Restaurants flush with federal funds should invest in their workers first
June 25, 2021
American restaurants are in a strange and hopeful place.
With the pandemic waning and the Restaurant Revitalization Fund passed, where restaurant owners have access to $28.6 billion in taxpayer funds, on top of the Paycheck Protection Program, or PPP, loans and grants, there is a chance now to rebuild. As dining rooms are reopening and diners are returning to the joy of eating in their favorite spaces, many operators are trying to re-hire based on their old, outdated low wages — in so many cases the subminimum wages as low as $2.13 an hour plus tips.
The effects of these subminimum and low wages are well documented. The idea that restaurant employees were being asked to work for such wages this past year while putting themselves at risk exposed this absurdity more than ever, and as restaurants reopen and try to restaff, it’s no wonder so many are struggling to sell this old model again. There is a wonderful opportunity for this industry to take a big step towards a better future for the people vital to restaurants’ vibrancy. It is time to raise wages.
For almost seven years, my wife and I have run Spuntino in Denver. We bought the restaurant we were managing when we were each 28. We had already grown up quickly working every job in the industry — from barback to manager, and from prep cook to chef de cuisine. We were experienced enough to know what we loved about the restaurant industry, but optimistic enough to know what we wanted to change.
We were tired of the industry’s myth that low pay and no benefits were just the way that restaurants survived — that such operational vices were necessary to pursue your passion. Poor back-of-the-house pay, over-worked and over-stressed managers, no health or sick-pay, and the antiquated tip structures that leave so many of our country’s people — particularly women and people of color — dependent on subminimum wages (a clear vestige of slavery) and on the tips of often fickle diners.
We’ve spent years proving that we could do better, proving that we could run a healthy business that supports better lives for our staff, not at their expense.
When the pandemic hit and the shutdown orders came, we doubled down. We saw that the livelihoods of the people who mattered most to us as business owners — our staff — were at risk.
Elliot Strathmann and his wife Cindhura Reddy.
We immediately, and finally, switched to paying every single one of our staff the full local minimum wage of $14.77 an hour plus pooled tips on top shared across the entire house. We kept full health benefits in place and expanded sick pay. For the months until we finally received a PPP loan, we gave funds from our gift card sales and any dollar above our break-even to our staff to ensure their livelihoods.
We were able to hustle through this ridiculous year with no layoffs and not a single positive COVID case among our staff. In 2020, we just barely beat our 2019 revenue.
While endless credit goes to the two amazing and talented women who run our kitchen and produce the beautiful food that our restaurant is built upon, just as much deserves to go to our wonderful staff that has stuck with us all these years.
Between PPP funds and the new RRF, restaurants that laid off most or all of their staff are being gifted the difference between their 2019 and 2020 revenues with taxpayer dollars after a year filled with layoffs and minimized expenses.
So many operators are trying to return to their old cynical models and it’s no wonder they’re having trouble finding workers to come back. I hear of too many restaurateurs, who are flush with federal funds, opening new concepts instead of raising wages. I hear restaurateurs complain that unemployment benefits are making it harder to hire workers, but only offering short-sighted sign-on bonuses rather than fair pay and benefits. I hear of restaurateurs who are planning on using RRF funds to stock their restaurant wine cellars rather than pay their people.
As we’ve reopened our dining room and bar with a fully vaccinated staff, we’ve had no trouble hiring. There’s no mystery why. If we were able to invest in our staff through the hardest year our restaurant has ever seen and come out with a stronger business, then there is no question that operators who have taken second round PPP funds and RRF grants can’t do the same with these funds now that they’re open and busy.
As a start, it is time to pass One Fair Wage — to eliminate the sub-minimum wage for tipped employees and pay all restaurant workers a full, fair minimum wage with tips on top. In the seven states that have done this already, workers and the restaurant industry are thriving.
The path is clear. Saving and rebuilding restaurants is not just about supporting owners’ bottoms lines — it’s about truly supporting the people who truly make restaurants the vibrant, wonderful spaces they can be. It’s time to raise wages and give restaurant workers, and the restaurant industry, the future they deserve.
Elliot Strathmann is the co-owner of Spuntino in Denver, along with his wife Cindhura Reddy, and a member of High Road Restaurants, an organization that advocates for fair wages and racial and gender equity.
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