It has been almost 18 years since I began operating The Second Street Bistro and The Murray Bar, and it has been almost 10 years since Gil’s opened its doors peddling wood-fired pizza. It has been a blast being a part of the cultural heart of this amazing town for so many years and I cannot thank you enough for your amazing support. That being said, I have a blunt confession to make: I have never liked the American model of running a restaurant or a bar. It is based on a comical addiction to minimum wage that in much of this country is as low as $2.13. Tip revenue is generally so huge that minimum wage bartenders and waitstaff end up being the highest compensated of anyone in the industry by far, creating resentment in the kitchen due to the gross disparity of wealth between people working in the same restaurant doing different jobs. In my operation before COVID, you could make 5X as much money if you worked in a position that required a computer terminal with a printer rather than a stove.
If you are not aware, restaurants in America operate under an imagined hierarchy that was codified into Federal Law long before I started in this industry 35 years ago. This law made it illegal to distribute tip revenue equitably among employees within a restaurant. Rather than find an equitable way of distributing tips, restaurants were legally broken into two houses where a minority of employees was granted full access to all tip revenue to be allocated without input or interference from the owner, management or kitchen staff. In exchange, front of the house waitstaff and bartenders agree to work for minimum wage or less with no benefits whatsoever. This is the model that 99% of bar and restaurants in America operate under and it never made any sense to me, but it was illegal to do anything else. This model worked out very well for the guest, who for the price of meal gets an adult human being whose entire livelihood is based on their generosity. Restaurants and bars utilize incredibly cheap labor and price their menus and drinks based on the unspoken understanding that the guest is going to help cover payroll on the back end. As menu prices have increased over the last 30 years, tip revenue has increased over 300%. Sadly, back of the house wages have stagnated forcing the best and the brightest to leave the industry, to be replaced in most of this country by a migrant labor force. This model creates an employee completely unique to the restaurant industry; the $60,000+ dollar a year minimum wage employee. Their loyalty will always be to the guest because the guest is really the one who is paying them. They act like minimum wage employees because they are, and they are not wrong. I hated paying people minimum wage. It never felt good and it was impossible under that model to ever build a team mentality. It bred resentment and entitlement as those who were rewarded the most contributed the least to the overall functioning of the operation. It was just madness to watch this ridiculous scenario play out year after year unable to do anything about it.
In 2018, the government got serious about addressing this issue and started to amend the Fair Labor and Standards Act (FLSA) and issued its final ruling called the 2020 Tip Rule. This rule finally recognized that kitchen employees are vital to the act of service in a restaurant and are thus eligible in voluntary tip pools, if all employees agree to this practice upon hiring. It was the greatest thing to happen to this industry in my lifetime. This would solve almost every single issue that plagues my industry without resorting to adding a service charge. Once the house adds a service charge, that money is property of the house to be spent as they wish. To be clear, any service charge or automatic gratuity does not legally have to go to the employees. Be wary of restaurants that add a “service charge”. It is dubious at best. My model is simply that customers voluntarily tip as is customary in this country and tip revenue is voluntarily shared, nothing is forced, and all tip revenue belongs legally to the hourly employees participating in the tip pool. Unfortunately, I was not going to be able to take advantage of this law change because it was illegal to change the tip policy of a restaurant that was already in operation under the old model. This rule only applied to new restaurants.
Then suddenly in March of 2020, I had no employees and was given my one and only chance to finally create an equitable model of employee compensation. I had been dreaming of this ever since I fled the kitchen in my early twenties and knew in my heart that it would work perfectly. My idea was not to use tip revenue to justify paying people minimum wage, but rather pay everyone a living wage with benefits and allow tip revenue to benefit all employees without making anyone completely dependent on them.
Nearly two years later the results have been stunning beyond my wildest dreams. Rather than dramatically raise prices, hours of operation had to be limited in Gil’s and The Murray, due to the fact it is no longer based on a minimum wage model with no benefits. The Bistro transformed itself into what I always wanted it to be; a truly exceptional dining experience in the French gastronomic tradition. It is just delightful. Your response has been flattering as every table is booked every night. In short, with this model change employee turnover has dropped from over 200% annually to virtually zero and morale is through the roof. We can capture almost 70% of pre-pandemic revenue with 1/3 of the staff in 30% of the hours of operation, making this year the most profitable in 18 years. I am finally able to offer all my employees two weeks of paid vacation, paid sick leave and additional COVID pay if they are forced to quarantine, IRA with 3% match, a weekly rotating staff massage and all the fun benefits that come from working in the hospitality industry.
Don’t worry as we get closer to summer, our hours of operation will increase, and music will return as COVID moves into the rear-view mirror. Once again, thank you for your unwavering support during these tumultuous years.
Cheers,
Brian and The Slainte Mhath Gang!!