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The owners of Gigi's Cafe banned tipping and added a 20 percent surcharge, but it was adding profit sharing that clinched the success of their bold move.

PAMPLIN MEDIA GROUP: JAIME VALDEZ - Charlene Wesler, co-owner of Gigis Café in Hillsdale, scrapped tipping and went to a 20 percent surcharge. With minimum wages rising and back of house staff harder to keep, she used the move, and added profit sharing, to unify her staff and keep stabilize their income.

Charlene Wesler always felt there as income disparity in the restaurant trade. As someone who worked back of house — doing the cooking — she felt her team had at least as much claim to customers' appreciation as the servers have.

"I started off working in a kitchen for $10 an hour, and one night I overheard a server saying 'I only made $200 tonight.' And I'd been there six hours!" The servers only shared their tips "a little bit," she says of that old job. Now she sits in her 50-seat restaurant Gigi's Cafe in the Hillsdale shopping center, which has become a success story for both its food, — now serving dinner — and its management experiment.

At Gigi's, she says, it was similar. "The problem was the kitchen's making the food, the guests love the food and are happy with the people who bring it to the table, but they don't realize who's getting the money."

Today, Wesler owner-operates Gigi's Cafe with her boyfriend Mike Susak. She works as an accountant three days a week, then in the restaurant on weekends. They also have six children between them.

When she was studying accounting at Portland State University, she started Gigi's as a waffle cart downtown, near the Culinary Institute where she learned the food business.

Wesler's food cart was called Gaufre Gourmet. "It's the French word for waffle but nobody understood it, so we shortened it to GG's," she says. People warmed to the new name. "It turns out everyone has a GG: that's what they call their great- grandma, their grandma, their dog, their stuffed toy..."

In 2014, with business was going well, they established the brick and mortar café as a family friendly place specializing in breakfast. The waffles were the platform for everything from eggs to fried chicken to fruit. But when she started writing checks for servers she realized the inequity was stark.

Then, changes in the law made Wesler really uneasy.

In March 2016, federal law made it illegal for restaurant owners to split servers' tips with the other staff. (That ruling has since been overturned by the Department of Justice.)

While it was not being enforced at the federal level, Wesler felt she had to get ahead of the game.

"We're one of last countries that still tips, I think its inequitable to the severs." This was making the inequity between front and back of house worse.

Oregon is a state where there is no tip credit: servers have to make minimum wage, as well as their tips. (In other states, they can legally be paid below minimum with the understanding that servers will make it up on tips.)

In Oregon, minimum wage currently is $11.25 an hour in Portland metro, heading to $14.75 on July 1, 2022.

"So, in Oregon as minimum wage goes up servers are making more and more, and they're already making about double what the kitchen makes."

Further, if Wesler, as owner, waits a few tables she can't keep the tips.

"In the end, a restaurant owner is happy to make a 6 percent return on a dish, and the server is making a 20 percent return on a dish without any liability."

PAMPLIN MEDIA GROUP: JAIME VALDEZ - Lawrence Garcia, a server and shift lead at Gigis Café, welcomes changes that saw a 10 percent surcharge replace tipping. He feels it is fairer to the back of the house (dishwashers, cooks), and profit sharing encourages staff loyalty.

"Gigi's is tipless!"

In 2015, her servers were making so much money four of them went to Europe on extended vacations. She started thinking she'd be better off as a server than running a restaurant.

"I had one say she didn't work for me, she worked for the customers. Well they start doing little extras, like throw in a little extra whipped cream. Or they'd mess up and ask can I give them a discount. Well who pays?"

So, in March 2017 she banned tipping. She added little notes to every condiment stand explaining that no customers need leave a tip, but a compulsory 20 percent surcharge would be added to every bill. Also, that 20 percent would be split between the seven front-of-house and the seven back-of-house staff.

"The reason it took me so long was I was afraid of what people would say. I was afraid of losing customers," she says.

Most customers have been fine with it once it was explained. Some people were just happy they didn't have to do math any more. She says 90 percent of the comments she gets are approving of the tipping ban.

The negative responses fell into two camps.

"One group said 'Just raise your prices.' Well if I did the inequity would be greater. Another person said 'Why not raise your prices instead of making us absorb it?' I don't understand that," she says with a laugh.

The other group was people saying she was forcing them to tip 20 percent.

"It's a small percentage that I'm not worried about them," she said. "One guy on Facebook said 'Gigi's is the government! They're forcing you do to do this.' Well, no, you don't have to eat here, there are many places to go." She explained her thinking and he removed his comments.

20 percenters

She also learned that people don't necessarily tip based on the food or service. "Normally people tip because that's what they tip. Regardless of service they tip because that's who they are."

There is no tip line on the check. When people try to add it in the servers correct them. If they insist on leaving extra cash on the table it gets pooled.

The other things Wesler brought in was profit sharing. For every six months someone works at Gigi's, they get half a star. The profits are divided up between staff in proportion to their number of points. They can also get more for being cross trained.

For example, Lawrence Garcia is a server, an assistant to the owner, a shift lead and can also work the waffle station.

"I've been here two years and I thought it was great for the kitchen," he says. He feels though he may make less on a busy summer day than he used to, he expects to make more in the winter.

