Restaurant owner says he has tips to share

A Valley businessman rethinks wages in an attempt to create a better pay structure for all employees.

zkyle@idahostatesman.comDecember 25, 2013 

tipping, service jobs, wages, food

Server Alex Kurek delivers food to Lauren Cacopardo and Tahlia O’Loughlin at Modern Grind Burger in Eagle. When the restaurant first opened, there was a no-tip policy. Customers were upset they couldn’t tip, so owner Rick Boyd decided to accept and share them. “In some cases, customers were downright upset we weren’t allowing them to tip,” he said.

DARIN OSWALD — doswald@idahostatesman.com Buy Photo

Rick Boyd started working in the restaurant business at 14, busing tables at an IHOP in Tyler, Texas, for $2.13 an hour, without tips.

Boyd said he’s served, cooked, hosted and bartended in the 20 years since, a career culminating in the opening of Brewforia Beer Market in Meridian in 2009 and a second location in Eagle in 2012, and Modern Grind Burger at the shared Eagle site this year.

That operation placed a beer store and a restaurant under the same roof, a combination not seen east of Bier:Thirty in Bown Crossing. Boyd then had another idea: to dismantle the tip and wage structure dominating the restaurant industry — a structure that he said takes advantage of employees and fosters bitterness between co-workers.

Restaurant owners in Idaho are allowed to pay servers as little as $3.25 an hour, if tips bring earnings above the $7.25 minimum wage. This structure shifts labor costs from employers to customers, he said.

“Most restaurants are going to take every opportunity to find a competitive advantage,” Boyd said. “Lower labor costs is obviously one of those things.”

The amount servers earn on tips varies wildly depending on the business, customer traffic, service, clientele and time of day.

Nontipped “back-room” positions — cooks, dishwashers and busing staff — are commonly paid minimum wage, with no chance for big tip days. Some restaurants require or encourage servers to “tip out” the other departments — paying a small percentage of their take to co-workers. But Boyd said servers still earn far more than their back-room counterparts.

So Boyd created his own pay structure about a year after opening Modern Grind. Employees in all positions start at $8 an hour or better. At the end of each day, all of the tips are pooled and distributed equally among the workers, regardless of position, based on how many hours each worked. Neither Boyd nor managers take a cut.

Including tips, employees make an average of about $18 an hour, said Marvin Kinney, manager of the Meridian Brewforia. Statewide, 51,000 workers in food preparation and related jobs — including all restaurant positions — averaged $9.37 an hour in 2012, according to the Idaho Department of Labor. Of the 51,000, 19,000 worked in the Treasure Valley.

COULD IT WORK ELSEWHERE?

Kinney is another restaurant lifer who has worked in many positions at many restaurants. He said several servers have been upset by Boyd’s pay model because it reduces the earning potential for the top servers. Those employees worked previously in bars where they could earn $150 in tips on a busy night, Kinney said.

But most Brewforia employees strongly support Boyd’s model, Kinney said.

“They love it, especially the kitchen guys,” Kinney said. “They make a lot more here than they would anywhere else in town.”

Boyd’s system is unusual in Idaho, said Pam Eaton, president and CEO of the Idaho Lodging & Restaurant Association.

Many restaurants operate on too slim of a margin to pay higher wages to servers, she said.

“They are labor-intensive businesses that already devote about a third of their sales to wages and benefits,” Eaton said. “Pretax profit margins for restaurants typically range from 3 to 5 percent. Many restaurants would be forced to limit hiring, increase prices, cut employee hours or implement a combination of all three to pay for the wage increase.”

Boyd said paying lower hourly wages would save him 4 percent to 8 percent on labor costs. But his employees feel they are treated fairly, he said, resulting in reduction of two problems that plague many restaurants: worker turnover and employee theft.

The more egalitarian tip-pooling approach also breaks down what Boyd called a “caste system” between front-room faces of the business — servers and bartenders — and the workers in the back.

Servers working for tips don’t appreciate what goes into preparing food quickly in a sweltering kitchen, he said. Cooks working for minimum wage don’t appreciate what it’s like spending hours dealing with customers, some of whom are rude or don’t tip.

“Unfortunately, there’s very little understanding between the two castes,” Boyd said. “This is an easy fix. It’s something every restaurant could do tomorrow without having any major upheaval in the way they do business.”

Zach Kyle: 377-6464@IDS_zachkyle

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