mathbabe

This is a guest post by Sam Kanson-Benanav, a chef who has managed restaurants in Minnesota, Wisconsin, and New York City. He spent two years in the studying global resource marketplaces in the Amazon rainforest, and his favorite food is a french omelet. 

Despite my desperate attempts at a career change, I’ve become fairly inured to the fact I work in one of the most job secure industries in America. And I’m not a tenured professor.

I am a professional restaurant person – cook, manager, server, and bartender (on nights when a bartender doesn’t show up). As a recent Washington Post article highlights: it has become increasingly more difficult for kitchens to staff their teams with proper talent. We could ponder a litany of reasons why talented cooks are not flocking to the kitchens, but if you prefer to stop reading now, just reference Mathbabe’s entirely accurate post on labor shortages.

Or, we could just pay cooks more. As it turns out, money is a very effective motivator, but restaurants employ two cannibalizing labor models based on fundamentally contrasting motivators: tipping and wages. I’ll take these on separately.

Tipping servers suppress wages for the kitchen                 

We already know tipping is a bad system, which bears less correlation to the actual quality of service you receive than to the color or gender of your server. It’s an external rewards based system akin to paying your employees a negligible wage with a constant cash bonus, a historically awful way to run a business.

In other words, restaurant owners are able to pass off the cost of labor for employing servers onto their consumers. That means they factor into their menu prices only the cost of labor for the kitchen, which remains considerable in the labor-intensive low margin restaurant world. Thankfully, we are all alcoholics and willing to pay 400% markups on our beer and only a 30% markup on our burgers. Nevertheless, the math here rarely works in a cook’s favor.

For a restaurant to remain a viable business, a cook (and dishwasher’s) hourly wage must be low, even as bartenders and servers walk away with considerable more cash.

In the event that a restaurant, under this conventional model, would like to raise its prices and better compensate its cooks, it cannot do so without also raising wages for its servers. Every dollar increase in the price of line item on your receipt increases a consumers cost by $1.20 , the server happily pocketing the difference.

Unfair? Yes. Inefficient? Certainly. Is change possible? Probably not.

Let’s assume change is possible

Some restaurants are doing away with this trend, in a worthy campaign to better price the cost of your meal, and compensate cooks more for their work. These restaurants charge a 20% administration fee, which becomes part of their combined revenue—the total pool of cash from which they can pay all their employees at set hourly rates.

That’s different then an automatic service fee you might find at the end of your bill at a higher end restaurant or when dining with a large group. It’s a pre tax charge that repackages the cost of a meal by charging a combined 30% tax on the consumer (8% sales tax on 20% service tax) allowing business owners to allocate funds for labor at their discretion rather than obligate them to give it all to service staff.

Under this model cooks now may make a stunning $15-18 an hour, up from $12-$13, and servers $20-30, which is yes, down from their previous wages. That’s wealth redistribution in the restaurant world! For unscrupulous business owners, it could also incentive further wealth suppression by minimizing the amount a 20% administration fee that is utilized for labor, as busier nights no longer translate into higher tips for the service staff.

I am a progressive minded individual who recognizes the virtue of (sorry server, but let’s face it) fairer wages. Nevertheless, I’m concerned the precedents we’ve set for ourselves will make unilateral redistribution a lofty task.

There is not much incentive for an experienced server to take a considerable pay cut. The outcome is likelier to blur the lines between who is a server and who is a cook, or, a dilution in the level of service generally.

Wage Growth

Indeed wages are rising in the food industry, but at a paltry average of $12.48 an hour, there’s considerable room for growth before cooking becomes a viable career choice for the creative minded and educated talent the industry thirsts for. Celebrity chefs may glamorize the industry, but their presence in the marketplace is more akin to celebrity than chef, and their salaries have little bearing on real wage growth of labor force.

Unlike most other industries, a cook’s best chance and long term financial security is to work their way into ownership. Cooking is not an ideal position to age into: the physicality of the work and hours only become more grueling, and your wages will not increase substantially with time. This all to say – if the restaurant industry wants more cooks, it needs to be willing to pay a higher price upfront for them. This is not just a New York problem complicated by sky high rents. It’s as real in Wisconsin as it is Manhattan.

Ultimately paying cooks more is a question of reconciling two contrasting payment models. That’s a question of redistribution.

But “whoa Sam – you are a not an economist, this is purely speculative!” you say?

Possibly, and so far at least a couple of restaurants have been able to maintain normal operations under these alternative models, but their actions alone are unlikely to fill the labor shortage we see. Whether we are ultimately willing to pay servers less or pay considerably more for our meals remains to be seen, but, for what its worth, I’m currently looking for a serving job and I can tell you a few places I’m not applying to.