Milwaukee-based PIE Inc., owner of Honeypie Café, Smallpie, Palomino and Honeypie Bakeshop, used the COVID-19 pandemic’s disruption as a starting point to shift from a traditional “tipped-employee wage” to a pay structure based on minimum wage with a fair, non-discriminatory tip pool for all employees. The move is part of a larger push across the restaurant industry to address historic pay disparities between front-of-house and back-of-house service workers. BizTimes Milwaukee reporter Maredithe Meyer recently caught up with the group’s CEO, Valeri Lucks, to talk about the change and its effect on hiring efforts.
What led to this decision?
“We’ve been wanting to do something like this for quite a long time. It’s been apparent to us for many years that the pay structure in the restaurant industry isn’t great, and you’ve seen different restaurant groups over the last five-plus years trying to address that disparity through eliminating tips so they can raise back-of-house wages and service charges and other things folks have tried.
“We’ve been trying to figure out a solution to this ourselves, but we didn’t have the opportunity until the pandemic happened because we lost 75% of our workforce and had to change our business model entirely. It gave us this window of opportunity to wipe the slate clean and start over, so we took that chance. As we started to rebuild from the pandemic, we didn’t want to go back to the old system. We found this new system – higher wages for front of the house and tip pooling – was working very well. As we reopened, we redefined our work so we didn’t have to return to an old system we thought had been broken for a long time.”
How does tip pooling work?
“We take all the tips that are taken in during a pay period, put them into one big pot, and that gets divided equally among everyone who worked in that block of time based on their hours worked. It adds an additional number of dollars to their base pay. That way, the entire team is sharing in the tip that comes in, which we’ve found to be a great thing because if you think about it, the server’s bringing your sandwich to the table, but there’s at least six or eight people that are involved in getting that sandwich made and brought to you, and they really get left out of that equation when the tipping is done.”
What’s the impact of the new pay structure so far?
“Operating with a smaller team during the pandemic, it really gave us the chance to restructure our work to be more of a team-based operation, as opposed to that traditional divide of front- and back-of-house.
“As we reopen Honeypie and expand our hours at the other restaurants, we’re recruiting and hiring. We’re finding that this model is aiding us in recruiting. It’s helping us in the back of the house because it’s getting more money to the kitchen. From a front-of-house standpoint, we’ve found that for people who are professionals – and who like to be in this industry because they have a passion for food, they have a passion for service – this professionalizes the role in a way that shifts the power back to the server and service. It’s not just working for $2 per hour with your pay being entirely determined by a guest who you don’t have a lot of control over. For a server to truly make a lot of money on the tip system, they have to work very high-volume shifts – Thursday nights, Friday nights, weekend brunch. Those hours are not conducive to a ton of people’s lives. … By using this tip pool, you can essentially make the same money on a Tuesday afternoon that you would on a Friday night.”
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