TIPS FEED SUBMINIMUM WAGES

A restaurant in San Francisco that has a no tip-policy and instead shares profits with its staff says it wasn't hit by the labor shortage

gdean@insider.com (Grace Dean) 

© Provided by Business InsiderZazie has a no-tip policy and instead shares profits with staff. Maskot/Getty Images

The co-owner of a SF restaurant says it's avoided the labor shortage thanks to its staff benefits.

Zazie gives workers paid family leave, health and dental insurance, and a 401(k) with employer match.

The restaurant also has a no-tip policy and instead shares profits with staff.

Many independent restaurants across the US say they've been devastated by the labor shortage, with some shutting their dining rooms, cutting their opening hours, or even closing for good.

But the co-owner of Zazie, a French restaurant in San Francisco, says that it's managed to avoid the labor shortage thanks to the benefits it offers staff.

These include paid family leave, health and dental insurance, and a 401(k) with employer match.

"Everyone returned after we reopened," Megan Cornelius, co-owner of the restaurant, told Insider. She said that Zazie had a "very low" turnover because it offered benefits that other restaurants didn't, and that just one server left during the pandemic because they changed careers.

Cornelius said that only a handful of staff had left the restaurant over the past five years, to either change city or switch careers. No one had quit to work at another restaurant instead, she said.

The restaurant has around 40 employees, roughly half of which have been at Zazie for at least 10 years, Cornelius said. Cornelius herself had been a server at Zazie for nine years before she bought the restaurant along with its executive chef and its general manager in January 2020.

Cornelius said the restaurant paid staff for the first month it was closed during the pandemic, then maintained their health and dental insurance while staff received unemployment benefits.

It even paid staff when it shut for around two weeks in January for repairs, she said.

The next time you open a menu at your favorite restaurant, prepare yourself for a little pre-meal indigestion.

Several popular restaurant chains have announced that they are raising prices in 2022.

Some chains say higher labor prices are forcing their hand and resulting in price increases. Others blame higher costs due to the general wave of inflation surging through the economy, or hardships brought on by the omicron variant of the coronavirus that causes COVID-19.

The restaurant also has a no-tip policy, put in place by the previous owner.

Instead, staff get extra money through profit sharing, Cornelius said. Servers get 12% of their sales, and 12% of the restaurant's total sales are shared between back-of-house staff, which Cornelius said created less of a division between front- and back-of-house staff and removed the bias associated with tipping.

"Profit sharing just made sense to us as it's reflective of how busy we are," Cornelius said. "If we are busy, the staff and the restaurant make money. If you simply raise wages, it can get expensive. It also is an incentive to work hard and maintain great service with your tables.

The no-tip policy forms a core part of the restaurant's philosophy. "Zazie is proud to be tip-free!," a banner on its website reads.

"We get compliments on it all the time from our guests," Cornelius said, saying she thought that momentum for no-tip policies was growing among diners.

"Tipping is a very archaic way of people making their money," she added. "It's just nice to not have tap dance for money."

Some diners still do leave tips, Cornelius said, which servers can take for themselves, though many choose to share them with other staff.

She said the restaurant's previous owner had financed the benefits it offers staff by hiking up its menu prices. The restaurant currently charges around $20 for sandwiches at lunch and $35 for dinner entrées.

Zazie pays its staff the city's minimum wage, which is $16.32 per hour. Cornelius said that servers, kitchen staff, and dishwashers typically make $1,000 or more a week from wages and profit shares, depending on how busy the restaurant is.

Cornelius said that she hoped more people would start to respect restaurant staff.

"I just really hope that people kind of take a second look at their server or take a second look at their busboy or the dishwasher when they go into the restaurant and really appreciate how hard they're working," Cornelius said.