Why this Sacramento restaurant added a charge to the bill for back-of-the-house staff
At the end of each shift, Hook & Ladder Manufacturing Co. server Neill Little turns his tips into his manager. When he gets the money back the next day, it’ll have been split between all other front-of-house employees – plus the cooks and dishwashers sweating over the plates in the kitchen.
That’s a contrast from Little’s other job at Camden Spit & Larder, where servers keep every thank-you dollar they earn. Both models have their strengths, but Hook & Ladder’s approach makes the staff more cohesive than at a typical restaurant, he said.
“I enjoy knowing how much I’m earning, working for and seeing the fruit of my labors. At the same time, just cause you’re the best player doesn’t mean your team is good,” Little said. “If you help out the kitchen, who really is the engine of all restaurants ... a better product will come out, which then increase tips.”
Tip pooling is a new option for Hook & Ladder and other Sacramento restaurants, thanks to a recently-passed amendment to the federal Fair Labor Standards Act. Hidden away in the back of a $1.3 trillion federal spending bill last year, the amendment allows tips to be split between the front- and back-of-house positions.
Doing so helps address a pay disparity between front-of-house employees (servers, bartenders, bussers, runners and hosts) and back-of-house staff (cooks and dishwashers), said Alaro Brewing Co. co-owner Ray Ballestrero, who began pooling tips at his Spanish brewpub in January.
Though low-end positions are paid minimum wage or something slightly above it in most restaurants, Sacramento servers can make anywhere from an extra $4 to $20 an hour in tips, according to salary-tracking website Pay Scale. Back-of-house staff, however, don’t see that extra cash.
“It’s not just the food, it’s the whole package. And that package includes the back-of-house,” Ballestrero said. “It’s a hard industry to keep employees. If your employees are doing well, they’re going to stay with you.”
Hook & Ladder went one step further. Not only did the Richmond Grove restaurant begin pooling tips at the beginning of the year, it added a 2.5 percent “kitchen equity share” to all dining bills for distribution among back-of-house employees.
The kitchen equity share, which Alaro also experimented with before tip pooling was legalized, can be returned to customers upon request, though Hook & Ladder co-owner Jon Modrow said only two customers out of more than 1,000 have asked for their 2.5 percent back.
After two-and-a-half months, the average employee’s pay was up 6.3 percent when adjusted for the required minimum wage increase, according to Modrow’s data. Five of seven Hook & Ladder employees got pay increases, including some of nearly 50 percent.
Customers don’t seem to mind, either: Hook & Ladder’s total year-to-date sales were up 8 percent through February. Modrow and business partner Kimio Bazett’s other restaurants, The Golden Bear and Kru, could eventually begin pooling and adding a kitchen equity share, he said.
Magpie Cafe was one of the first local restaurants to experiment with disrupting the system. The midtown restaurant was lauded in the Washington Post in 2015 for including a separate kitchen tip line on customers’ bills, a practice it continues today. Unlike Hook & Ladder’s designated 2.5 percent surcharge, Magpie customers have to opt-in to the back-of-house pay bump and contribute whatever they like.
Servers at restaurants without a tipping system for cooks have reason to dislike the idea. More money for the back of the house could mean less money for the front. A second tip line makes more sense to Rose Hagerty, a server at TopGolf in Roseville. Back-of-house work only directly impacts Hagerty’s tips when an order gets messed up, she said. If it comes out as ordered, customers tip on the quality of their service rather than taste or presentation, she said.
“When it comes to tipping out back-of-house, I am not a fan of that,” Hagerty said. “Maybe there could be a separate section on the ... receipt where people could choose to tip back-of-house as another solution. Or maybe it should be the restaurant’s job to (fairly) compensate the back-of-house workers for their job difficulty.”
If restaurants need to tack on surcharges to pay their employees a liveable wage, why not adapt to the Asian/European models of charging more for menu items and eliminating tipping altogether? Several restaurants around the U.S. have tried over the last five years, from high-end places such as New York’s Momofuku Nishi to some Joe’s Crab Shack locations.
In nearly every case, it’s been a disaster. Roughly 40 percent of New York restauranteur Danny Meyer’s longtime front-of-house staffers abandoned ship after he nixed tipping at all Union Square Hospitality Group restaurants in 2016. Managers reportedly cried tears of joy when the owner of Bar Agricole and Trou Normand in San Francisco announced the restaurants would go back to accepting tips after nine months of experimentation.
Almost every trial saw customers balk at sky-high menu prices, even when they knew tip was included, and those who stuck around ordered less food, according to Grub Street. Front-of-house employees repeatedly left for restaurants with traditional tipping structures, where a busy night or an extra-generous customer meant instant gratification.
To eliminate or split tips risks alienating servers, bartenders, hosts or other front-of-house staffer who rely on them, Hawks chef/co-owner Michael Fagnoni said. And qualified employees have no shortage of options in Sacramento’s growing restaurant scene and tight labor market.
“If I told my servers their tips were going to be shared with the cooks from now on, they’d probably go somewhere else,” Fagnoni said.
Since introducing tip pooling, though, Hook & Ladder has lost one server who was promoted at her other job and a busser who quit to spend more time on schoolwork.
Meanwhile, three cooks have been able to quit their second jobs as a result of the pay bump, Scuderi said. He credited the retention to a team-focused work environment and clear, thorough communication between management and staff about the changes.
“I’ve always felt like I was working in a flawed system,” said Scuderi, who started out as a 13-year-old busboy in New Jersey. “The solution that we have in place now is able to pay our cooks a liveable wage. We have cooks that don’t need to work two jobs now. We have cooks that can work 40 hours a week and be comfortable with that.”
California is one of seven states required by law to pay tipped employees a full minimum wage ($11 or $12 per hour, depending on the business’ number of employees). In states such as Texas, North Carolina and Kansas, restaurants can pay their workers as little as $2.13 per hour, provided the employees make at least $20 per month in tips.
Californians also make for good customers; a 2018 Quickbooks study showed they tipped a higher percentage than patrons in all but 11 states. Local servers, then, are relatively flush compared to their counterparts across the rest of America, though housing information website Best Places also found Sacramento has a higher cost of living than most places around the U.S.
Even so, Little said, the base salary isn’t why servers stick around – especially since taxes on tips often come out of those paychecks.
“Tips are everything,” Little said. “Paychecks, in all reality, are our bonuses. They’re nothing to write home about in any way, shape or form.”