restaurants. We're not the first and won't be the last to try and address a core issue in the restaurant world.
Spent some time living in Europe and it was nice to eat out and just know what you were paying when you ordered. Taxes included in menu prices, small tip optional if you thought the service was good. Easy! And I promise you the waitstaff was getting paid better than 3 bucks an hour or whatever the horrifying minimum wage is for tipped workers here.
Danny Meyer is leading the way in NYC:
Thanks SC for your comment. I can't speak about what servers make in Europe, but assuming all other restaurants costs and operations are comparable, I'll wager their counterparts in the U.S. make quite a bit more in total. We have deep respect for Danny Meyer, but doing away with traditional tipping in favor of one fairly hefty (over 25%) hospitality admin fee (which then gets split among employees as the house sees fit) is a lot to ask of guests who are used to, and in favor of, leaving their server/ bartender a tip.
Maybe our restaurant culture will move more toward a European model, but for now, we prefer letting our guests leave a tip of their choosing for their server/ bartender, knowing that a small amount of their bill will go directly to the folks who prepared their food.
Danny Meyer is my hero.
I love Tres Gatos but am struggling to get my head around how the owners of a place that charges $15 for a glass of wine when the bottle can be purchased for $16 do not have the profit margin to pay their workers in line with the owners alleged ideals. I'll probably still go on special occasions, but they are pricing themselves out of my monthly dining rotation. Especially given the presence of several other solid local options.
Fair question. Our answer is that the profit margin at our restaurants is in the mid single digits, which means very little cushion for slow times, such as winter. Focusing on the markup of individual menu items, like a glass of wine, fails to take into account how expensive it is for restaurants to simply keep their doors open: pay building insurance, unemployment insurance, health benefits, worker's comp, utilities, city licensing fees, real estate taxes, etc., etc.
We are proud of what we pay our employees, relative to industry standards, but we are not comfortable with the fact that our kitchen staff makes so much less than our servers/ bartenders. We don't want our serving staff to make less, we want our kitchen crew to make more, and this small admin fee is our best shot at accomplishing that. We would love to have a bigger profit margin that would allow us to simply pay our kitchen crew more, but that is not the reality we face.
David's response is excellent, but also that is not a true statement. We have never sold a gass of wine for $15 that any retailer is selling at $16 per bottle, unless that retailer was deciding to sell that bottle below cost or there is some other completely atypical factor at work.
To David for his comments. You are a brave man, sir.
The bottle I looked at for reference is the 2013 Bodegas La Cartuja. On the TG menu for $15 per glass. Currently on sale in NH state stores for $15.99 and regularly priced at $19.99 per bottle.
This is more an exercise in me trying to understand the economics of the restaurant business than anything else.
I know and love the Cartuja! It is actually priced at $10 a glass, the $15 price is for a half carafe which is more than 1.5 glasses and meant to be shared by a couple or used as a food pairing for a table of four.. On another note, it seems you have been in to Tres Gatos and I can only hope you're had good experiences.. We're certainly not perfect but we try to give the best value and experience possible..
I fully support employees making 3% more!
And maybe Tres Gatos will get the full amount to the right workers.
However I can see these service fees becoming more common with the money going to the owners pockets.
I'd much rather the restaurant raise prices.
JP Dude: great point, and one we discuss all the time. Yes, we're asking our guests, and the public at large, to trust that we're doing the right thing. To me, that's what being a neighborhood business is all about: the successful ones are usually those that have won the trust of the people living in their neighborhood. Tres Gatos is proud to be an integral part of JP, hosting a monthly Benefit Night to support local nonprofits, being a stage sponsor to the JP Music Fest, and donating generously to all sorts of local fundraisers. Same philosophy behind Centre Street Cafe, our sister restaurant.
We share your general concern about how the hospitality admin fee might be handled by other restaurants (including corporations like Verizon...wait, they're not a restaurant), but we don't want to not take this course of action out of concern for what other restaurants might decide to do.
