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The restaurant staffing crisis is seriously holding back the industry’s ability to operate at full capacity and as society opens back up and people return to indoor dining, it is the very moment when businesses should be turning profit.
The rebound has been seriously curtailed by a lack of staff. However, in San Francisco - ground–zero for the restaurant staffing crisis - one chef/owner is bucking the trend with a new business model, and while most restaurants can’t find decent staff, Teague Moriarty of Michelin-starred Sons & Daughters is actually expanding his team.
In between the first and second waves of the pandemic, we caught up with chef Moriarty who outlined his new business model, which was founded on a profit-share system, giving staff a greater stake in the business. Now, with seemingly the worst of the pandemic behind us, and with Moriarty’s new business model put into effect, we catch up with him again to check on progress.
“It’s going good,” says Moriarty. “It’s crazy we’re sold out two weeks in advance consistently and pretty much sold out with a whole month of reservations right now. The first month (of reopening) we were a little under profitability-wise, the second month we were profitable, and that’s not at our full capacity. Our payroll is upper-high with our new system, but it’s working.”
“It’s a tough time. I’ve seen a lot of restaurants just not able to reopen… they just can’t find the staff. They’re just sitting empty, closed, waiting. So many people left, that’s the issue. So many people during the pandemic, just thought, ‘hang on, I was working 12-hour shifts, midday to midnight, now I’m working at Amazon, delivering driving or whatever, working eight hours, but making the same money and they’re going to be home early at night. It was a wake-up call for many people and they just don’t want to do it.”
Moriarty took the opportunity presented by the pandemic to do something he had wanted to do for a long time and retool the business model in a fairer, more equitable way. Employees earn a minimum of $65,000 per year, with salaries topping out at $90,000. Benefits include two weeks’ paid vacation, unlimited sick pay and fully-paid health insurance, and staff will evenly split 50% of the profits. Tipping will be replaced with an 18% service charge, which goes toward salaries and benefits.
The results, so far, have been positive, says Moriarty, even allowing him to expand his team, when others can’t find staff.
“We hired some staff, another two. People are not able to find staff in San Francisco right now, but they’re not paying enough either. Two dollars above minimum wage just isn’t really going to cut it at the moment. We haven’t had any problems with staff.
“Of course, it helps that we’re paying a lot more than anyone else does for those positions. Front-of-house, I think we’re more within a competitive range. The challenge for us is that we want to find people who have chosen hospitality and wine to be their career not a stepping stone.”
Managing a restaurant is about profit and loss, stock management, marketing and of course gastronomy, but managing people is something that can prove the biggest challenge of all. You would think that this type of profit-share model would boost staff morale and encourage loyalty.
“It’s tough to say what the effect has been so far,” says Moriarty. “I think the real benefits will be felt long-term, like at the end of the year, when the profit share comes through, we’ll see the effects as we move forward. In terms of how we were doing things before, everyone is earning more than before, except for captains, who are earning more through tips. So everybody’s making more money, from the managers, to the cooks, everyone’s getting more benefits and I think there’s a greater stability in that. It really does increase the ‘team feeling’."
Hospitality is not an easy career, and those who stick with it need a passion for it. For Moriarty, those people are worth the extra dollars.
“In hospitality, you also have to factor in that it’s a really hard job, I think we should be paying them more, but we can’t afford to. It’s better than what it was, but there’s also room to move forward. I think everyone should be making 5 or 10 thousand more per person, but we’re just not there yet. Everyone is making a living wage for sure, and that is nice but it has to be the ground floor of things, not the end-stage."
This type of experiment requires a buy-in, firstly from the staff, but ultimately from the customers. So far, Moriarty says, there hasn’t been any pushback, even if it does require the customer to abandon the tipping culture.
“We haven’t had a single complaint or even comment about the new system. I think people get it, there was a service charge before, we don’t allow tips, there isn’t even a tip line on the credit card bill when it’s presented, there’s no operation for people to leave tips but they get it."
“I think at the beginning, there was some positive feedback and people said ‘oh I saw that article, that’s awesome’, but now it’s just normal for the customers, people come in just to have a good meal. We did have one customer who came in with his friends and got all the extras, and he came back in two days later to tell us we should be charging more. Maybe one day.”
Moriarty understands it can be easy to lose sight of the fact that restaurants are about hospitality over all, and just as in a home, it makes it hard to be hospitable if the family members are unhappy. “It does all translate to a good experience. You can’t have good hospitality, a good level of food, if your staff are resentful.”
And after multiple lockdowns, he is pleased with the way things are getting back on track.
“Overall it’s going great. Financially it’s been surprising to see how the area has bounced back I expected to see more hesitancy from customers, but we’ve been full and I’ve heard that from other restaurants.”
It sounds like Moriarty has found a new way of working, a template for other restaurants to follow, but the chef says other restaurateurs should be wary about adopting it unless they are fully confident it will work from them. Not everyone will be in the position to do this.
“You have to start realistically with what your sales are. That’s why we kind of started lower, we wanted to see how much business we were doing now sold out every night, I feel comfortable hiring a bit more. We started off a bit more bare bone than we would have.
“From a kitchen point of view, we had to really think through the menu a bit more. ‘What can we do with five of us?’… and as we’ve moved forward, we’ve expanded, and now we can think about what we can do with seven and it opens things up.
“So we’ve definitely had to work a bit harder to both simplify and at the same time elevate the menu to accommodate the labour system. Has the new system affected the menu and the cuisine on offer? It has, but not necessarily in the ways, you would presume."
"It’s been a transition from my end, but there are some things that I have that other restaurateurs don’t have. One is that I own it 100%, I don’t have investors that I have to placate or involve in the decision-making process. I can give away half the profits if I want.”
As for plans for the future, apart from an idea to open a wine bar some way down the road, Moriarty is just looking at trying to be in the moment.
"We’re just focused on being better," he says. "It’s been a dramatic year, I just feel lucky to have a job."
