Hospitality Industry Can Not Afford to Pay Salaries to Workers

Danny Meyer, the scion of New York’s feted restaurant group, Union Square hospitality announced last week his plans to eliminate tipping at his restaurants

While Meyer hopes raising prices and cutting tips will bridge the traditionally large pay gap between kitchen staff and wait staff, providing a good, living wage salary, not everyone in the kitchen is on board with the plan.

Daisy Morales is one of the people who are less than thrilled with this plan. Morales has worked in the service industry for the past seven years doing every job from line cook, to waitress, to her current role as manager of Costos Arepas Bar near Herald Square.

As a kitchen worker, Morales received a taxed hourly wage. As a waitress, she earned a base pay and tips, amounting to at least the NY minimum wage standard of $8.75 per hour.

As manager, Morales has worked on salary for the past year, after receiving hourly wages for the six prior to that. She says she does the payroll for the restaurant group that owns Costos, and takes part in the decision making process behind offering employees either a salary or hourly wages. She says that owners want to give all employees good salaries, but because of low profit margins, that just isn’t possible.

Small profit margins, in the five to seven percent range for most restaurants, according to figures from Sageworks, as reported by Forbes, prevent most small business from being able to afford to pay all of its workers on salary. Not just a salary though, a desirable salary that would make both workers earning tips, and workers earning hourly overtime pay, welcome the change.

Morales says that because salaries offered to restaurant workers at her group are small, she believes most, given the choice, would choose to stay hourly, with the ability to make more in tips, and be paid extra for overtime hours when they work more than forty hours a week or ten hours in one day.

To calculate the salaries we offer now, the restaurant payroll manager “[multiplies] anticipated hours that they think the employee will work with hourly rate. But [salaried workers] get paid vacations and sick days so that’s something they have to take into consideration when we offer them salaries.” She motions to a kitchen worker, hastily untying his apron. “Its slow now so I sent him home, but [the salaried workers] have to stay.” She thinks 30k or more is where non-manager kitchen workers would start considering taking a salary, and says that it would be even higher for wait staff.

Other restaurant workers interviewed agreed with Morales’s position. One of these workers is Bareburger Kitchen Manager Louis Tapia. He says since the time he started in the restaurant industry as a dishwasher he has always been hourly and prefers it that way. “The overtime makes it worth it- if I had to be salaried I would definitely make less and probably be here for more hours,” he says. Tapia asserts that he would take a salary if it was an amount that would be worth the loss in overtime, for him, that would be over 45k.

Joanna Bonczek, is a bartender at Greek restaurant on 14th street. She says she currently works for tips, but would want a salary if it was high enough to match her average $700 weekly take home in cash. She typically earns this over the course of her three day work week.

When asked if her attitude towards customers would change if it wasn’t gratuity dependent she says “No it wouldn’t change anything,” she says pausing. “I mean I think it wouldn’t.”