He's from Newberg but has spent a lot of time in his father's home country,

Puerto Ayora in the Galapagos Islands, where he was a tour guide. "I know I can make a career in hospitality and restaurants."

Part of Wesler's plan is to retain good staff — making waffles is an art — by making them think long term, about benefits, mortgages and pensions, rather than just blowing their cash as is common in the industry. Better retention means less resources spent on training.

The issue isn't just economic. Garcia says the scheme rewards loyalty. He wants to stay because he likes the work, and he also likes the owners. "They've got your back," he says of Wesler and Susak. "They treat us like human beings, and working in rests we aren't always treated well."

Keith Nutter has been a server there for a year, and was with the previous occupant for seven years.

"It's working out, we get good medical," he says. His dental coverage costs just $4 a month. "Plus, we get fed well here, plus the owners have your back."

Compared to 10 years ago, Nutter sees the service industry here as more competitive. "There are lot of good servers out there, people taking it seriously. You can make more money from serving than from something with a college degree."

Wesler says the effect so far has been improved staff relations, particularly the front versus back of house "head butting". She facilitated had a retreat to Eagle Crest near Redmond and bonded over rafting, a spa day and cooking.

Staff get medical and dental if they work over 35 hours. In the past some servers worked hard to qualify for benefits, then cut back their hours.

"Before there was a lot of people trying to play the system, says Wesler. "Now they're different, they're grateful."

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COURTESY: THE SOLO CLUB - Mark Hammon, a manager at Besaw's and The Solo Club, who says the industry is having a hard time finding back of house staff right now.

The Manager

Mark Hammond is the Director of Operations at Tuatara Enterprises and a manager of Besaw's and The Solo Club on Northwest 21st Avenue. Hammond was a bartender at the high-end steakhouse Morton's for ten-and-a half years.

There are 10 staff at The Solo Club and 60 at Besaw's, half of whom are part time.

"Currently we have a more conventional model (than Gigi's), allowing guests to decide how much they tip," says Hammond. "The tip is kept by service staff and distributed to support staff, but the model is something we're looking at.""The rising minimum wage has helped servers and bartenders who already make a good living,

and given them a pay rise. But the people who need a pay rise didn't get one."

One headache for any restaurant manager now is a huge dearth of back of house staff.

"When I post a job on Poached (the foodie job site) for a server I get tons of resumes, but line cooks and dishwashers, I get far fewer."

Other forces

"I have no hard facts for this but the common wisdom has been the growth of the marijuana industry. They are able to hire people who trim for a lot more than the minimum wage. They can make $16 to $32 an hour, 8 hours a day. And they are paid under the table. Compare that to back of the house, hot and sweaty, working long hours often past midnight."

Again, the issue is not entirely about wages: staff will stay longer where they feel respected. "Cana (Flug, Besaw's owner) is very good at holding on to staff. She has many people who have been with her for over a decade."

He admits the company missed the boat with the July 2017 increase in minimum wage, and is keen to redress that. "Businesses that aren't lean and haven't worked out a way to work it, will go under," he says. "More restaurants will sink."

COURTESY: PARK KITCHEN - Park Kitchen restaurateur Mark Dolich stopped tipping and put menu prices up 20 percent. he has all staff roatate through all jobs.

The Restaurateur

Scott Dolich is owner of Park Kitchen, a 40-seat restaurant on the North Park Blocks.

"In early 2016 we eliminated tipping and coupled it with One House." He says. "One House is where we rotate our cooks and servers through various positions. That allows us to pay the cook/serve one wage. "

Like Gigi's, there's no tip line on the check. "But we don't even have a service charge. We put the prices up 20 percent. What you see on the menu is what you pay."

"We originally talked about doing a surcharge, so we took six months of warning guests that it was going to happen. The feedback we got was 'Just raise prices 20 percent and call it a day.'"

Once it started, they messaged it heavily, online and on a placard on the tables so it's not a surprise at the end of a meal.

"The initial impetus was we were having a lot of difficulty scheduling our waiters so they could have a steady income." They had busy summers and lean winters. "They weren't able to pay their rent because they were only working three days a week. We wanted them on a regular schedule so they could budget their income and expenses. Once we started talking about it at manager meetings, we heard the cooks weren't happy getting paid less than servers, and the servers couldn't get medical benefits. That's why we started our One House."

He came to the figure of 20 percent because that was their average tip.

"It hasn't come without its challenges. People do measure it differently, they say 'That's more expensive than the place down the block.' There is some explaining to do there."

Angry comments have not been an issue.

"We've had very little negative feedback from our customers. We' were very vocal and upfront about it, over the course of year and a half I can count on one had the people who have said we don't like what you're doing."

He had a restaurant owner from Seattle come in and say he loved the restaurant, the food and the service. "But he was angry that he thought I was short-changing my servers. All I could say was talk to them and ask them."

Some waiters didn't like it and left.

"We did this for our servers, most of them like the concept but they didn't like working 40 hours a week, because they have other things going on. Now we mostly have a house of next level cooks, who want to lean about food, wine, liquor, how to serve, and to go further in the industry."


Joseph Gallivan
Reporter, The Business Tribune
971-204-7874
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