Just like the cost of living, the cost of running a restaurant can feel like it is always on the rise. Between the rising cost of rent and the minimum wage increase in 20 states, seemingly unavoidable expenses can add up quickly. If you’re looking to become a restaurant owner, the economics can be daunting.
But before the numbers scare you off, consider these three creative ways other restaurateurs have combatted inflation in the restaurant industry.
Make back-of-house all-of-house
What if the lines separating back-of-house and front-of-house disappeared? What if guests could talk directly to the person making their food about recommendations or substitutions? One Californian restaurant is already doing this, and loving it.
Chef Christian Darcoli of California restaurant and wine bar Pinoli Cucina Rustica employs no front-of-house staff. Instead, the chefs take orders, serve and interact directly with their guests.
“I feel that it is very important for our chefs to have the opportunity to interact directly with our guests,” says Darcoli. “Allowing them to run the front-of-house as well as the back, gives them the opportunity to welcome our guests into the restaurant, share their love for and knowledge about food that we create.”
Besides getting to see the gratification from the guests, the chefs are able to make more money as well, since Pinoli Cucina Rustica adds an automatic 18 percent service charge that goes directly to staff.
While this solution might not work for restaurants that are already open and employing front-of-house workers, it’s worth considering if you’re planning to open up a small restaurant. With the vast difference in wages between front-of-house and back-of-house, this approach removes inequality amongst traditional restaurant roles by rolling them into one.
Get someone else to expand your business
At Pinks, a restaurant, bar and live music venue in New York’s East Village that specializes in street food-inspired dishes and hot rod decor, owner Avi Burn knew he needed to generate revenue beyond the four walls to keep up with costs and be profitable, so he turned to catering. But instead of biting off more than he could chew by trying to build a catering practice from scratch, Burn outsourced to ZeroCater, a company that finds the customers and coordinates logistics.
“Working with ZeroCater has helped increase our net revenue significantly,” Burn says, advising other restaurateurs to look into implementing something similar. “Hire well, put a designated manager at the helm of the operation, be over-communicative and have an efficient delivery model worked out.”
You don’t need to be an accountant to calculate food or labor costs or forecast your sales, you simply need a budget and a good expenses spreadsheet.Get Yours
If catering is a move you’re considering, working with a third party could let you start a great side hustle without the headache.
Minimum wage increases in many different states and cities across the country have driven a lot of restaurants to dip their toes in the tipless pool. California is set to raise the minimum wage to $15 an hour by year 2023, spurring Los Angeles-based restaurant Hinoki & the Bird to dive right in, eliminating tipping in favor of adding a 20-percent charge to each bill.
At first, the front-of-house wasn’t fully on board, not knowing how this would impact their paychecks. But the back-of-house staff was excited about the new solution since wages increases allow the restaurant to hire high-quality kitchen staff. Some front-of-house employees did walk out, but general manager Annette Yang says that those who stayed are happy with a more steady pay that is equal or more than what they were making with tips.
As for notifying customers about the change, the restaurant did away with the tip line on the reciept all together and added a note about the new policy. When guests ask if they can leave an extra tip, Hinoki & the Bird staff politely decline in an effort to keep the wages even.
Yang says a no-tipping model is one that more restaurants will soon follow. “I absolutely see the no-tipping model as the standard for all restaurants in the future,” she says. “As minimum wages continue to rise, every full-service restaurant is having to rethink how they pay their employees. Restaurants will no longer be able to pay their servers minimum wage plus tips if the minimum wage jumps almost 50 percent.”
Yang says aside from straight cost, a no-tipping model also helps to foster better relationships and morale between every employee.
“More and more restaurants are choosing to close the huge gap between incomes in the kitchen and the front-of-house,” she says. “Kitchen employees are demanding and deserving higher wages than they have historically been paid. There’s just no way for them to survive in most major cities unless we do so.”