Restaurant owner hoping new fee will help keep back of house staffed and happy
STEAMBOAT SPRINGS — Destination Hospitality founder Phil Armstrong understands the challenge of finding and keeping good employees in a town like Steamboat Springs.
“I’m trying desperately to find a way to sustain my businesses in a town where it’s just very difficult for people to live, whether you are making $60,000 or $70,000 a year it’s still a tough place to live.” Armstrong said. “I realize this is a bold move that only a few restaurants in the state are doing.”
In the beginning of August, Armstrong implemented a 3% “kitchen appreciation charge” at Table 79 in Steamboat Springs and Aurum Food & Wine locations in Steamboat and Breckenridge. The appreciation fee appears on the customer’s final bill, and is a way of showing gratitude to the back-of-house employees who play a behind-the-scenes role in the Steamboat dining experience.
Under current law, front-of-house employees like servers and bartenders are unable to share their tips with the back-of-house employees like cooks and other employees who prepare the food.
Armstrong said this has caused a discrepancy that, for him, has made it more difficult to hire those back-of-house employees who are key to the success of the restaurant. He said he pays competitive wages starting at $15 to $20 dollars per hour depending on work experience of the person. But servers and bartenders can make two to three times that much money based on tips.
“The thing that I wanted to let people know about this is that, as a restaurant group, and as most businesses in this town, our biggest challenge is labor, right,” Armstrong said. “I mean, nobody can afford to live in Steamboat and certainly not a cook, even if they’re making $20 an hour.”
Armstrong is hoping his approach will help ease that discrepancy making it easier to hire new people and to hold onto his more experienced long-term employees
Nick Hoover, from the Colorado Restaurant Association, said there is very little regulation about sharing tips with regularly tipped employees like servers, bartenders and back waiters.
However, if a restaurant wants to go down the route of sharing tips with employees like cooks and dishwashers, there is a lot more regulation, and the restaurant is no longer able to take the tip credit for tipped employees. That means the restaurant owner would be required to pay an additional $3.02 per hour or more to the front-of-house employees.
“A service fee that is used to help compensate back-of-house employees is not uncommon, but it is being used sparsely across the state,” Hoover said. “Some have tried it, and some have gotten backlash from it. It’s an emerging trend if anything.”
Hoover said holding onto employees is not an issue limited to resort towns like Steamboat. And several restaurants in Denver have also implemented service fees.
“Our board of directors has never taken a position either way when it comes to the existence of service charges,” Hoover said. “Our job is to support restaurateurs in making sure that they do things in the appropriate manner. If they do it correctly, we support them being able to use a tool that is available to them.”
Nick Sharp, president of the Steamboat chapter of the Colorado Restaurant Association, knows only of a few restaurants, including Aurum, Table 79 and Mountain Tap that have programs that reward back-of-house employees.
“There is a big challenge to get back-of-house wages to a place where they are sustainable, and those employees are earning a living wage — especially in expensive communities like Steamboat,” Sharp said. “It’s not just in Steamboat, but it’s in the hospitality industry as a whole. The disparity between back-of-house and front-of-house employees can be great. It can be several dollars an hour.”
Mountain Tap co-owner Wendy Tucciarone said her downtown establishment started a revenue sharing program a couple of years back that rewards employees who are working behind the scenes. She said employees in those positions can make an extra $1.50 to $2.50 per hour depending on how busy the restaurant is. The money comes out of Mountain Tap’s bottom line with back-of-house employees making 3% on food sales.
“It’s diffused our profits a little bit, but it’s worth it if we can keep good staff,” Tucciarone said. “It’s so important, and it’s so important to have a good, solid staff.”
She said Mountain Tap is also lucky because the restaurant has a small back-of-house staff. She said on a busy night, Mountain Tap only has four employees working in the back.
While the systems for rewarding their employees are different, the end goal is to make it easier for them to live and thrive when the restaurant is doing well.
“When it’s busier, they know that their back-of-house revenue sharing is going to be higher,” Tucciarone said.
Armstrong said his system has had a similar results across the street, and in the weeks since he implemented the system, he has notice a difference among his cooks and dishwashers who are more motivated and excited as things get busier.
“The tourists that come to our town don’t realize how fine the balance is,” Armstrong said. “They come here to eat in our restaurants and shop at our stores and enjoy the scenery and skiing on the mountain, but what if there’s no one to work the lifts or cook the food or clean the rooms? The town is done.”
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