TIP THE KITCHEN - RULE 3 - DON'T F*@& WITH THE MONEY
Co-Authored with @chefjamielynch
Making this initiative work had to start with one flawed conceit; $$ is almost always traded in exchange for services, and as such that $$ is how we define value.
But $$ does not equal worth

2/ A few years ago, Pat was offered the chance to be the commencement speaker @aicharlotte graduation, where he discussed some flaws in an exchange rate that equates money to worth.
(see below if you are interested)

3/ Unfortunately, so much of how our shared world is structured DOES misappropriate worth to income...and in keeping with that, most people do as well.
As a business owners, we have always been taught that the most successful businesses are the ones that make the most profit

4/ While to many, that may ring true; but in the restaurant industry, the average successful businesses lifespan is less than 10 years. The biggest reason for this is undercapitalization of new businesses. The second biggest, we would argue: transient and undertrained work force

5/ As such, we believe that the ONLY way to have a viable industry long term, is to start thinking that way; over the long haul
Most restaurant business models (if they are even prepared) forecast out the first 1-3 years of business.
This good practice but far too short sighted.

6/ At 5th Street Group we've decided to take less so we can do more;
There have been months where one of our stores has an ebitda of 30%+ of sales....thats a lot in our world.

("EBITDA" - earnings before interest, taxes, depreciation, and amortization )

7/ Over the lifespan of our existence I would guess we have an AVERAGE EBITDA of ~14% +- (I'm not going to include COVID era numbers as they will seriously skew an otherwise accurate snapshot)

8/ As ownership, we have decided that we can cover our costs, make our partners happy and invest in long term security and growth potential by lowering the floor for desired profitability to 10% versus 14%.
Of course we would be pleased to do more, but 10% is the magic number.

9/ That additional 4%+ is to be spent on investment in our infrastructure and people (primarily the later). Tip the Kitchen is one example of this.
4%+ to train, to teach, to allow for mistakes, develop, inspire, and prepare hospitality folks for a career in this industry.

10/ WE believe this is critical because many in this industry have not considered other options besides making as much $ as possible
(We understand that for some businesses 10% sounds like a lot. I think our approach can be scaled to whatever reasonable needs a business may have)

11/ To complicate things, there are a LOT of bad actors in the restaurant business....people that would mess with a co-workers $$ without thinking twice.
Illustrating this point, and ripped directly from todays local headlines: https://www.postandcourier.com/myrtle-beach/worker-enslaved-at-sc-restaurant-should-get-546-000-from-manager-court-rules/article_4b8a99f8-a875-11eb-83f6-6b1e1cea67f1.html?fbclid=IwAR0IIO_V8vupEAmy_Wj2LaERPZrIhUK_9fOvt5tkPqhT1vJaWXELuwiRIaY

12/ While it has happened to both of us, we thought @chefjamielynch's experience would be most telling giving the subject:
"While throughout my career there are more examples of sketchy money "handling" there have been a few that are the most brazen, and unacceptable:

13/ "As a young cook in NYC, I worked at arguably the most prestigious restaurant of that time (I will not name it publicly). My base hourly was $9/hr +-....maybe minus?!
I was paid on a 40 hour work week schedule, equaling $360/week pre-tax.

14/ My work week consisted of 6 days on, one day off...with 12 hour work days being the expectation, and 14+ hour days not being uncommon.
I worked there for 1 year +- with one week off (I'm assuming, I honestly don't recall)

15/ So, as Pat says, "let's do some math."
12hr/day * 6 days/week = 72 Hours. Under normal federal law, including overtime pay, I should have received 32 hours at time + 1/2
My annual pre-tax take home should have been: $41,184
My actual annual pre-tax take home WAS: $18,720

16/ I later was part of a class action lawsuit for this company's practices and received damages ~ $7k.
While I was thankful to have recovered ANYTHING, I am curious to this day what happened to the other $15k Thats a lot money...a livable wage, that was taken from me.

17/ That super shady experience in my formative years of culinary professional development left me feeling undervalued. I had to become a mercenary in order to survive, which is too bad, because mercenary doesn't really jive with hospitality." -JL

18/ What Chef Jamie describes here is synonymous with so many hospitality workers exposure to the industry.
What a disruptive, toxic way to enter the work force!
Messing with peoples money not only impacts their right to live, but also their perception of the industry as a whole

19/ Many of us have become abused pit bulls, with big hearts and the capacity to love completely, but, hurt to the point of despair
Imagine the psychological damage that must be felt when your boss tells you that you aren't worth even as much as what you had already agreed on

20/ perhaps for the most talented, the most ambitious, the most driven, the most confident this kind of bull shit is endured as an annoying cost of doing business.
But following a standard "bell curve," those people only amount to 10-20% of the workforce
https://www.mathsisfun.com/data/standard-normal-distribution.html

21/ the other 80-90% of the work force are mostly people who can find a compelling career in hospitality, but either cannot afford the job, or will not tolerate the nonsense that many times comes with restaurant work.
In our opinion, THIS is the source of the staffing crisis

22/ SO! RULE 3 - DONT F--- with the money.
Thru 15 days, our kitchen staff per shift per participant average share of gratuity is over $70 bucks.
Thats a 60%+ increase in their pre-covid take homes....and thats the AVERAGE!

23/ Our worry is that some of the suspect motives mentioned in this thread will corrupt our initiative.
If 5SG can increase incomes by 60%, than other ownership can adopt this system, increase incomes by 30%, and reduce hourly rates of kitchen staff, profiting on that other 30%

24/ Shady moves like this destroy the purpose of the Tip the Kitchen initiative; to build trust within the restaurants themselves in order to provide a path workers can follow to reach a viable level of success and stability in their careers
You cannot do that without trust

25/ Without transparency you cannot lead, and without integrity you should not. If you tell the team to buy in, then that buy in has to be reciprocated by ownership....its on the owners to demonstrate, thru pay and treatment, that the employees have real value.