Denver Restaurants Are Grappling With a Different Type of Wage Gap

You’ve been hearing it for months, years even: Denver’s restaurant industry is at a crossroads. The collision of too many eateries, the rise of the well-paying cannabis industry (not to mention ride sharing and construction), a dearth of affordable housing, a low unemployment rate, and a lack of skilled employees has spawned a full-fledged labor crisis.

This disaster-in-the-making has resulted in a close look at the disparity between pay for front-of-the-house (servers, bartenders, hosts) and back-of-the-house (cooks, dishwashers, porters). Traditionally, servers make minimum wage—currently $7.18 per hour—and receive tips. Line cooks and less visible employees receive a slightly higher minimum wage—currently $10.20—and no tips. (Many restaurants pay more than this, but this is the bare-minimum as determined by the state of Colorado.) “This is the business model that has been generated and made institutional over the last 100 years,” says John Imbergamo, a Denver restaurant consultant. “The way restaurants run assumes a certain amount of wages come from tips.” But that system almost always pays guest-facing employees handsomely, while those cooking and running the food can barely make ends meet with their much-lower wages. What gives?

As the industry grapples with this discrepancy, a number of Denver restaurateurs are attempting to even out the pay scale, in part because it’s the right thing to do but also because they must remain competitive and attractive to employees in a wildly oversaturated workplace. The key is understanding that “if an employer pays the full minimum wage [currently $10.20 under Colorado law] then that employer has greater latitude in how it runs its tip pool,” says labor attorney Todd Frederickson, a partner in the Denver office of Fisher Phillips.

This is not the “hospitality included” or “no tipping” mission that New York City restaurateur Danny Meyer launched a couple of years ago. By all accounts, Denver isn’t ready to adopt that model and many, including Imbergamo and EatDenver president (and the Way Back and American Grind owner) Chad Michael George think doing so would dramatically affect service. “I hope we never go to service included,” George says. “If [servers] don’t get the endorphins of picking up the check and seeing what their tip is, service will go down. It’s the carrot at the end of the rope.”

Instead, Denver restaurants are getting creative. A handful have added a service charge that collects two percent of the night’s food and beverage sales and pays it to the kitchen staff. Duo Restaurant implemented this “living wage surcharge” in June 2017 and has since been regularly paying its kitchen staff an additional $2 dollars an hour (cooks at Duo start at $13.50 per hour). “The economic climate is forcing changes and it’s the right thing to do,” says general manager and partner Bobby Rayburn. “Let’s face it, the cooks are the most talented people in a restaurant and they’re earning in the bottom 20 percent.”

Within the next week or so, ChoLon will implement a similar “kitchen appreciation fee,” which, like at Duo, distributes two percent from each day’s sales to hourly back-of-the-house employees based on how many hours were worked that day. “We’ll do this for a year or so, gather data, and see how much more the kitchen staff gets paid and adjust as needed,” says chef and owner Lon Symensma. As for how it will effect the dining guest, Symensma says that given ChoLon’s check averages, the fee comes out to less than $2 per person. (When Symensma opens LeRoux in a couple of months, it will also implement a kitchen appreciation fee.)

Over at Ultreia, Rioja, and Bistro Vendôme, owners Jennifer Jasinski and Beth Gruitch opted to add a two percent fee to the prices on the menu and distribute that to the kitchen staff. That’s why when you look at Ultreia’s menu the shishito peppers cost $9.18 and the croquetas de jamón cost $7.14. “We leave in those unusual numbers, rather than hide them because we want people to notice,” says Imbergamo, who represents the Crafted Concepts restaurants. The hope is that diners will ask questions. Why didn’t the restaurants adopt the service model of Duo and ChoLon? Union Station and Larimer Square already collect a two percent historical preservation and restoration fee; having both felt steep. “It doesn’t solve that problem,” Imbergamo says. “But we came to the realization that it wasn’t enough to stop us from doing it.”

Still others are exploring different models: At Annette, chef-owner Caroline Glover pays everyone, with the exception of her general manager and sous chef, the same amount and tips are shared evenly. “I’m a firm believer that a restaurant is a system and every part is needed to make it run,” Glover says. “Everyone is integral and it just makes sense to be fair.” With Annette’s cooks making $25 to $30 an hour, there’s little turnover in the kitchen but the approach has made it more difficult to retain talent in the front of the house. “It’s been hard but I like to think we have a close-knit family and they’re there because they believe in what we’re doing,” she says. “[This system] weeds out people who are just there for a paycheck.”

Dana Rodriguez, chef and co-owner of Work & Class and Super Mega Bien, nurtures the idea of the restaurant as family. “I think we [as an industry] are missing the human part,” she says. In addition to offering her employees accident, dental, and medical insurance, 401ks, and paid vacation, Rodriguez has created what she calls “the tip bucket.” At the end of the night, voluntary tips go into the bucket and when the amount reaches $500, the restaurant puts in another $500. The staff then votes and the bucket goes to the hourly employees who need it most. “Everybody does everything here. There is no ‘I work harder than you,’” Rodriguez says. “We’re all in this together. We go up or we go down but we all go together.”

At the Wolf’s Tailor, chef Kelly Whitaker’s two-month-old restaurant in Sunnyside, Whitaker has worked out a point-based model. Depending on experience, an hourly employee starts at the lowest allotted point (and thus pay) but with hard work and the passage of a detailed written test, he or she can jump to the next pay level. “We think a good [support staff] wage would be $16 to $20 per hour, maybe a little more,” he says. “For a line cook or front waiter, we shoot for $22 to $30 dollars an hour. The point system works to support these wages.” As for why he went with this approach instead of adopting a service fee, Whitaker says it encourages upper movement. “There needs to be a scale for people to aspire to be better. It’s complicated but so far it’s working.”

Dave Query, founder and owner of Big Red F Restaurant Group (the umbrella company for Lola, the Post Brewing Co., Jax Fish House, and more) recently informed his hourly staff that their pay will increase to a minimum of $15 an hour; for those already making that amount, they get a percentage bump too. In addition, by 2020, Query says hourly employees will get a paid week off. “This isn’t revolutionary but we’re trying to bring back-of-the-house closer to front-of-the-house,” he says. In order to pay for these changes, Big Red F is shifting its focus from outward to inward. “We’ve always been very philanthropic,” says Query. “That’s not stopping but we are moving money to the Big Red F family.” There’s also the Big Red F Family Fund, for which the 350 to 400 employees closing out each night choose whether or not to donate to the fund. “It’s like when you go to the grocery store and are asked, ‘Would you like to add $1 to your bill for whatever cause,’” Query says. The fund is governed by a group of employees who decide how it’s distributed.

Clearly, a wage shift is coming for the better of the industry. “The system is broken,” Symensma says. “The pay scale needs to be more balanced and bringing awareness to the public is the first step.” Astute diners will notice more of these changes (often noted on menus and itemized receipts) as restaurants grapple with the living wage conundrum. Those efforts, in all their forms, should be applauded because the ripple effect is immense. According to the Colorado Restaurant Association, Colorado restaurants account for 12 percent of the statewide labor force. That boils down to a lot of workers who deserve more that what the industry has traditionally carved out for them.