Doug Marschke, also featured above, is a believer in the employee retention power of benefits like health insurance. He shared with us, “Hiring and training a new person takes a lot of effort. It’s a big time and financial investment. It takes time to train new people, but it also takes time for new people to become good at their job. The first thirty days are a whirlwind, and they may not really be up to par with the rest of the staff until sixty days in. This is all a huge investment. If you have to keep doing this over and over again, you’re losing thousands of dollars. That’s why we spend the money upfront on benefits like health insurance to help us retain employees.”
While 31% of restaurant professionals provide health insurance to their staff, according to respondents of the 2019 Restaurant Success Report, there are blockers to providing health insurance and benefits.
One challenge is employee turnover, which has reached an annual rate of 74.9% according to the Bureau of Labor Statistics 2019 Job Openings and Labor Turnover Survey. This challenge leaves restaurateurs at a crossroads: If a restaurant employee is unlikely to stick around for more than a few months, and insurance waiting periods can take up to ninety days, is investing in employee health benefits really worth it? Some owners and managers don’t think so, citing a lack of regulatory requirements and poor restaurant profit margins as justification.
Another hurdle in offering health insurance to restaurant employees is cost; health insurance is expensive to provide in a low-margin business. One way restaurateurs are offsetting some of the cost of health insurance is through a surcharge on guest bills. Marschke said, “Surcharges like these are pretty controversial, but they’re becoming more common. I know more restaurants are starting to do it. It's a few percentage points, like three and a half percent. But, honestly, that only covers one third of our bill. Because of our price point, we can't really raise our menu prices. We do tacos and burritos, not items that you can sell for $20. In a white tablecloth environment, I think you can hide a dollar or two into a menu item, and it won’t be a big deal. But for us to hide one or two dollars in a menu item would be a huge thing. So we do the surcharge and are very open with our customers about what it’s used for. It’s described on our menu and lets guests know that it only pays for a portion of the total cost of employee health insurance.”
Borgen doesn’t employ this surcharge method and instead takes on the full cost of employee health insurance. It’s challenging, but she believes it’s worth the cost. “It's not easy, and it's very expensive, especially for a small independent restaurant like us,” she said. “But I definitely think that it pays for itself in terms of employee loyalty and fostering the culture that we want out of our workplace. We see the impact in turnover and labor costs, and all those things start to add up. You can also talk all you want about taking care of your employees, but if there are no tangible benefits to them working there versus the place across the street, I think it’s just lip service.”
If you’re interested in providing your restaurant staff with health insurance and benefits, but don’t know which HMO to choose, consider using a platform like Health Care HQ, Stride Health, or others that are designed for restaurants. They provide users with a comprehensive suite of health care insurance programs that they can pick and choose from, with plans for small restaurants, large restaurants, and individuals.
Inclusive Hiring and Harassment Management
What Is It?
Homeroom is a renowned restaurant in Oakland, CA (specializing in mac and cheese) that has baked two key elements into its unique management model: inclusive hiring and harassment management. For Erin Wade, co-founder and CEO of Homeroom, it wasn’t enough to just open a restaurant that served world-class mac and cheese. She also wanted it to be a safe, enjoyable place to work for people from all walks of life.
Homeroom’s Story and Experience
Homeroom’s commitment to creating an inclusive restaurant environment starts with the hiring process. As Wade told us back in an April episode of The Garnish podcast, “We seek out people with diverse life experiences. And I'm not talking just in terms of race or gender. We also work with organizations that place refugees, we hire people who are formerly incarcerated, and former foster youth. We're really looking to have a company that's as diverse as [Oakland, CA], the city that we live in, which is one of the most diverse cities in America.”
Once a new employee is hired, they’re given a two-hour cultural orientation, run by Wade herself, to emphasize the company’s commitment to inclusion and to teach it as a core value. Wade said, “We talk about it, and we train for it, and then we really try to try to live it. I mean, more than 70% of our leadership team are women and people of color. We just feel like that's really important. We work in an industry where, honestly, women and people of color comprise most of who is in the lowest paid positions in the industry. But once you start going up that power ladder, you start seeing a lot less women, a lot less people of color. So we feel really committed to honestly just saying that that's important to us, so lots of different people raise their hands whenever we have leadership positions open up. We promote from within pretty much exclusively.”
Beyond actively promoting values like diversity, inclusivity, and empowerment, Homeroom has developed and utilizes a much lauded anti-harassment policy — one that Wade wrote about for an op-ed in The Washington Post.
After stories started cropping up from Homeroom’s servers about issues of harassment from customers, Wade give her team the agency to develop an anti-harassment system themselves. They decided on a color-coded system in which different types of customer behavior are categorized as yellow, orange or red:
Yellow refers to a creepy vibe or unsavory look.
Orange means comments with sexual undertones, such as certain compliments on a worker’s appearance.
Red signals overtly sexual comments or touching.
During a shift, the affected staff member reports the color to their manager — they don’t have to explain what happened right away. Wade said, “In the case of a yellow or an orange, the manager just goes in and takes over the table. And in the case of a red, the manager goes in, takes over the table, and asks the guests to leave.”
It’s an approach that cuts off harassment at the source, blocking it from escalating. “What's been so amazing is that we came up with it as a way of dealing with the problem, but what it's actually done is really help curb the problem,” explained Wade.
Implementing the system has shown a marked reduction in incidents of harassment in the restaurant. “When we first held that meeting, sadly, every woman had a red story,” said Wade. “Now, they're happening maybe once a year. It's really uncommon. And it's a really elegant system ‘cause it's super easy to use. It's not complicated. You can use it on the floor of a busy restaurant. And, most importantly, it doesn't rely on managerial judgment of ‘is this harassment/is this not.’”
She’s working on a training piece for other restaurateurs to help them get there. “We do just generally believe our staff, and the system is set up to do that. A lot of restaurants are not really based on a model of trust and transparency. But I want to get restaurants that maybe aren't based on that model to still use this, because I think it can make a huge change in our industry if more restaurants picked it up.”