I echo the concerns here. My greatest fear is that big box restaurants and chains will put this to use and not handle with integrity. We are choosing not to allow that fear to stop us for implementing our best long contemplated best attempt to shift the business model for the benefit of our kitchen team. This actually really hits home and is a major concern, I can only hope that the market and guests in general can tell the difference betweem a small family business run with integrity and best intentions and a large corporation that is attempting to dishonestly increase their bottom line. Judging from a good amount of comments here, a lot of people really can't distinguish our tiny restaurant from a massive corporation like verizon. I'm hoping that in the grand scheme of things the people who support our restaurants don't feel the same way.
How kind of the owners of fancy restaurants to charge their diners to pay their employees! If I wanted to be in charge of that, then I'd open my own restaurant. These guys are a couple of holier-than-thou cheapskates.
If it were just the cost of the food, you could walk down to Whole Foods and pick up your own ingredients, stop at Streetcar and get a nice bottle of Rioja and go home and make your own dinner. You are paying, in great part, for not having to cook, serve, and clean up, launder your own linens, provide your own convivial, candlelit ambiance, etc. Why is this so hard to understand? And what restaurant do you think operates magically outside these same basic guidelines?
And no--you wouldn't open your own restaurant. I really doubt you have any comprehension of how one actually works or the backbreaking, all-consuming work that goes into running one.
....then why not break down everything?
x % cost of the uncooked food
x % back end
X % front end
x % hostess
I'm paying for drinks and a meal which are marked up to also pay for rent and salaries. I pay 20% for service. which depending on the restaurant, servers will tip out to busboys and an expediter. Sally, I don't think you understand the restaurant business. Talk to restaurant managers, servers and chefs -- they'll help you out! And if you want to moan about back-breaking work -- I guarantee you that restaurant work is not back-breaking. Labor jobs are back-breaking.
I talk to plenty of them and I have no doubts that it is intense, physically stressful work that requires a lot of heavy lifting, crazy hours and a near-insane level of dedication. If you know any middle-aged chefs or kitchen folks who aren't dealing with some kind of health issue connected with years of work in kitchens, I'd love to meet them. And no--I'm not "moaning" since I'd never cut it in a restaurant kitchen in a million years. I have a lot of respect for the people who do, though. Maybe
I talk to plenty of them and I have no doubts that it is intense, physically stressful work that requires a lot of heavy lifting, crazy hours and a near-insane level of dedication. If you know any middle-aged chefs or kitchen folks who aren't dealing with some kind of health issue connected with years of work in kitchens, I'd love to meet them. And no--I'm not "moaning" since I'd never cut it in a restaurant kitchen in a million years. I have a lot of respect for the people who do, though.
... that restaurant work isn't tough on your body
If you feel so strongly about the wages of restaurant workers who do not receive tips and are not management, then I sincerely hope you personally tip them as well as your server, as the owners of Tres Gatos are saying all diners should. Complaining about it on Uhub does not increase the pay of prep cooks and dishwashers.
Hi Sally: Just wanted to say thank you for sharing your perspective, which we as restaurateurs deeply appreciate. As you imply, the joy of going to a "nice" restaurant is the feeling that you will be taken care of, served delicious, carefully prepared food, in an appealing environment that transports you away from work, home, worry, etc. All of that takes a lot of time, energy (human and fossil fuel) and yes...money.
They should just make the food free, advertise the heck out of that fact, and collect all their revenue through fees.
16+ year restaurant veteran here. This looks like it will be more akin to a tip/bonus/commission for the kitchen staff than an offset to hourly wages, thus reflecting the same situation as the front-of-house staff: on the shifts where you're busy as hell, you make more. Slower shift, you make less.
Sorry if someone else has already explained this-- didn't see it at a quick glance but I don't have time at the moment to read all the comments.
Sounds like you are describing shift differential pay. Which to me makes it even more silly to pass along to the customers. Why not run specials during slower times to get more people in during those hours?
