Why This SF Restaurant Group Treats Its Employees Like Start-Ups Do

Welcome back to Hot Takes, a new Eater SF series that tackles burning topics on the minds of restaurant industry workers in the Bay Area — from their perspectives.

In this week's column, restaurateur Ryan Cole (co-owner of Trestle, Stones Throw, Fat Angel, and Corridor) explains his decision to start treating his restaurant group Hi Neighbor like a start-up, which is a revolutionary move meant to battle SF’s struggle to find restaurant employees. Check back soon for the next edition of Hot Takes.

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The first time I lost a cook to go to Apple, I thought, "How am I supposed to compete against someone who’s going to pay $70,000 a year for a line cook?" It was really eye-opening that I’m now competing with the cafeterias of Twitter, Dropbox, Uber, Square and everybody else who's creating restaurants inside their companies for a nine-to-five job paying double the money. I work in restaurants; I see that restaurant workers get very little in comparison to tech companies, where employees go out for happy hour, have a pool and rec room, free food, and a whole lot more. When you have those benefits, it’s not surprising why people want to go work for those companies — I know I do.

"We've always believed that guest satisfaction has a direct correlation to the internal company culture."

Any CEO will tell you that employees make the company, that you’re only as good as your staff. And the biggest problem in the San Francisco restaurant scene right now is finding employees. So I’m at a crossroads of, "What do I do that will drive my long-term success?" It's obvious that something needs to change.

My partners (Jason Kirmse, Jason Halverson, and Tai Ricci) and I started thinking a lot about this, and we teamed up with Master’s students from a local university who were looking to solve business problems in the creative arts sector. We didn’t need help from them regarding openings or how to run a restaurant or anything in the kitchen — we needed help from them with employee retention and turnover. Over the course of three months, the group interviewed many of our employees about what makes them both happy and unhappy at work, and they studied our business and company culture, as well as that of other restaurants.

Together, we all came up with a plan of action. At the end of the process in early January, we had a comprehensive pamphlet that outlined the new benefits program, and we had an all-company meeting to explain what we were doing. People were really appreciative, but I don’t think they fully understood until they received their first benefit at the end of the month. The customizable monthly benefits run the gamut; there is a build-your-own wine cellar program, wine classes or sommelier certification reimbursement, Netflix subscriptions, dining credits, movie tickets, gift cards, and commuter checks — essentially employees can choose what’s the most valuable and beneficial for them. Other company-wide benefits as part of the program include business classes, cooking classes, wine country trips, farm and agriculture tours, plus of course medical, dental, and paid vacation time. We also invite existing employees to invest in our new restaurants at the onset of a new project.

A lot of employees express the desire for room to grow, and this program allows them to stay with us long enough to hopefully develop their skill set enough to move up in the company. Our turnover has always been pretty low, and it’s a little too soon to tell if this has changed even that small percentage. However, we were able to staff our new restaurants nearly on referrals alone — for our recent opening, we placed only one advertisement.

"The first time I lost a cook to go to Apple, I thought, 'How am I supposed to compete against someone who’s going to pay $70,000 a year for a line cook?'"

Obviously this program comes with costs, which we were able to pay for through check surcharges. Every restaurant in the city has the SF mandate surcharge to cover health care costs for employees, and most restaurants charge four percent at minimum. We used to charge just two percent at our restaurants, so we raised it up to three percent (3.5 at Stones Throw), which is still below standard, to fund these benefits. We’re not sneaking around — it’s right there on the check — but no one even noticed. We’re proud that we’re putting that surcharge to use for our employees, and it’s extremely tangible. Our other cost saving is low turnover — you don’t have to train people, place ads, sacrifice your service, and potentially have a guest never come back. The other upshot to this is the guest experience. We’ve always believed that guest satisfaction has a direct correlation to the internal company culture.

It can seem financially scary to start something like this, especially if you’re already at a higher surcharge, but we’re trying to look more toward a long term vision and say, "If I make $1,000 to $2,000 less a month now, but I have a team built for the future, it’s worth it." I don’t think many people are willing to think like that, to think outside the restaurant box when it comes to operations. People are thinking outside concept-wise, but when it comes to internal systems and processes, people are not thinking any differently than they were five or ten years ago.

For example, I am not going to wait for an employee to quit to learn he or she’s unhappy. I think about all of our employees and who’s taken care of and whose personal life is going well and who has other aspirations. I’m not going to wait for someone to ask for a raise if they’re worth investing in. I’m going to proactively give someone a 25- or 50-cent raise so that they don’t start looking elsewhere when they want that. It means a lot to the psyche of an employee when we approach them versus them having to ask us.

If something were to have to change for financial reasons, we could adjust our offerings, but I don’t think I would ever go back on this program. Understanding the next generation of people is important; this wouldn't have been expected when I was 21 or 22, but times are different, and the way people do business is different. It’s time for the restaurant industry to catch up.

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