What does (or should) your burger and fries really cost?

**It’s important to note, that it is only my experience and thoughts and that I have not included any full, proper analysis for a minimum wage.***

In Madison, and likely around the country, there are signs like this everywhere. Help wanted. It’s the new struggle restaurants is labor. For those not in the industry the response seems simple: “Well, just hire back all the people who had to be laid off.” Not that simple. Many of them moved on. Permanently.

Student workers went back to their home towns. Migrant workers moved on, or changed cities or even countries. Some of them also went home to family. Others found entirely new industries. One of my former employees found a new career with a nice 9 to 5 job in a stable industry with a salary and benefits! She did that well before my brewpub closed.

So now we have an opportunity. But will society take it and will it work? Can we change the way pay works in the service industry?

A couple of years ago, I was opposed to the idea of changing pay in the service industry – not because I didn’t think the workers deserved it, of course they did! And more! However, I, as an owner, didn’t think the PUBLIC could stomach the idea of how much their burger and fries really cost them. A $12 burger and fries was really about $15.92 if you factor in tax, then (20%) tip. But were people willing to accept that price if we made them pay that up front? Well, there’s more to it than that. Many cook/dishwashing staff are underpaid in this world too. So, to properly pay them, add another bit of cost to your burger and fries. And then, the more an owner pays their staff, the more they owe in employment taxes (social security and Medicare). So that adds another 6%. Then add in workers compensation insurance, as that costs more the more you pay people. (Tips are often excluded from workers comp policies.)

I once calculated it out for my own pub (far pre-pandemic). At the time, our signature burger (including a side of greens or fries) was $13. To change things so that everyone’s wages were at least $15 per hour (and those already making more than that got a proportionate raise), and cover the employment taxes and and keep things net revenue neutral, I would have had to charge about $20 for that burger and fries with my operations at the time. I already had a pretty expensive burger at $13 so I felt there was no way the public (at the time) would have gone for a $20 burger and fries.

But now we have an opportunity to do that! The public is more understanding and willing to pay more and owners are willing to pay more. Maybe we can eliminate the tipping custom that our society has engrained in it. That’s great, right?

Well….not so fast. I actually think we do need to eliminate it, but there’s another thought process. There are studies that show that tipping doesn’t actually increase with better service, but what about the fact that that people who work in fancy restaurants during lucrative shift earn BIG bucks in tips? Even my non-fancy pub had very sought after shifts. Trivia night was lucrative, as was Friday nights, and the biggest of the biggies – college football Saturdays. Ok, then, we just need to make a shift by shift revenue share or bonus structure whereby the people who work those lucrative shifts just get more money in their paychecks. Or maybe a bonus every month. That is absolutely possible. But many of the point of sale systems haven’t caught up to that idea, so then you’re looking at a small business owner who has to figure it all out in Excel and do that every night…every week…every month. My managers and I actually looked at what it would take – both a new tip share pool and a revenue share model – and it was a pretty ugly mess and extremely time consuming for ALL (not just managers), since my single location small business brewpub didn’t have the revenue high enough to have it’s own accounting department.

What I’m getting at, is that it is time. It’s time for that paradigm shift, in my opinion. And there’s even a few places who are making it work so that means it can be done! But I contend that two things will have to happen: 1) The wage change needs to be legislated state wide or (preferably) nationally. 2) The technology for shift-based revenue share or bonus automatically built in to the point of sale needs to be greatly improved.

The service industry is tough on the employees, and they absolute deserve better. And the public needs to recognize that their simple burger should be more of an expensive treat and not an every day cheap meal. That might lower the supply (number) of restaurants (that’s already in progress thanks to Covid) and it might help increase the supply of people wanting to work in the industry.

For right now, the bottom line is that the workers (kitchen and wait staff) just aren’t there. So as an important note, when you do go out to eat, be patient as the managers, owners, and staff are all just figuring out how to get things going again as things open back up in the pandemic.