Saturday, September 5, 2015

Sactown Restaurant Service - the next two years

You have to have been a coma not to know that there's a new Kings arena being built downtown. It's pretty hard to miss if you happen to be anywhere near the construction. With it comes all the talk and excitement of what the arena will mean to Sacramento, mostly in terms of economics.

My mind has been dwelling on one facet of those economic changes — the state of the Sacramento restaurant scene in terms of restaurants and their staffs.

You may think Sacramento has a fine collection of restaurants as it is. Well hold on tight because we are about to see an explosion of restaurants in the next 18 months. Some are already beating others to the punch. In June there were the openings of the remodeled Paragary's, Iron Horse Tavern, Roxie Deli, Dos Coyotes. In July we got the moved Magpie, Localis, Fish Face, and Metro Kitchen & Drinkery. The midtown Broderick's and the long awaited Empress Tavern just opened up.

Here's the thing. Competition is going to start getting fierce to not only hire all levels of staff for these restaurants, but also to hold onto them. The truth is, Sacramento does not currently have enough staff for all of these restaurants. There are not enough servers, chefs, line cooks, general managers, bartenders, bussers, dishwashers, etc. for the current number of restaurants, let alone the 30+ slated to open in the next 18-24 months.

Even less? QUALITY staff. Already restaurants in town are trying to lure quality servers, GMs, and more.  This has made me really think about what will be happening with restaurant labor over the next few years. 

This post is not meant to take any position on any particular method(s) but to point out some of the issues our local restaurants will be contending with over the next 18-24 months.

High turnover 

I worked for the State of California for 20 years and many of the last ten years were filled with hiring freezes and furloughs as the State tried to save money. Because of the strict hiring freezes, agencies and departments would end up hiring staff from other agencies because they couldn't bring in fresh new blood as new hires from the public. The problem is that when you have this much constant turnover of staff, work doesn't get done because it never gets learned. Before a hire has time to learn the new job, maybe even improve upon it and leave a legacy for new hires in the future, they were already being enticed away to other positions and promotions. The labor force was constantly moving.

Now imagine that in the restaurant industry. In Sacramento there are only so many restaurant staff currently available. We're not talking fast food staff, we are talking about seated, service restaurants from small cafes to fine dining establishments. Restaurant work is hard and low pay. Quality staff are going to be sought out, enticed, and hired away from competing restaurants. Chefs, GMs, and servers are constantly moving.

Recruit elsewhere

The best solution to look elsewhere and the most obvious is the Bay Area. What does Sacramento have that the Bay Area doesn't? Lower cost of living. It's time to start heavy recruitment of quality staff from San Francisco and vicinity. Local restaurant leaders should (and are) join forces to start an active advertising campaign and recruitment effort in the Bay Area and maybe even Southern California as well.  In order to get new hires to make the move, give them an incentive to encourage them to recruit their fellow restaurant coworkers to join them in the move. 


As hard as we may try to recruit restaurant labor, the fact of the matter is we still won't be able to attract enough people in the short amount of time. There's also the added problem of a general labor shortage of chefs throughout the United States. One reason cited in a recent Fortune article is that, while record numbers of people are going to culinary schools, they are racking up huge student debt, and so they end up going to chains, hotels, cruise lines where the pay is better than independents. This leaves independent restaurants and regional restaurant groups competing for chefs. 

The question is, what method or methods will our local restaurants use to hire and retain restaurant staff?


All over the country there is debate and politics going on with raising the minimum wage. Some cities have already done it, most notably San Francisco, Oakland, and Seattle. Here in Sacramento it is also being examined.
Most servers are paid minimum wage with the expectation that they will make a decent amount in tips. In the Sacramento market many Back-of-house (BOH) staff (cooks, dishwashers, etc.) also make above the current minimum wage because the market is so competitive to hire them. 

The current issue before the Sacramento City Council is to raise it to $12.50 but they can exempt servers if they prove that they are already making $15 when you count their tips. How will restaurants manage the increase? Will some offer more? Will they raise menu prices?

Tipping vs Service Charges

Until a few years ago I did not know that minimum wage for servers can be different than other workers. In some states servers are only paid $2.13 an hour. $2.13! The rest of their livelihood is from tips. Luckily this is not the case in California. Servers do get paid the same minimum wage as everyone else and then make tips on top of that. 

Another fact much of the public doesn't realize is that tips cannot be shared with BOH according to the Fair Labor Standards Act.  The disparity of tipping between FOH and BOH was discussed in a recent Washington Post articleMore restaurants in major cities, and recently Magpie, are adding a BOH tipping line whereby patrons can leave a small tip specifically for the BOH. Many restaurants do have servers share their tips with other Front-of-house (FOH) wait staff such as bussers. 

Most of us are used to the addition of a 18-20% service charge for when we have a large party of, say, eight or more. Another change in the industry is to get rid of tipping altogether and just add a service charge to every bill. This has especially become a more popular option in those higher minimum wage cities such as San Francisco and Seattle. Service fees can benefit both FOH and BOH staff, unlike tips. 

Profit Sharing and/or Benefits

Restaurants, like All the Sea Creatures Restaurants in Seattle, use a 20% service charge to level out pay inequities and increase the pay of all staff to at least $15 per hour without increasing the prices on the menu. But they and other restaurants are also taking an extra step to retain workers by offering 401K plans and health insurance. 

There are a few that are going even further with profit sharing. Zazie in San Francisco not only offers an employer match 401K plan, health insurance, and dental insurance, but profit sharing as well. Yes, it's meant raising the menu prices, but customers have understood and adopted to the change. 

Raising Menu Prices

In the case of Zazie, prices were raised as much as 20% but customers didn't mind in the end.  The reason?  Well if you are already paying 20% of the bill as a tip, how is that different from raising the menu 20% and then eliminating tips? In reality, it's a wash.  

The ones who mind are those customers who either are low tippers to begin with, or those who still believe that tipping is a reward system and so they fluctuate their tips depending on how they perceive service.  

There are those that argue that raising prices will drive customers away. What studies have shown is that over the last decade dining out has been increasing at an astonishing rate, making the restaurant sector one of the strongest for economic recovery. People are dining out more than ever. Will price increases slow that pace down?

In the end local restaurants will be weighing their options carefully because the stakes are high. They may chose to try one or more of the options. I'll be interested to see how it all plays out. 

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