As a national debate rages about raising the minimum wage, a handful of Triangle restaurants have voluntarily decided to pay their employees more.
Earlier this month, more than half a dozen Durham restaurants joined a voluntary campaign to raise pay to $12.33 per hour from the $7.25-an-hour federal minimum wage and $2.13 an hour for tipped employees. One of those restaurants was Monuts Donuts in Durham.
Monuts’ co-owner Rob Gillespie, 29, said, “Being young, we ourselves ... knew how hard it is. Minimum wage is simply not enough.”
This is in the wake of decisions by Target and Wal-Mart, within a month of each other, to pay their employees more than minimum wage, and New York State’s increase in pay for tipped workers to $7.50 an hour, effective Dec. 31.
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In North Carolina, the Republican-led state legislature has shown no interest in raising wages above the federal minimum. But that has not prevented a movement from zipping through the veins of the restaurant industry. Local eateries have found different ways to raise pay for front-of-the-house staff: bartenders, servers and hosts; and back-of-the-house staff: cooks and dishwashers.
Vimala’s Curryblossom Cafe in Chapel Hill raised wages above the minimum and pool tips, splitting the tips from each shift evenly among both front-of-house and back-of-house staff. Monuts Donuts pools tips for front of the house staff and pays at back of the house staff at least $12.33 per hour and a median wage of $14 per hour. Raleigh’s lucettegrace and Chapel Hill’s TRU Deli and Wine bar eliminated tips in favor of higher pay, while Durham’s Pizzeria Toro decided to raise base wages on top of tips.
One employee who has benefited is Peter Brayshaw of Carrboro. Brayshaw earned $7.25 an hour before starting as a cook at Vimala’s 10 years ago. Now Brayshaw, 32, earns $14 an hour, which allows him to support his 5-year-old son and domestic partner. For Brayshaw, the extra money means more nutritious food on the dinner table and having enough money to spend on fun and travel.
Monuts’ tipped employees earn a base wage of $8 to 11 an hour, depending on position, and after tips earn a median wage of $18 per hour. Despite the higher labor costs, the restaurant has been successful. In November, Gillespie and his partner, Lindsay Moriarity, spent an estimated $400,000 to open up a second location on Ninth Street. “I think anyone can be successful while paying minimum wage if they start off with that model,” Gillespie said.
Monuts is one of the 22 businesses and 11 nonprofits that signed on to the Durham Living Wage Project – a campaign set up by advocacy group the People’s Alliance that will certify restaurants and businesses if they pay at least the city’s living wage for a family of four: $12.33 in 2015, or $10.83 with employer-provided health insurance.
The campaign, now covering 757 employees, will issue orange stickers to participating restaurants and businesses to hang in their windows.
Durham, with its booming restaurant industry, is the place to start the project in the Triangle, said Elizabeth Poindexter, spokeswoman for DurhamCares, a nonprofit working with the Durham Living Wage Project. Poindexter said, “When we do chat with the larger companies, we can show them what is starting to happen and hope they’ll want to develop a living wage.”
Teamwork and turnover
Eliminating tips in favor of pooling tips or a service charge lets a restaurant run more efficiently, said John Walls, who works at the North Ridge Country Club in Raleigh, which, like most private country clubs, slashed tips in favor of a fixed 20 percent service charge.
“There is a lot more teamwork,” Walls said. “As a manager, that also meant I didn’t need as many people on the floor, because they tend to look out for each other.”
Walls added that practices like table poaching, when servers steal customers based on perceived affluence, also diminishes.
Employee turnover falls when the minimum wage rises, and workers who stay tend to be more educated and skilled, said Bill Lester, a UNC-Chapel Hill assistant professor who specializes in minimum wage and living wage research.
Lester’s research compared the minimum wage of front-of-the house staff in the restaurant industry in the Triangle versus San Francisco, where employers are required to pay $15 per hour. In 2011, his research showed that turnover in the Triangle restaurant service industry was 40 percent, compared to 19 percent in San Francisco.
Reinvesting in workforce
Business owners, such as Gray Brooks of Pizzeria Toro, are seeing those returns on their investment by paying a higher minimum wage. After the restaurant closed for renovations due to a fire in November 2013, Brooks raised wages from the tipped minimum of $2.13 to $6, and from $10 or $11 for cooks to $13. It cuts into his profit margin but is worth it, he said.
“We’re reinvesting in the workforce and quality of service,” Brooks said.
Though TRU Deli and Wine Bar in Chapel Hill pays above minimum wage, at $8.50 per hour, and eliminated tipping, owner Dwight Debree said he would be hard-pressed paying higher wages since he is barely profiting now. In order to pay higher wages, Debree has cut hours for his employees, with many workers taking on shorter and less frequent three-hour shifts.
“I support a higher minimum wage, but I’m a little bit on the fence as to whether or not it should be mandated,” Debree said.
He later added: “The college environment goes hand in hand with keeping your prices low, and it drives wages down because we only can pay the employees so much. It puts us in a tough position should we force wages up in this environment.”
For Daniel Benjamin, the owner of Raleigh pastry shop lucettegrace, there is a benefit to cutting tips entirely – less administrative work.
“Coming from kitchens and not having any front-of-the house experience, I didn’t want to deal with the paperwork,” said Benjamin, who pays his employees $10.10 per hour. “We’re not a full-service restaurant … the guest doesn’t need to share the burden of paying my employees, they just need to pay for what they order.”