I’m a bit late to the conversation. I try to order a bottle from the restaurant when I’m bringing one in with me as long as there are enough of us that it makes sense. Generally factor in tip pre corkage, but by the end of one of those meals I don’t care enough to figure it out the difference as long as the service has been good.
This solves the ‘menu price’ problem but not underlying wage problem. Front of the house would love it, back of the house would continue getting screwed.
He says it is illegal to give tips to employees who don’t serve food and acts like that is what creates the disparity. It is disingenuous and obfuscates the real issues. Nothing is stopping a restaurant from paying the back of the house more or paying the front of the house more and requesting they share tips. The whole way he presented it was silly and it is obviously why it did not work. If the solution was as simple as eliminate tipping add 21% to everyone’s bill and the FOH and BOH would be happy every restaurant would do this. The problem is the FOH does not like this and it is only a small marginal improvement for BOH so it is a lose lose. And some restaurant goers don’t like the no tipping, I would say I was on the fence.
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Thank you Robert for confirming why my BS meter was going off with his accounting of it. Not in the industry but I didn’t need to be to identify some obvious questions.
I don’t really think this has changed much. It is just more obvious in todays world.
I view corkage as a privilege and respect the perspectives of restaurant owners and servers, but I agree with you and Justin. Wine stores can be successful on a 50% margin, so why can’t restaurants be successful selling wine for a little more, if their menu prices already reflected the European model where employees are making a living wage. The wine selection would need to be limited, thoughtfully selected, interesting, and constantly updated, like at a good wine store.
I am guessing that there aren’t enough wine lovers and hobbyists in the US to make this work; the alcohol-subsidized lower food prices appeal to a significantly larger group of customers.
Wouldn’t it just mean you have to keep menu prices high enough to pay the back of the house sufficiently to retain staff.
Front would benefit as well because with every $5 menu price increase they are getting an extra buck too.
I wasn’t addressing any of the other points, just the legal point. And, again, regardless of how he worded it on live TV, I’m quite certain that he didn’t literally mean that it would be illegal for a customer to tip a cook or a dishwasher directly, and that what he was referring to was the law that prohibits the forced sharing of tips given to servers or bartenders with those in the BoH. (And again that hasn’t always been the law, nor has it ever been the law everywhere, but some jurisdictions have passed such laws under the rationale that it is wage theft to force those who receive the tips directly to share them, subject to whatever conditions any particular law may spell out).
With all this discussion of the ‘broken restaurant business model’ and failure of FOH/BOH compensation, tipping, corkage, wine markups, etc., I have to ask:
What works? What are the positives that are replicatable? What are the models and methods of restaurants that deliver great meals for years or decades? Because they are out there. In the millions. Does it just come down to good management, careful financial planning, competent hiring, good recipes, cooks, and client interaction, thoughtful and balanced investment in space, materials, food, wine, etc.?
Yes, a topic for another thread, for sure. Or another forum entirely. How about ‘best methods for creating great wine-oriented restaurants’?
I understand you were in the industry and you understood what he was saying. He is obfuscated the issue for the normal diner to think oh the reason the BOH makes so much less is due to a bizarre legal technicality. The real reason is simple the economics of the restaurant industry don’t support simply paying them better. For some reason I just have never clicked with the Danny Meyer world. He preaches hospitality but I have never really felt any of his restaurants have soul. I think just like the interview it works for the masses as I realize many, many people love his restaurants.
This is a great question. And I will start by saying most restaurants don’t make money and the really well run ones that do are making single digit margins. If you define what works as profitability then it is high volume low costs, burger, bagel, pizza, fried chicken type places. High volume bars. The higher end more elaborate restaurants never make money. Take Danny Meyer mentioned above he made his fortune not on the 11 Madison the #1 ranked restaurant in world but on Shake Shack that is all you need to know about the restaurant world.
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You forgot steak houses, but many are chains.
Agree with that but I would put them in the high volume camp.
What about the many very good non-chain restaurants that last for years or longer? I just don’t believe that they all lose money. I do believe that it’s hard to make the business model work, and that the returns are not great. But nonetheless the restaurants stick around.
As I said above single digit margins they are surviving but not getting rich.
Here is a real life example of a restaurant I was asked to invest in.
High regarded, every accolade under the sun booked 100% of the time. Total revenue over $5 million. Before the owner pays himself or investors it makes about $500k a year.
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Then what’s the draw for hundreds of places in every city?
Tax Haven?
Too much money and it’s an ego boost to say let’s go to my restaurant?
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Yes. Plus location, location, location.
Same draw for many small business owners it is a living. A very tough one and I have the ultimate respect for them.
And as for the tax have I think that is true in big cities like LA or NY.
I went to a local steakhouse with some old friends a couple of nights ago. There was nothing on the list that we wanted to drink and they do allow corkage. We brought 5 nice bottles and no one hassled us. In fact both the manager and assistant manager came over during the meal and thanked us for coming in and asked how the meal was. I am pretty sure we were the only table that brought wine. We would not have dined there if we could not byo and the restaurant would have missed out on that revenue. Nice example where it worked our well for everyone.
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The overhead is different. Rent, furnishings, breakage, labor. Hard to figure out what the right number is.
The volume is also different. Maybe a liquor store outsells them 30 to 1 per square foot (In volume, not $$)