Not at all, shift pay is illegal in our specifice business except for a couple of really limited circumstances. There are two entirely different types of workers (tipped and hourly) and associtate labor laws under a single business model and it has created a massive pay gap that is really hard to solve legally. We're not willing to try and solve it by breaking the law. It is a complicated issue that doesn't take to simple solutions, or none of this would be an issue across the entire industry and we wouldn't be here getting our a$$es chewed off for trying to fix it. I'm so glad to explain, clarify, share details, etc... but I'll be upfront and say that we've been trying to solve this for years and I don't think there is an easy, one line, silver bullet that will fix it as many negative commentators would like to imply.. If it were easy to fix you wouldn't be reading about it. We're sincerely trying to make a small but lasting improvement to both our business and our industry. The fact is we don't have to as we do not have the same hiring issues as other restaurants, our only motivation is to improve the wage gap because it is the right thing to do. We think this is the simplest solution to a really hard problem.
Thank you. It's actually revenue sharing for the kitchen staff and we're paying out the revenue before we receive it. Every kitchen staffer received a raise the day the administrative fee took effect. Our servers pool and the particulars of that side of the business causes their earnings to move in lock step with top line revenue, we are trying to mirror this effect for our kitchen staff in a manor consistent with wage laws that doesn't violate guest expecations too much or hurt the FOH tips. It;s a really hard problem, which most industry people know, and we think the time is finally right to try and make a correction now and for the future. Thank you again for your positive comments. Tough crowd in here!
If patrons and employees at these establishments are satisfied with the decision and business remains good, then I don't see anything negative about it. Best of luck!
Hi Maria: Thanks for your comment. So far, we've had a really positive response from our guests, who are our life blood. It's very important to us that our regulars and supporters understand why we chose this course, and we are willing to go to great lengths to explain it. We accept there will be naysayers; our goal is not to win everyone over to our side. What's important to us is that our restaurants remain successful, sustainable neighborhood businesses that employ dozens of JPers for many years to come.
I would also like to note that our entire team, tipped and non-tipped, has been very supportive of this change. It's a credit to them, and it confirms our belief that step 1 is to create a great workplace in which the motivation and objective is entirely about delivering great food, service, and experience to each and every guest, every day. If our servers and bartenders can give us the benefit of the doubt and see the bigger picture we are trying to address, I hope guests and commentators can also.
What about Phil who is spinning tunes in the back and ready to recommend a good read? When are we gonna give him a % of the bill? I really like Dave Doyle and am excited about his next restaurant but this is ill conceived. I hope he read the comments as I did and understands why this doesn't help him or his back of the house staff. What if there is less work for them because of it?
Thanks for giving Phil a much-deserved shout out! He does an amazing job and is a big reason for Tres Gatos's success. We're taking all comments seriously, and trying to respond to each and every one.
As far as not helping out our BOH staff, the change in policy already has -- all kitchen staff at Tres Gatos and Centre Street Cafe got a raise yesterday. So far, we've had a positive response from our guests. If it ever appears this that policy, or any of our decisions, jeopardizes the well-being of the business as a whole, obviously we would re-evaluate and make adjustments. Our team is always our first priority.
Phil is a force of nature, world class human, and one of my favorite people. The retail side of the business does not suffer from the same dilemma as the restaurant side, so it's apples and oranges, or rather apples and LPs...
Just noticed this in the article:
Parties of six or more, private events, and prix-fixe menus will have a 7 percent fee added, plus automatic 15 percent gratuity for service.
What's the rationale for more than doubling the "hospitality fee" if you happen to have 6 people at your table?
And I have no idea how this would be handled tax-wise. I assume like a tip. Yet, they probably don't have to report the income like the waitstaff would. OK, legally, they have to report it, but it would be easier to hide because they don't get paid at the waitstaff rate.
I can see a restaurant having cash-flow issues and skimming off this fund to help finance their operations rather than distributing it to the staff. Happens with sales/meals tax all the time.
