DUNEDIN, Fla. — This Labor Day, we’re taking an in-depth look at a new pay scale popping up in restaurants across the country and now in Tampa Bay, but not everyone is on board with the model, which pays $1 an hour, plus commission from an automatic service charge.
It’s now the pay scale at three restaurants in Dunedin with the goal of helping disperse a livable wage between the front house and back house staff.
However, four former employees of one of the restaurants, the Black Pearl, are protesting the new commission-based pay structure, saying $1 dollar an hour is not a fair wage.
“Unfortunately, now most of us have to struggle and pinch pennies because someone decided to switch to a model that benefited their bottom line, in my opinion,” Whitney Southall, a former employee at the Black Pearl, told ABC Action News in a small protest outside of the restaurant.
Southall and three other former employees claimed they were let go for expressing concerns about the pay scale.
“Technically we were also fired, with no backup plan. I myself have three kids I have to feed, so losing my income was significant,” Southall exclaimed.
We went to co-owner Zach Feinstein of The Feinstein Group, which owns the Black Pearl, the Living Room, and Sonder Social Club.
He told us that the terminations happened well before he made any pay changes.
“We had two employees that were let go for disciplinary reasons, and we wish them the best,” Feinstein explained. “We have two hosts that were let go because we absolved the host position at the Black Pearl to make way for a new sommelier position, they were going to be offered jobs at The Living Room here in Dunedin, but when we called them to discuss it, you know the reaction -- we just thought separation was best.”
We then asked about his new pay scale, and he explained that he learned about it from a consultant out of Seattle, and there’s been a lot of misunderstanding since he introduced it.
“In the restaurant industry specifically, you typically have a big disparity between front of house and back. And so it's you know, service staff and cooks and dishwashers and, and prep cooks. And so what this program really helps to do is it raises the bar across all lines,” he explained.
Here’s how it works:
With a traditional tipping model in Florida, a server makes a wage of $6.98 an hour, plus tips, but shares a percentage of those tips with support staff such as bussers and food runners.
In this particular commission-based model, servers make $1 per hour, plus 15% commission on sales, and keep 100% of any additional tips.
Feinstein said each restaurant has its own percentage spread based on the particular services at the establishment.
“So the servers and bartenders are making more, but now we're able to, for the first time, be able to pay back of house people considerably more, more than anyone else in town because of this model,” Feinstein said.
It’s an additional fee that has become more common on receipts since the pandemic -- labeled as a “service charge,” many restaurants have said it helps with cleaning supplies, to-go services, and staff.
At The Living Room, for example, you’ll see a 20% service charge, where bartenders get 16%, and the remaining 4% helps pay the back house wage of at least $15 an hour. Feinstein said before this model that wage was close to $10 an hour.
The Living Room bartender Michael Day told us he’s making more money now than he did working in finance.
“Then the gratuity is what it should be. If I give that razzle dazzle a little bit of good, you know, extra service I get an additional, and now I'm seeing you know, wages that you know, they rival my best year in mortgages,” Day explained.
Feinstein shared The Living Room employee payroll with us to show that staff are actually making more than they were before the new pay structure.
On one shift sheet for March, it showed the average front house employee made less than $35 an hour with the traditional tipping model and then $46 an hour with the commission-based model --one server made $84 an hour.
UCF Professor of Hospitality Management Kevin Murphy suggested that this model could be a saving grace for restaurants after the pandemic.
Payroll Comparison by ABC Action News on Scribd
“I’ve walked in, gone to restaurants recently where they were like ‘sorry we’re closed tonight, we didn’t have enough cooks show up,’” Murphy said.
While the national U.S. unemployment rate in August was 3.7%, the hospitality industry is double that at 7.2%, on top of an inflation rate near 9%.
Murphy adds that it doesn't help when fast food restaurants are offering $15 an hour to inexperienced teenagers, often more than restaurants are offering skilled cooks.
“So if this model works out, and some substantial change can come across the industry, I applaud them for that, and I hope it does, but that remains to be seen,” Murphy said.
It’s also important to clarify that a server will never legally only make $1 an hour.
In Florida, a tipped employee must either be paid or tipped up to the state's minimum wage, which will be $11 an hour by the end of September.
“Although this is radically different, we think it's the future and what it's going to be here moving forward because otherwise, your drinks are gonna get delivered by a robot and you're gonna order off an iPad, and that to me, isn't hospitality,” Feinstein concluded.
Murphy said he hasn’t heard of many restaurants that have successfully implemented this model without backlash, but if it sticks, he said it could create a more equitable hospitality industry in America.
We reached out to the Florida Restaurants And Lodging Association (FRLA) to find out if other restaurants in the state are implementing a commission-based model.
A spokesperson for FRLA told us in an email:
“We have only heard positive things from those utilizing the model, including servers making mid-six figures on the model. The commission-based model is one of many legal methods to design compensation that incentivizes employees while providing some relief to employers from onerous wage laws, and FRLA continues to share information on this and other payment models that best suit the needs of those across the hospitality industry.”
Another topic that comes up in this discussion is the expectation of tipping in general.
America consistently ranks number one in the amount expected to tip for service. During the pandemic, customers were expected to tip more to support those still working in the industry, but now it’s become a norm to tip upwards of 20%.
“The United States is one of the few countries that has this crazy model,” Murphy said, “I mean, most countries leaving a tip means two or 3%.”
According to the Points Guy website, most European countries add a service charge for the waiter to get a small tip.
Countries like Denmark, Australia, and New Zealand pay high enough salaries where tips aren’t needed.
And countries like Japan, China, and South Korea, actually consider tipping rude.
