Restaurant workers are one the most exhausting jobs, yet many industry professionals are notoriously underpaid.
Employees often depend on tips from customers to make a living wage. This adds to the already stressful working environment.
Unfortunately, restaurants in the U.S. pass the labor cost onto customers in the form tips, leaving hard-working employees without safety net.
But the owners of a San Francisco eatery have been defying the status quo for years with their “tip-free” model that offers all their staff a living wage with full benefits and even a share of the restaurant’s profits.
Under the second owner Jennifer Piallat, Zazie, a popular brunch spot, went tip-free in 2015. Piallat had the unavoidable task of increasing menu prices by 20% in order to sustain this business model.
She was expecting some resistance, but the customers were surprised at how happy they were with the changes.
“In fact, one customer said she expected sticker shock, but that the menu still looks reasonable,” the restaurant owner said after carrying out the new system.
The staff was happier if patrons were happy with the change. All staff earned between $15 and $20 an hour when the no-tip arrangement first became effective.
Servers got a 3%-7% pay increase, while back-of the-house staff received a staggering 35% raise. The team now earns anywhere from $30 to $65 an hour. The employees receive 25% of the revenue share from every item on their menu.
“Our staff are treated like adults, with ‘real jobs,’” Piallat explained. “Our labor costs are much higher than most restaurants, but our food cost/loss is much lower, so our profits end up higher.”
“More mature, long-term staff waste less food, make less mistakes, are less likely to steal, and can handle bigger sections.”
Piallat can offer full-time and part-time employees paid sick, vacation, health, and dental insurance. It also offers a 401(k), with a four percent employer match.
“The only person losing money is me,” she joked. “My accountant doesn’t like it, but I didn’t want to risk anyone being dissatisfied.”
Piallat also believes transparency is essential for a healthy workplace. So she keeps a spreadsheet of all the important numbers.
“Everyone sees what everyone else makes. There’s no shadiness about it,” she said.
Over the years, these changes have allowed three of Zazie’s long-time workers to become part-owners of the French eatery.
In January 2020, Piallat sold Zazie to one of its servers, its executive chef, and its general manager—three employees with 50 years of cumulative experience at the restaurant. Piallat is now 25% of the business.
“I always knew I wanted to sell to my staff. I couldn’t imagine putting 17 years into building this community to have some stranger come along and treat them like disposable idiots. The hard part was choosing who to sell it to…I doubt they thought they’d ever own the place,” she said.
Zazie’s owners plan to carry its “no-tipping” legacy for the next decade.
Fortunately, the restaurant seems to be doing better than ever, even after the pandemic’s devastating effects on businesses everywhere.
Many restaurants were shut down due to labor shortages.
The staff benefits also contributed to Zazie’s very low turnover rate. Only one server left to switch careers during the pandemic.
Only a few employees had left the restaurant in the past five year to move or change careers. However, no one quit to work at another place.
We hope that other restaurants follow Zazie’s footsteps. Everybody knows that service workers deserve more.
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