2 Percent: Why it Makes Sense

This is the first piece in an ongoing series exploring questions about our local economy.

 

At 9:00 on a Sunday morning in Montpelier, Vermont the streets are generally still quiet. However inside the Southern breakfast restaurant Down Home Kitchen the atmosphere is always strikingly different.

Sixteen year old Lucy Wood and her stepdad Ben Skolnik walked into Down Home. They sat down on the the old tractor seats at the counter because it was already too busy to get a table. Sounds of voices, laughter, mellow music and the occasional crash of a pan or ding of a bell filled the air.

Ben and Lucy both ordered what Lucy describes as “the best coffee in Montpelier” from the young bartender, Brielle, who is adorned with a colorful old-fashioned apron.

The two come to Down Home a few times a month, usually on Sundays, and sometimes with more family.

But what goes into a meal like this or any meal out? There are two distinct parts and yet, the most Lucy heard of them was that tinny bell or maybe clank of a pan against a stove.

The front of the house is made up of servers, hosts and bussers. A server at Down Home works about an eight hour shift. He or she (but most likely she) will take home approximately $200 dollars or more in tips alone on a normal weekend day. Servers make $5.25 hourly because of the tipping system. At Down Home the servers are required tip out hosts, dishwashers, and bartenders around five to ten dollars depending on how busy it is.

In 2011 the Federal Labor Standards Act upheld that it is against the law to require tip outs to the kitchen workers. Since non-tipped employees earn twice as much as tipped employees for minimum wage tip pooling could become suspect. (1)

Beyond the buzzing calm of the dining room in the back of house are the cooks, dishwashers, prep cooks, and bakers who prepare the food. Cooks work for eight or nine hours in a day. They make a few dollars over minimum wage.  The back of house is isolated, not thought or talked about, customers might only hear that bell saying that the order is up. “This is built on racism and xenophobia, you have people of color, immigrants, people that are not educated hidden, behind the wall.” The system, Mary Alice Proffit, Down Home Kitchen’s owner says, is “pretty fucked up.”

It’s easy to spot the problem; that kitchen worker is making over a hundred dollars less than their server counterparts on a busy day. The solution? Proffitt thinks about this inequality a lot and last Winter discovered a strategy for dealing with it.

The surcharge is essentially a profit-sharing mechanism,” Proffit explains the 2% surcharge that is added to all bills at her restaurant.

“So when Down Home Kitchen is experiencing busy days, we are able to share […] the business with the people who are not working on a tipped wage but who are having to still work a lot harder to make those days happen.”

The idea was developed by some restaurant owners in California and New York City and has been picking up speed. (2) Even in Vermont Proffit knows a few restaurants that are adopting the method, including ZenBarn in Waterbury.

So does it work? Mary Alice says she has seen a difference. Cooks who are often living paycheck to paycheck are immensely grateful for the extra cash. One cook told Mary Alice it was because of that extra cash that he was able to fix his car and keep working. When the competitive market is between business owners to find and keep employers this bonus at the margin really makes a difference.

Mark Schumacher could probably be found flipping Ben Skolnik’s pancakes that day. Cooks like Schumacher who know how to work all stations of the kitchen have therefore put in enough time (usually 6 weeks to 3 months) and commitment to receive this monthly bonus. How much you get depends on how much you work and whatever business comes in the door during that time. For a cook who works 30-40 hours a week the bonus could be $300 depending on the month. The surcharge should average a two dollar an hour raise for kitchen workers.

Along with Schumacher in the back of house is likely another line cook, a dishwasher, a prep cook and a baker. When the ticket with Ben and Lucy’s order printed in the back it was stuck at the back of a line of orders to be made. When it was finally gotten to, the eggs cooked, the tomatoes cut, pancakes flipped, the plates delivered Brielle came streaming back into the kitchen asking for an order of grits ‘on the fly’ having forgotten to put them on the ticket originally. Suddenly Schumacher had to pause his process, stop everything and get that order of grits out pronto on a mistake that was not even his. This is a frustration for every cook everywhere, but restaurants with the surcharge it is less so. Those cooks who are having to do favors and on the fly orders are being rewarded because if Ben and Lucy enjoyed their experience they will come back again bringing in more business and upping their kitchen tip. There is a better overall team spirit Proffit says, the cooks know that by helping out the waitstaff they are also helping themselves, “I don’t see a lot of fighting between the front of house and back of house anymore. I’ve had more women willing to take jobs in the kitchen.”