How about just paying them?
The purpose of the hospitality administration fees is to increase the wages of the kitchen while NOT significantly detracting from the total earnings of the tipped staff and NOT unduly violating the expectations of our guests. Parties of 6 or more, special event prix fixe dinners, and large events have historically always had automatic charges added and internally these situations increase the workload of the kitchen more than the tipped staff so it seemed fair. Our servers completely understood and accepted this thinking.
It is also in place (and the point of the whole structure) so that as prices go up in the future, wages and earnings for all employees will rise proportionally. We will all rise in the same direction, something easy to envision but difficult to implement is a scenario where there are 2 entirely types of employees under the same roof. If there were simple solutions we wouldn't be talking about it. No one would.
We are implementing and processing this and all other aspects of our financials in full accordance of the law, of course.
Our staff trusts us to do the right and internally but of course for good measure we will be sharing all of the metrics regarding tracking the hospitality adminsitration fees and their distribution. You would have to know more about us as owners, our staff, and the long history of trust we have mutually established.. Something hard earned in practice but of course easily doubted/dismissed without any information. So easy to imply, as above regarding the legality about how we operate, that people will be dishonest, yet why would we be so public and upfront about everything we are doing?
Thank you for getting on UHub and making an effort to explain what you're doing. I know I have a been a bit harsh about your new fee, and your posts here have definitely tempered my feelings about it. I'm sure your lip is practically chewed off from biting it so much while writing your responses, but it has definitely influenced my thinking.
You have obviously put a lot of thought into devising some way to solve a problem you see. A lot of places don't even get that far. To actually implement a solution is laudable. It may not be popular, and it may eventually be replaced by another solution, but I respect your attempt to try something. I may not fully agree with it, but again, I respect your efforts.
As an aside, I'd like to address those people here that brought up profit margins.
I know nothing about the restaurant business, but I have always thought that it has to be one of the toughest small businesses to manage. The dynamics of the business are mind boggling, between managing the help, the menu, the physical place, getting the ingredients you want, getting customers to come in and come back, and pulling all that together. You have to be crazy to want to do it, and the only reason someone would want to do it is passion. Your passion is obvious. Making everything from scratch from good ingredients is a commitment one can only accomplish with passion.
So, when someone looks at your food, looks at your prices, and makes a comment about your huge profit margins, I don't see that as a well thought out comment (my turn to bite my lip). If someone feels that dinner for two is more than they want to spend, I understand that. But when they start throwing out the words "huge profit margin", I think it displays a gross misunderstanding of what went into creating that meal. Living out in the semi-sticks, I have never been to your restaurants, so I'm just talking from a general perspective.
Anyways, thanks for your responses. Again, I live a distance from your restaurants, but would definitely like to make a visit in the future.
Wow, thank you very much. We're really glad to explain and talk about it in detail to anyone who cares enough to listen. It's a small change but it's also significant and I understand that it is asking a lot when you make a change to people's expectations.. A lot of internet vitriol was expected, and we're here to just make sure we're getting our thinking out as well. If we don't put the vision out there and stick up for it then who will and how can we hope to succeed? We've been working on this for a long time because it has bothered us for a long time. A lot of the timing had to do with Danny Meyer's announcement and a stronger sentiment to start to correct class imbalances everywhere.. I'm not making a political statement but the whole #FeeltheBern sentiment is sort of in play here too. We owe it to all of our people to do everything we can to try and make this successful, because it is in fact a pretty big risk. Also, we've known about this problem for a long time, talked about it for a long, but... if you don't actually do something to actually make it better, then none of it really mattered and I know from experience that it's a terrible, terrible feeling. "Time to get busy living or get busy dying," as they say. All the hate aside I'm relieved to finally be underway. Thanks for your kind words. Internal feedback at from guests and staff has been really positive, but of course the internet is a different matter entirely and it isn't easy to have anonymous people try and tear down what you're working for. THANK YOU!!!!!!!
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