After implementing a prospective solution to narrowing the restaurant industry wage gap in their establishments last year – despite significant grief for doing so, mostly online – three Boston restaurant owners have found their right-now solution.
Our faith in the neighborhood has been confirmed.
Following the famous Danny Meyer no-tipping announcement throughout his New York restaurants, Keith Harmon, David Doyle and Maricely Perez-Alers – owners of Tres Gatos, Centre Street Cafe, and Cafe Verde in Jamaica Plain – took the plunge to make a change. In December 2015, the restaurateurs applied a Hospitality Administrative Fee (HAF) to two of their restaurants (later implementing the same fee in their third location) in an attempt to narrow the wage gap between front-of-house (FOH) and back-of-house (BOH) employees.
The fee automatically adds a 3 percent increase to all bills received, with a 7 percent increase to parties of six or more. The faces behind the idea were upfront and honest with their customers, adding a very visible note to each menu, highlighting and explaining the charge.
The fee is designed to decrease the divide between front and back-of-house workers, providing better opportunity in benefits and raises for BOH workers, and the ability to “pay employees as much as we can,” said Harmon. “It’s a revenue sharing pool that is fed by the 3 percent administrative fees. We pay kitchen staff $1 an hour extra in every paycheck, then we distribute any excess collected according to total hours worked at the close of each month. Since the money is distributed evenly by hours worked, it’s more effective at the lower end of the payscale, which is part of the design,” he added.
According to Harmon, the fee is added to the pretax total of the bill and guests tip as they see fit on that total. “So if you and a friend come in and order $100 in food, we charge a $3 Admin Fee that goes exclusively to the kitchen. We could have just raised prices, but that is a one-time fix,” he said. “This is systemic. Now as total sales go up or prices rise in the future due to inflation, the servers and kitchen will each make more in lockstep. Adding the HAF to a guest’s check was the simplest, best solution we could find to a very complicated problem.”
After a full year of fee implementation, the three restaurants (Casa Verde was included in the data from their opening in May 2016 on) found considerably positive results. According to Patrick Maguire, author of “I’m Your Server Not Your Servant,” as well as PR, social, and hospitality rep for the three restaurants, the outcome has been overwhelmingly positive.
Maguire reported that the average increase for kitchen hourly workers was $2.87 per hour and that BOH kitchen salaried workers made on average approximately $5,948 more per year than before the application of the fee. Maguire also stated that the HAF has increased gross kitchen wages by $100,700 and servers actually saw an increase in tips by 2.5%, despite initial concern.
According to Maguire’s findings, there is now a direct correlation between restaurant revenue/success and the compensation of all workers. Maguire reported a significant enhancement to team engagement, excellent staff retention, and a dramatic improvement to recruitment.
In agreement, Doyle stated, “despite initial concerns about how FOH staff might be affected by the fee, we quickly discovered that their tips were not adversely affected, and to their credit, they quickly embraced the HAF as a gesture of respect to their BOH co-workers. Overall, the experience of responding to questions from guests about the HAF has resulted in our teams being more aware of how hard our BOH teams work, for relatively modest pay, and I believe this has strengthened our teams.”
Doyle also offered gratitude to restaurant guests, who’ve overall supported the movement. “JP is, in general, a neighborhood that prides itself on being progressive, supporting indie businesses, taking care of each other. We felt that if any neighborhood in the city (or the country) would support our effort, JP would. Our faith in the neighborhood has been confirmed,” he said.
Various restaurants around the city, including Yvonne’s and Bar Mezzana, have since implemented the fee as well. And as predicted by Chef Josh Lewin of Juliet, the issue will only continue to heat up in the new year.
After years of toying with the idea of a change, “I remember the day I read Danny’s [Meyer] letter on the front of the New York Times about no tipping,” Harmon said. “I called David and said we should get off our asses; December 1st is the time.” And according to Harmon, it’s all been worth it.
It’s “the single best business decision we’ve made, without question,” he said.
Featured image via flickr.