A smattering of finely chopped scallions garnishes the small bowl of grits which is brought to Lucy in such a timely fashion that the delay is barely noticeable. It is these details of cooperation that make a restaurant run smoothly.

The kitchen surcharge also helps to combat two of the biggest problems facing restaurant owners in Vermont; a low supply of people to hire and a difficulty keeping them. Proffit explains, “Few immigrants, few college students.” She mentions that in cities kitchens are made up mostly of Mexican-Americans or immigrants. She’s right; 35% of cooks in the US are Hispanic or Latino. (10)

The kitchen tip rewards staff for hard work and hopefully makes them more inclined to keep working there, as Proffit says, “Retaining employees, keeping good people, not having to rehire is one of the goals of a good business.”

With the kitchen tip Proffit gains a competitive edge on other restaurant owners in the area. The additional cost of this surcharge, having higher prices for customers, is well made up for if she can hire and keep good employees. This experiment at the margin has therefore paid off in her eyes.

 

The bill for a 12 oz coffee at Down Home- notice the kitchen tax

 

Not everyone is a fan of the surcharge. 18 year old Wilson Knight thinks that in terms of actually making things fair kitchen staff are still making much less than the wait staff. “I’d rather have it than not,” Knight explains. “(but) it doesn’t equalize anything. (…) it is really just a nice thought. It’s a good intention just not very well carried out.”

However, there is something more important than if this tip is an effective strategy for equalizing the wage gap, if the customers do not accept paying this extra charge there will not be any wage gap to equalize. So what do they think?

Going back to Lucy and Ben who have finished their meal and Brielle has delivered them their bill. The layout of it will look something like this:

 

EXPENSE COST ($)
Blueberry pancakes 11.00
Green Mtn. Goat w/ grits 12.00
Coffee (2) 5.00
Taxes (total of 10%) 2.80
Kitchen Tip (2% of total with taxes) 0.62
TOTAL 31.42
TIP (say Lucy and Ben tip 20%) 6.28
TOTAL + TIP $37.7

 

That’s sixty-two cents on a twenty eight dollar food bill without tax. Lucy thinks that is reasonable, “It really isn’t that big of a deal to have to pay a little bit more to reward the kitchen for their service.” Most people seem to agree with Lucy, and an article about the surcharge in the Boston Globe said that, “For most businesses using this strategy the surcharge resulted in no drop in customers”. Mary Alice reports the same for Down Home.

Lauren Quinn and Brian Clark both came to Down Home the same day as Lucy with their families. The three, like Wilson, find the idea admirable but can think of systems that might work better.

Quinn remarks, “The other alternative is food costing enough that the employer pays everyone a fair wage. In theory I’d support that system more, but I know it’s not the kind of thing one single restaurant can change.” Mary Alice talks about this “real price of food” too, the limitations being that the resulting price hike would put them out of business.

Clark wonders “…why it wouldn’t be as effective to simply divide the waitstaff tips among all?”

There is more that goes into this answer than just that it is against the law. There is competition for good servers and front of house workers just as much as there is for the back of house. Proffit knows this,“Serious servers. They won’t work for you if you take too much of their tips, they’ll just go somewhere else. It’s back to the same problem of retention.”

She elaborates on the incentives system that tipping is based on saying that wait staff would do a less quality job if they do not have this uncertainty that they might not receive a good tip if they do not “perform” well.

Many European countries have done away with tipping altogether having encountered some of the same problems. Even though change comes slow in our sleepy Vermont town, could Down Home Kitchen’s 2% kitchen tip be our wake-up call?

The kitchen surcharge is explained briefly to customers on this board that also features a beverage list