$15 Minimum Wage Or Not, Restaurant Bills Will Rise

Boston, MA - So, you order a plate of linguini, and it's good linguini — meaty manilla clams drizzled with olive oil, fresh-squeezed lemon juice, and a shower of oregano. For a plate of linguini that good, you're willing to pay $22 for a full portion. A glass of the house white alongside runs you another $8, and then you have to factor in another few bucks for tax and, say, $6 for tip.

How do you then feel about paying a three percent "administrative hospitality fee" on top of that?

That's the compromise at popular Centre Street Cafe, a means of evening out the pay between back-of-house and front-of-house staff without raising prices at the Jamaica Plain Italian restaurant. It's one of many ways an evolving industry is tackling the conundrum of employee pay and diners' bottom line.

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State legislators are currently considering upping Massachusetts’ minimum wage to $15, following the footsteps of nearby New York and far-off California.

Whether or not the minimum wage indeed jumps to $15, the fight to keep good restaurant employees on staff has become cutthroat in the midst of Boston's dining boom. Mid- to higher-priced restaurants in particular are getting creative to stave off price-hikes and keep all-star kitchen talent, but they can't hold out forever.

Here's how three Boston restaurants are working around a city they say has little appetite for pricey plates, and why many menu prices will eventually increase anyway, $15 minimum or no.

The Hospitality Fee

Keith Harmon is one of three co-owners at Centre Street Cafe, along with nearby Tres Gatos and soon-to-open Casa Verde in JP. They have been pondering staff pay challenges for the past several years, concerned that their cooks and dishwashers were getting substantially less than servers and other front-of-the-house staff.

For several reasons, that gap couldn't be closed by raising prices alone, Harmon said.

"You’re bound by the market," he said. "It’s not easy to just raise your straight prices and hope to be competitive.”

Moreover, raising meal prices has historically covered inflation, increased electrical fees, insurance costs, and the like — not across-the-board raises. Customers then tip to match those higher prices, money that goes toward front-of-house staff, but creates an ever-widening gap between them and their counterparts in the kitchen.

Hence, the hospitality administrative fee, which adds roughly three cents on the dollar to the dining total. The restaurants charge a three percent fee on regular bills and put a seven percent hospitality administrative fee on group, prix fixe, and event dining.

While he hopes that's not significant to diners, Harmon said it makes a notable difference to staff, particularly given the pitched battle for restaurant talent in Boston. The three percent fee allowed Harmon and his co-owners to give the entire kitchen a raise, plus pay servers slightly more, he said.

Knowing diners don't take even small price fluctuations lightly, Harmon and his co-owners shared their plans in painstaking detail through an open letter to diners and the restaurant community at large.

"To be successful, we really had to shout it from the mountain tops," he said. "We didn’t want people to think we were trying to hide something or slip anything in there.”

The Tuition Reimbursement Plan

"Collectively as a industry, we’ve set up a structure that’s not sustainable for 99 percent of people coming out of culinary schools," said Chris Coombs, with the Boston Urban Hospitality restaurant group.

Coombs, the lauded chef behind dbar, DeuxAve, and Boston Chop, is trying to crack the staffing challenge by addressing that educational mismatch. In a place with sky-high rents like Boston, that disconnect is especially glaring.

Housing is expensive enough, but when cooks come out of culinary school thousands of dollars in debt, Coombs said, he doesn't have the budget to pay high enough wages to cover both. That means losing chefs, not only to the competition, but to other, better-paying industries.

Enter: The tuition reimbursement program. The program pays employees’ school loans up to $1,000 a month.

The industry culture is shifting, Coombs said. Staff expect to move up quickly, be challenged, and generally have an elevated quality of life. In addition to finding ways to offer those other perks, Coombs said, tuition reimbursement "sweetens the pot."

So far, he can't conclusively say it has helped with the retention problem, given the program's newness. But Coombs said it appears to have at least helped attract more interest from prospective employees.

The Training Program

Boston Nightlife's Bill Brodsky has taken a similar tact, but from a different angle. Rather than reimburse hefty culinary school loans, his team is being built on greener talent. It takes training but, Brodsky hopes, builds loyalty.

Under the Boston Nightlife Ventures umbrella, Brodsky operates Wink & Nod, Tap Trailhouse, Griddler's Burgers + Dogs, Akinto, and the forthcoming Southern Kin. The diversity of restaurants gives eager young chefs creative outlets without leaving the company that's invested the time and money to train them.

"We might be getting these diamonds in the rough who need time and development," Brodsky said. "We’re really trying to offer people long-term careers."

That contrasts with the restaurant group's previous approach of aggressively recruiting all-star talent, and with how chefs previously climbed the ranks.

"When I was coming up, it was commonplace to work 70 or 80 hours a week for no money," Brodsky said. "You kind of made a deal with yourself that you’re learning that craft, and this is what you need to get ahead and earn your dues. But the climate has changed significantly."

Now he, like Coombs, hears the call for quality of life. Boston Nightlife tries to limit working weeks to no more than 50 hours, Brodsky said. They've upped wages, and will keep paying incrementally more. Should a $15 minimum wage requirement take effect somewhere down the road, Brodsky said, he'll probably be there already.

The Rub

Even without another minimum wage hike, Boston restaurateurs are fighting on multiple fronts: there's the growing price tag on commercial real estate and rent, increasing food costs, and staffing challenges exacerbated by the crush of new restaurant competition and a changing industry culture.

"I really think at some point there are going to have to be some price increases," said Centre Street Cafe's Harmon. "All restaurants are going to have to catch up with that curve a little bit or be trampled under it."

Big picture, Harmon is convinced the question ultimately isn't about money, but the value that people place on food and the environment.

Popular local vegetarian chain Clover is one that's angling to get ahead of that curve, but taking a strictly price-based approach. The owners are aiming for a $20 per hour average employee wage built on moderate price increases over a two-year period.

"To support $20/hour customers would have to be willing to pay $10-11/sandwich. I think we can get there in 2 years. But really this is a cooperative experiment. We’ll watch carefully to see how you, your friends, your colleagues, respond," founder and CEO Ayr Muri blogged last October.

Even not-so-careful watching quickly reveals that response: mixed, but trending negative.

"I love the idea. Unfortunately, there is no way I can pay $10-$11 for a sandwich," reads a typical reply to the blog post, echoing the sentiment on other online forums. Others argue that while they, themselves, can afford that higher meal ticket, it further inhibits lower-income individuals' access to healthy food.

The argument made by Muri, Brodsky, Harmon, and many others is that wages (and, also, prices) are on an upward trajectory, but it will take a cultural shift among diners to make that feasible.

"I really think the underemployment issue in the hospitality industry still goes back to what people are willing to pay for dinner," said Coombs. "In the Boston market, an entree over $39 is still considered expensive. … I’ve only seen food costs increase, but the price I’ve seen people pay for dinner still stays the same."

Restaurants right now are "knee-deep in transition," to use Brodsky's words.

They're experimenting with different ways to simultaneously compete on price and employee pay. It's an existential question about restaurant culture and employee quality-of-life, as well as a hard-nosed financial conundrum. Current prices can't last forever, but current culture is shifting, too. Minimum wage increase or no, the outcome will likely be a different model than what most restaurants have today.

"Certainly nobody wants to just throw higher prices on the menu," Brodsky said. "There’s no easy solution. If so, we wouldn’t be having this conversation."

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Photo courtesy Dan4th Nicholas, Flickr/Creative Commons