In October 2020, Sweet N Savory Café launched a new business model, jettisoning a tips-based system in favor of providing a $15 hourly wage for everyone on the staff.
One year on, how is the model working?
“It works really well in terms of teamwork,” owner Rob Shapiro said Tuesday. “It removes the ‘hustle’ – servers not necessarily being their authentic selves and competing for tables just to get tips. Our guests can flag down anybody if they need service.”
Since the restaurant decided to be “honest with the market” – to use Shapiro’s phrase – about its new operating premise, Sweet N Savory has needed to make some basic changes. One has involved adjusting its prices upward to make up the difference between paying staffers the industry-standard hourly wage of $2.13 and the new $15 rate.
“It costs 10-12% extra to run this,” Shapiro said. “That’s an extra $20,000 to $25,000 a month. Plus commodity prices are up. We’ve had to make three-to-four small prices increases so far.”
Another change has involved staffing. When COVID-19 restrictions forced restaurants to close in the early spring of 2020, Sweet N Savory had to lay off about 60 front-of-house employees, leaving it with a skeleton staff of nine. The shutdown gave Shapiro time to think about how his beliefs regarding equity and sustainability should be reflected in his business. So, when Sweet N Savory reopened at the start of summer in 2020, the restaurant began experimenting with the idea of paying a living hourly wage rather than asking employees to rely on tips.
The results were mixed, according to Shapiro.
“There was some learning curve,” he said, explaining that it took the public time to adjust. And many restaurant workers were reluctant to give up the tip system.
The restaurant began looking for people in other industries such as retail, telecommunications, administration.
“We’re after people who want to do this for a living,” Shapiro said. “We know they have mortgages, car payments, families. We’re developing a business model that will compensate them properly and enable us to have sustainable profitability.”
A tip-based pay model is definitely more profitable in the short term and even in the medium term for a restaurant than is a guaranteed hourly wage model, Shapiro said, but he said the taxpayers have been good to Sweet N Savory.
“We received two rounds of PPP [Paycheck Protection Program] loans and got Employee Retention Credits [through the IRS],” he said, saying that judicious use of that government support has allowed the café to transition into the new system, building revenues while pruning some costs.
Finding that some guests still wanted to leave a tip, one server created a “Tip It Forward” program that has taken off.
“It’s to satisfy those people who say ‘I had such a great experience here; can’t I leave a tip?’ and benefits people in the community who need the money more,” Shapiro said. “Our guests can now scan a QR code and donate. We are currently working with First Fruits Ministries; all the donations go to them.”
Shapiro’s downtime during the early months of the pandemic led him to envision several other new directions for his eatery. In the next few months, he and his team will turn Sweet N Savory’s patio space into a beer garden. A screened porch dining area will get a makeover as an event center.
And, starting later this month, the café will give its menu some traveling shoes. Each week, the kitchen staff will offer menu items from a different international or regional cuisine. The first foray will involve five-to-10 Hawaiian dishes in addition to Sweet N Savory’s regular menu.
“We have a lot of talent in our kitchen, and we’ll try to make the food as authentic as possible, with our staff giving input during taste trials,” Shapiro said. “Our guests can wear leis or Hawaiian shirts. Our goal is to make it memorable.”