Struggling to Keep Staff, this Restauranteur gave Everyone a Raise



Chances are you are familiar with Dirty Candy, the brain child of Amanda Cohen, which recently reopened in a larger location on the Lower East side. It's one of the most popular restaurants in the city and is booked up with reservations from hungry customers for months. In the previous version of the restaurant, Cohen struggled to keep her best cooks, a problem many restaurants deal with.

In an effort to keep talent, she decided to level the playing field. Everyone, front of house and back of house alike, are being paid at least $15 an hour.

“I’m hoping it’ll keep talent around,” she said. “Definitely in the back of the house, it’s an incentive to stay.”

Cooks and their back of house peers work hard but don't usually make as much as their front of house counterparts. Part of the reason Cohen made this decision was because of the high cost of living in NYC.

New York City has been deemed the most expensive in the country for families and since 2009, the cost of living has increased a staggering 23 percent. Cohen believes that the cost of living, coupled with the fact that the NYC experience isn't viewed as vital as it once was on a cook's resumes, is leading to a exodus of back of house talent. “We were, I think, losing cooks for the last couple of years to other great food cities,” she said.

Along with the higher wage is a new policy that does away with voluntary tipping. Instead, a mandatory 20 percent administrative fee is added to bills. “It just seemed fairer all around to everybody,” she said. “Cooks are notoriously not paid a lot of money to do their jobs, they work very long, hard hours. But they are always guaranteed their pay.”

The situation is completely different for waiters. “Servers, on the other hand, aren’t always guaranteed their pay but, especially in New York, they tend to make a lot of money at certain kinds of restaurants. It seemed like the way we could balance this out so everybody was paid a fair, living wage and everybody was guaranteed their wage.”

Cohen's back of house staff are "pretty excited" because "they'll be making a decent living, not as much as I would love for them to make…but better than they were,” she said. A living wage in New York City is $12.75 an hour for a single person but rises to $20 or more if the person is a parent.

The front of house staff is also excited about the changes. The salary provides them with more stability than before. “To know at the end of the week this is what I’m going to make because I worked this many nights is a huge bonus. They never have to wonder.” She pointed out that with the snowy, cold winter New York City has experienced this year, servers might not have been able to count on customers coming out and giving them tips. That adds a layer of instability most workers don’t have to live with. A steady wage is “just like every other job,” she said. “Servers shouldn’t be treated any differently. It’s a job.”

The new system is also beneficial to her as the restaurant owner. “I fundamentally don’t agree with tipping, with the system that we’ve set up,” she said. “I’ve basically outsourced my human resources department to the customers. If you don’t think the server did a good job, you don’t have to pay them. It’s crazy.”

Cohen stated that she hasn't “had a single complaint” from customers about the new policy. “We’ve had a lot of questions, but nobody has refused to pay it,” she said.

The goal is to get customers comfortable with higher prices that have the cost of labor baked into the dining experience and doing away with tipping and fees. So far, she's hesitated to raise prices because of the fear of alienating customers who aren't familiar with the restaurant's policy.  “But hopefully within a year, we’ll just move into that system, and nobody will question it,” she said.

Cohen pointed out that it’s more a matter of semantics than a substantial difference for the customer. “No matter where I incorporate it, you’re still paying the same amount of money,” she pointed out. There’s little difference for a customer’s wallet between a voluntary 20 percent tip, mandatory 20 percent fee, or paying prices that are 20 percent higher without an extra gratuity. “Ultimately we’re splitting hairs here, your bill is your bill, it’s the same bill no matter what.”

Cohen also plans to add benefits to go along with the higher wage. “It’s still a restaurant, still very, very slim margins, and we’ve just opened, which means margins are nonexistent if not negative,” she said. “But once we sort of get up and running and things are little more stable, it’s definitely something we’re considering implementing.”

Cohen's idea that a higher wage will help her keep her best talent is something that has been proven in research by economists. Higher wages help companies retain talent while also attracting more qualified applicants, enhancing customer service and increasing employee's performance and productivity. Huge businesses such as T.J. Maxx, Gap and Walmart have recently raised their base wages based on these assumptions.

The dislike for tipping is also a growing trend. Cohen joins other restauranteurs in New York and beyond who are eliminating them. For example, a new restaurant in Philadelphia, which has a lower cost of living, is paying employees $15 and hour and has implemented mandatory fees to cover the cost.

Is a higher base wage the way to keep the best talent for restauranteurs? Would you be more likely to stay at a job that pays better and maybe even offers benefits? Is this the future of the restaurant industry? Let us know the comment box below.

[VIA Think Progress]

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