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3 Ways Restaurants Can Bridge the Front- and Back-of-House Wage Gap

Posted by Kendal Austin on 3/24/17 2:00 PM in Restaurant Management

6 minute read Print

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Restaurants across the country are struggling to close the increasing wage gap between front-of-house and back-of-house workers.

This issue is especially prominent in states where the minimum wage is being criticized because it does not match the cost of living. If a dishwasher works makes a flat $10/hour, they may struggle to make a living on that wage. A server will work for the same or slightly lower baseline wage, but have huge opportunity to earn additional compensation from tips.

Consequently, hiring for non-tipped restaurant staff is increasingly difficult. It’s clearly stressing people out.

The wage gap among restaurant staff has been a difficult and controversial problem. Simply raising menu prices to increase pay for kitchen staff only increases the tips earned by front-of-house workers.

Here are three increasingly popular ways that restaurants across the country are leveling the playing field for equally valuable staff members.   

1. Eliminating Tips  

The National Restaurant Association named the tipping debate as the #1 trend to watch in 2016, and the debate continues to simmer. Many restaurants have opted to completely eliminate tipping in favor of salaried pay for all employees. This is typically rolled out with higher menu prices or a flat service charge on every bill.  

While many attribute this shift in tipping policies to the increase in minimum wage, it’s also about leveling the playing field among skilled workers.

This policy hit headlines in 2015 when Union Square Hospitality Group, the force behind some of New York’s most important restaurants, announced it would eliminate tipping at all 13 of its restaurants.

"What we’re hoping is that increasing wages will act as a magnet towards recruiting, towards getting the right talent in our kitchens, and then stabilizing the back of the house, so we can give the gift of a regular schedule," Ashley Campbell, CFO at USHG, told Eater.

“The black eye in the restaurant industry is that front-of-house employees make so much more than back-of-house,” Michael Pagana, Director of Operations at Ethan Stowell Restaurants in Seattle, told me. “Since we’re not legally allowed to ask servers to pool tips with the back-of-house staff, we eliminated tipping and implemented a service charge to make sure everybody was rewarded for doing their part for the restaurant.”

Restaurants in Seattle, Los Angeles, and San Francisco, in particular, are experimenting with this model with varied success. Joe’s Crab Shack eliminated tipping and then reinstated it after losing as much as 10% of customers at the pilot locations.

And so the restaurant tipping debate rages on.

 Pros

 Cons

  • Levels the playing field for staff salary
  • All staff can feel more involved in the “big picture” and overall guest experience
  • Forces customers to change their behavior
  • Doesn’t directly reward front-of-house staff for exceptional performance

2. Revenue Sharing

The parameters of revenue sharing for non-tipped employees varies by business. The ultimate goal is to tie the success of the restaurant to the compensation of its kitchen staff, similar to how tips work in the front-of-house.

One tactic is to earmark a percentage of total sales to go directly to kitchen staff.

At Mamaleh’s Delicatessen in Cambridge, MA, 5% of non-alcoholic sales are distributed equally to the back-of-house workers at the end of the month. Owner Miller Munzer told WBUR Radio that they hope the revenue sharing model will ensure better pay and decrease turnover.

“Ultimately we hope it will help with staffing, which means less turnover," she said. "I mean, there's a tremendous expense in hiring people, training them, and then turning them over."

Other restaurants say they will distribute that earmarked revenue to non-tipped workers based on merit, hypothetically mirroring the front-of-house tipping system.

While this is a valid solution, concerns have been raised about the lack of regulation on this earmarked revenue. Technically, the money belongs to the house and they can distribute it at their discretion. Operators are not legally required to distribute it to the kitchen staff, leaving the door open for exploitation of workers.

Pros

Cons

  • Ties back-of-house pay to the success of the business
  • Better recruiting and hiring for cooks and dishwashers with higher wages or opportunity to earn bonuses
  • Lack of transparency and potential for exploitation*
  • Dips into the restaurant's bottom line profits


*An Open Book Management” strategy, which gives all employees complete visibility into the restaurant’s bottom line, may help offset this concern.

3. Kitchen Service Charges

Another revenue sharing model charges customers a “kitchen service fee” as a percentage of each check. Rather than do away with tipping altogether, some restaurants charge guests a few cents on the dollar that goes directly to kitchen staff.

Yvonne’s, a supper club in Boston, added a 3% “kitchen appreciation charge” to every bill in an effort to reduce the wage gap between tipped and non-tipped employees. They were inspired by restaurants in Los Angeles implementing a similar fee.

“It probably would have been easier to raise menu prices 3 to 5 percent and pay employees more,” managing partner Chris Jamison told the Boston Globe. “But I wanted to make it clear [the wage gap] is a priority for us.”

Unlike the service charge that’s included offset a no-tipping policy, this small fee is required like tax and is charged in addition to a standard tip expectation.

Needless to say, in order for this strategy to be successful, it’s important to communicate that to customers. Some workers have reported that this strategy causes confusion on the part of both the staff and the guests, resulting in lower tips for front-of-house staff and customers feeling ripped off.

Pros

Cons

  • Guarantees a percentage of each check is allocated to kitchen staff
  • Overtly recognizes the efforts of the kitchen staff by presenting it to the customer
  • Requires customers to understand why they’re being charged a service fee
  • Customers may be reluctant to tip on top of a service charge, reducing tips for front-of-house staff

There’s no doubt that a happy, well-paid staff drives better results and lower turnover. Whether the back-of-house staff is paid out on each check, as a percentage of total sales, or as a flat base salary for all employees, it’s clear that restaurants are searching for an answer to the growing imbalance among skilled employees.

Share in the Comments: How have pay policies impacted front- and back-of-house staff at your restaurant? Are you planning to make changes to your strategy? 

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toast restaurant management blog

Written by: Kendal Austin

Kendal Austin is the Marketing Manager at Toast responsible for customer and partner programs. After a brief stint in foodservice, Kendal found a passion for marketing technology that solves problems. Her claim to fame: she was a contestant on the Price is Right and lost in the final round.


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