This article was originally published in October 2021. we're reposting it now, as it was one of our most popular articles of the year.
During the pandemic and its ensuing aftermath, hospitality pros began abandoning their posts in droves—and who can blame them? The lack of job security, lackluster benefits, customers’ bad behavior, plus new mask and proof of vaccination mandates, has amounted to a perfect storm. But Jacob Trevino, owner of Cincinnati’s Gorilla Cinema Presents—the group behind popular Cincinnati bars and restaurants like Overlook Lodge, Tokyo Kitty, The Lonely Pine Steakhouse, and The Video Archive— has found opportunity in the chaos. Trevino introduced a new experimental pay structure that guarantees his employees at least (if not more than) the city’s median average income. While this system won’t work for every venue, it might get more industry pros thinking about the importance of financial innovation moving forward.
“We’ve been having this conversation for years,” says Trevino. “Nobody really wants to say what a bartender is worth, mostly because it’s all been based on tips. A bartender in New York City doesn’t necessarily make the same as a bartender in Milwaukee, or Cincinnati for that matter. Even if you ask our bartenders, ‘What’s your best year, what’s your worst year?’ You’re going to get a variety of answers.”
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So, the challenge for Trevino was how to provide stability for his employees—particularly after COVID-19 forced lockdowns with no guarantee of shift hours, customers, or tips.
His solution? A new pay structure called the ‘Employee Threshold Equation’ (ETE).
With the ETE, team members decide their annual salaries, and that amount is broken down into an hourly rate. If the employee doesn’t earn their minimum amount for the week, Gorilla Cinema Presents pays them the difference. However, if the employee happens to make more than their minimum, the employee keeps the extra income. With most salaries starting anywhere from $30,000 to $40,000 per year, Trevino says the system ensures that all full-time employees earn above the city’s median average income.
How did Trevino implement the ETE? By streamlining staff in a way that encourages employee loyalty and engagement. “We sat down and said, ‘How do we build this back better and more secure?’ What that means is less middle management, less employees, but more full-time employees that are invested in the project. They are there for consistency in pay, but they also believe in hospitality, and are aligned with our beliefs, too," says Trevino.
Initially, Gorilla Cinema Presents took a loss as a result of the ETE. But, long term, Trevino knows they are fine to continue with this structure for years to come. “We've been doing this since October last year, and we're almost a year into it with a lot of data to show.” And that data proves that the system is working. The sales threshold for new front of house was $33,500 in January 2021, compared to $50,000 as of September 2021. The sales threshold is the amount of revenue needed to bring on a new hire.
Simultaneously, Gorilla Cinema Presents has also experienced excellent retention rates. Approximately three-fourths of employees having remained with the company since the program’s inception.
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Whether the rest of the industry is able to follow suit remains to be seen. Trevino admits it’s hard to change what’s already so systemic. In many ways, a tipped wage is fundamental to the way the industry works. When asked about other pay models making an impact he mentions another Cincinnati-based concept, Dutch’s. Their new system, Trevino says, is worth noting.
Dutch’s has recently implemented a 20% gratuity on each bill. This is pooled and distributed equally among the staff. Although some customers were resistant to the change initially, co-owner Rachael Bernstein notes that most are receptive to the idea. “People are conscious of what the restaurant industry has been through,” she says. “They are showing more empathy and are much more aware.”
Historically, pooled tips are controversial – anyone who’s worked in the industry knows that. But with an earning potential of a $25 per hour as a result, the staff at Dutch’s is onboard with new system as well. “Nobody’s pushing back because everybody is making great money and everyone is doing their part wherever and whenever help is needed,” Bernstein explains. “We do things together as a team, versus having a separation between front and back of house.”
In fact, Dutch’s revised pay structure attracted one former employee to return part-time, alongside her new real estate job. Bernstein was also able to hire a general manager who had previously left the industry. They were attracted to the role because of the new pay model.
However, restaurant consultant Izzy Kharasch of Hospitality Works finds that his clients are unlikely to implement these types of pay structures. “Pooling tips works in catering environments and when restaurants have large parties,” he says. “But at my restaurants everybody is mostly working for themselves.” On a daily basis, when servers are working their own tables and handling their own customers some will average 22% tips while others around 17%, which makes it a challenge for those people who work hard and earn the most money to accept such models. Yet his clients are looking for new employee incentives. He cites referral bonuses ($500 paid over 90 days, to both the new hire and the employee who recommended them), reasonable schedules and weekly pay dates as examples.
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Trevino acknowledges the changes he’s made are a hard ask across the board—particularly for owners and operators that have succeeded on the back of cheap labor. “If you look across our industry, we're just so varied. Different backgrounds, the ways we've done things, and the ways we’ve operated for 10 or 20 years,” he notes. “To say ‘Hey, we're going to try this whole new thing’ is scary. It’s a seismic industry shift that I don’t know if everyone can get onboard with.”
For his part, Trevino must be doing something right because while other restaurants continue to fold, Gorilla Cinema Presents keeps expanding and shows no signs of slowing down. In partnership with video game developer Gylee Games, Gorilla Cinema Presents is planning to open three more bar concepts, with the first one—Cosmic Gorilla—scheduled to launch later this fall. “We’re doing some fun stuff. That’s why we want to keep it going. If I have stable and happy labor, we can be creative—and that's what the industry needs right now,” concludes Trevino. “If people quit the industry because they don't see a future in it, we'll just be back to how we were in the late ’90s—cold drinks and no culinary skills.”
And that hardly seems worth everything we’ve been through.
Jacob Trevino will be speaking at Bar & Restaurant Expo (formerly Nightclub & Bar Show) March 21-23, 2022. Visit www.barandrestaurantexpo.com for more information and to be the first to know when registration opens.
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