Business-as-UNusual - Dave's Dispatch

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David Farkas

Business-as-UNusual
July 22, 2008

We all know the restaurant business is a multi-faceted, fascinating space in which to make (or lose) money. Even in times like these, with so much news focused on what ails the industry, stories pop up now and then that remind you of business-as-unusual. Here are three:

Tip her, please.

1. The topic of tipping is never far from controversy, as Starbucks is learning the hard way. But imagine a chain that decrees that its servers use tip money to help subsidize credit-card processing fees -- the case at Yours Truly, a small, midscale chain in northeast Ohio. In most states, servers are among the lowest paid workers in a restaurant. As of July 24, Ohio, a tip-credit state, will require restaurants to pay tipped employees $3.50 an hour. Of course, tips bring that sum up, sometimes beyond the state's $7-an-hour mandated minimum depending on the type of restaurant. Still, no matter how much servers make, one has to ask whether it's fair to insist they share in the burden of paying for credit-card processing? "It's totally fair," asserts Yours Truly President Larry Shibley, recently explaining the situation to a reporter. "Why should I pay the service charge on their tips? It was an overly fair practice of subsidizing tips."
2. Can you say, "MISTAKES WERE MADE?" Several important ones in the case of Cleveland-based Mr. Chicken, as COO Michael Siemens, son of the founder, admits in the business pages of the Plain Dealer. Expansion: "We stayed [in Youngstown] far longer than we should have. Just because you're a hometown favorite doesn't mean you can go to someone else's hometown and be their favorite." Marketing: "We launched our first TV commercial in 2000. We produced a few before I realized we had to go back to what worked for us. There are good food commercials that generally cost about a quarter of a million dollars, and there are bad ones." Guess which type Mr. Chicken produced.
3. I'm a sucker for "hope-springs-eternal" stories. Here's one, from a local newspaper, about a couple who operate a busy restaurant in rural Grafton, Ohio. Despite a robust business, the duo decided to add a few more seats, with pizazz. But instead of a redesign, which would have meant hiring an architect, the couple is slapping an existing diner car on the front. "Nancy’s owners, Rick and Denise Shutek ... say it will liven up the diner’s current building, which is boxish and rather nondescript."

Posted by David Farkas on July 22, 2008 | Comments (5)

Industries: Expansion, Human Resources, Marketing, Operations

July 23, 2008
In response to: Business-as-UNusual
Interested Observer commented:

Anyone remember the old line "Regarding the current recession, we decline to partiicipate." ?

July 23, 2008
In response to: Business-as-UNusual
restauranteur2000 commented:

Can't agree with your comment that servers are the lowest paid people in a restaurant. Quite the opposite. I have managed and owned restaurants for over 25 years and they are always the highest paid employees, sometimes more than the managers. Get the facts straight.

July 23, 2008
In response to: Business-as-UNusual
in the business commented:

While I agree a good server is the highest paid it still sounds cheap if the operator forces the server to pay the collection fee on their charge tips. Whats next a fee for the next operating cost the operator can dream up to pass on? I don't care how good the food is with out good attentive service it is hard to get repeat guests.

July 24, 2008
In response to: Business-as-UNusual
Dave commented:

Servers, to be sure, often earn above the minimum wage and, as a result, can make more than some managers. But the feds and most states let employers take a tip credit, which means ... well, you know what that means. From that standpoint, servers are among the lowest paid workers. Customers' beneficence makes up the rest of their hourly wage. Sorry for the miscommunication.

July 24, 2008
In response to: Business-as-UNusual
simon commented:

In Texas waiters are paid 2.13 an hour. On top of that restaurant managers are allow to have them do other duties for 20% of there shift. They have them do cook side work and they send the cooks home. There are times they make great money but at some of the slower restaurants they could walk home with $10. Then they have to tip out a set perentage of there tips for bartenders and bus staff. Waiters are given min. breaks,most restaurants give them a discount for there meal not a free meal.Now they want to take one more thing out of there tips... Managers get free meals and bonuses...