Wellness Contribution: Oakhart Social Supports Kitchen Staff with New 3% Fee
For some in the restaurant industry, the plight of kitchen workers can feel like Social Security. We all know that it needs attention, but, as for solutions, we keep kicking the can down the road. For Oakhart Social owners Tristan Wraight and Ben Clore, it was time to stop kicking. They have introduced a “wellness contribution” – a 3% fee added to all Oakhart Social checks that goes directly to the health of their employees.
In Need of a Bigger Pie
Most diners do not realize just how small restaurant margins are, and how little of the money they use to pay their check actually winds up in the pockets of owners and employees. After rent, food and beverage costs, insurance, utilities, equipment, tax, etc., the revenue collected from guests’ checks leaves little money for owners to pay employees or save for themselves. With such little money left over, how can restaurant workers make a decent living?
In the front of the house, the gratuity system has long been the answer. With tips, some Charlottesville servers can take home as much as $30-$40 per hour.
But, what about restaurant employees who do not benefit from tips, like cooks? In Charlottesville, most cooks are paid hourly, with rates starting around $12 per hour. For entry level positions, that’s all that many restaurants can afford. Even experienced, well-trained cooks do not make much more. Devote years of your life to the grueling work of cooking in a restaurant, and you still may be making $15-$17 per hour. This is because restaurant margins rarely change much over time. If the pie never grows, neither can cooks’ piece of it.
The wage gap between the front and back of the house has been part of the industry for so long that most cooks just begrudgingly accept it. A consequence of it, though, is that cooks usually lack health insurance. 40 hours per week at $12 per hour yields $480, pre-tax. Try buying health insurance on that.
Neither can restaurants afford insurance for all of their cooks. Margins are too tight. An informal survey of Charlottesville restaurants revealed that while some provide full or partial health coverage for management level kitchen staff (usually 1-3 employees), few or none provide full coverage for all kitchen staff. And, some restaurants provide cooks no coverage at all.
What makes this particularly acute, says Wraight, is that kitchen workers are often among those most in need of health care. ““There’s a lot of marginalized people who work in this industry,” says Wraight, ” — people with mental health and addiction issues.”
Oakhart Social’s solution is what it is calling a “wellness contribution” – a 3% fee added to all restaurant checks. The restaurant’s website explains:
The wage disparity between tipped employees and non-tipped employees often leaves many without any meaningful medical protection. To make sure our kitchen staff has the health care it needs and deserves, we have decided to add a 3% Wellness Contribution to all guest checks. After careful research, we have decided that such a contribution is a better way to reduce wage disparity than by raising prices on individual menu items. We thank you for your support in helping us protect all of our full-time, non-tipped employees, and our pursuit to create a sustainable model for this industry.
Before the wellness contribution, health benefits for Oakhart Social’s kitchen employees depended on their seniority. While management level kitchen staff (1-2 employees) received full coverage, remaining full time kitchen employees were eligible for a 50% contribution of their insurance premium from the restaurant. Even with that 50% contribution, though, insurance was still out of reach. Not a single kitchen worker opted fot it.
For Wraight and Clore, this did not feel right. “We got into this industry to be hospitable,” said Clore. “We work hard to take care of people and put a smile on their faces when they walk out the door. Ultimately, though, working so hard for that smile would just be putting on a show if we were not also doing everything we can do to take care of the people we work with.”
Now, with the wellness contribution, Oakhart Social provides full health insurance coverage to all non-tipped full time employees, from cooks to dishwashers. Each week, Oakhart Social transfers all proceeds from the 3% wellness contribution to a separate account solely for use towards paying for the employees’ health insurance.
In other markets, restaurants that have implemented similar fees have faced backlash, and even lawsuits, including a class action filed last year alleging that a Minnesota restaurant group’s use of the fees amounted to “fraud, misrepresentation, and deceptive practices.” Restaurants have also been fined for inadequately disclosing the fees.
Here in Charlottesville, response to Oakhart Social’s wellness contribution has been “uniformly positive,” says Wraight. For that, Wraight credits our community. “Charlottesville is the type of community that would welcome this way of helping,” Wraight said. “I am not sure if the fees would be as welcome elsewhere.”
Among the backlash in other cities, a common question is: why not just raise menu prices? After all, the wellness contribution is really just a 3% price increase on each menu item. Clore says the main reason was to raise awareness. Few customers are aware of the enormous wage gap between front and back of the house, or that most cooks in the industry do not receive health insurance. “If you’re not in the service industry, you don’t see the people in the back,” said Clore. “Out of sight, out of mind.” Oakhart Social planned to begin health care coverage for its kitchen employees regardless, and, while it could have done so through increased menu prices, Clore says that the “wellness contribution” allows guests to know the reason for the increase and where the money is going.
A New Way
Because the wellness contribution is so new to Charlottesville, other questions remain unanswered as well. Will the price increase cause a drop in business? Will servers’ tips decline?
This is all uncharted territory, so only time will tell. When it does, Oakhart Social will not be the only one interested in the outcome. As the restaurant seeks to tackle an industry-wide problem by pioneering a way to provide for the wellness of kitchen staff, other restaurant owners are paying attention. “We are taking a close look at what Oakhart is doing,” one owner said. “If this works, we could very well try something similar.”
Clore is not surprised. “Who wouldn’t want to take care of people?”