April 29, 2024 • 42 mins
Restaurant work is undeniably tough. Long hours, fierce competition, and thin profit margins characterize this demanding profession. The challenges only intensified during the COVID-19 pandemic, testing the resilience of workers and business owners alike. Dining constitutes both an undeniable pleasure and a thriving business sector. It is integral to our lives and livelihood.
In this Distinguished podcast, Stephen Clark, President and CEO of the Massachusetts Restaurant Association (MRA), joins us to explore the ballot question to eliminate the tip credit and mandate tip sharing.
Get a look behind the kitchen door at this dynamic industry. If you are passionate about restaurants, gather around for this podcast!
The “Distinguished” podcast is produced by Boston University School of Hospitality Administration.
Host: Arun Upneja, Dean
Producer: Mara Littman, Executive Director of Strategic Operations and Corporate Relations
Research and Content Creation: Lan Lu
Marketing: Anne Dawson
Editing: Isabella Laikin and James Leon
Music: “Airport Lounge" Kevin MacLeod (incompetech.com)
Licensed under Creative Commons: By Attribution 4.0 License
http://creativecommons.org/licenses/by/4.0
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Episode Transcript
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SPEAKER_01 (00:00):
As Dean of Boston University School of Hospitality
Administration, we areinterested in the topic of wages
and compensation in the serviceindustry and will be presenting
various vantage points.
In this podcast, theorganization One Fair Wage,
proponents of the minimum wagefor all tipped employees, is
named by its opponents asCalifornia activists, which
(00:21):
conveys a political stance.
As an academic institution, weprovide the platform but do not
take a stance on the issue.
Now I welcome you to listen tothe podcast and form your own
opinion.
Welcome to the DistinguishedPodcast, where we delve into the
heart of the restaurantindustry, an integral part of
our lives.
(00:42):
Dining out not only nourishesour bodies, but also provides an
experience that feeds our souls.
Yet, behind the scenes,restaurant work is undeniably
tough.
Long hours, fierce competition,and thin profit margins
characterize this demandingprofession.
The challenges only intensifiedduring the COVID-19 pandemic,
(01:03):
testing the resilience ofworkers and business owners
alike.
Today we are privileged to haveSteve Clark, president and CEO
of the Massachusetts RestaurantAssociation, joining us to
explore the future of thisdynamic industry.
The MRA is an advocate for foodand beverage providers, offering
essential support througheducation, cost-saving programs,
(01:24):
networking, and governmentadvocacy.
I'm your host, Arun Ubnaja, Deanof the BU School of Hospitality
Administration.
Thank you for tuning in as wenavigate the evolving landscape
of restaurants and hospitality.
And Steve, welcome to our schooland the Distinguished Podcast.
SPEAKER_00 (01:42):
Dean, thank you very much for having me.
It's exciting to be here in yourbeautiful podcast studio on
right here on campus at BU.
Really excited to get into ourconversation today.
SPEAKER_01 (01:50):
Thank you.
So let's uh start with the roleof restaurants in our society.
So today you can order food froman app and have it delivered in
very little time to almostanywhere.
Work, home, or even an outdoorsetting such as a beach or a
park.
We have seen the rise of starchefs and restaurants with
theatrics designed to rival aBroadway show.
(02:12):
How do you explain the expansionof dining options in our
society?
And why do we love to eat out somuch?
Is it for entertainment value?
Is it need for community?
Are we just lazy?
What is that the reason that asa society we are spending more
money on food than ever before?
SPEAKER_00 (02:30):
So that's a great question.
And it's probably all of theabove.
There are different segments ofthe industry that attracted
different people at all times.
I think just in terms of howquick we are, uh how busy we are
in our life, uh, the ability togo out and acquire a good
quality meal at any opportunityis is is is entirely necessary.
(02:52):
So for example, last night, Ihave a 13-year-old son, I have
an 11-year-old daughter, son hada baseball game, and then CCD
afterwards, daughter had thecross practice, it was 7
o'clock.
You know, we hadn't fed anyoneyet, they hadn't been home from
school.
It was a lot easier to walk downto the local restaurant, grab
something and go than it wouldbe to actually go home, plan a
menu, put out a plate, clean upafter ourselves.
And also the stuff at our houseisn't that good.
(03:14):
I mean, I was able to get, youknow, a uh a well-made barbecue
pork sandwich.
I don't have pork at my house, Idon't have time to smoke it, I
don't have barbecue sauce.
So all of those things that areavailable that that quickly, uh
and and inherently, so that'sone, you know, just we're so
busy as a society.
Two, we have an innate desidesire as humans to interact
(03:35):
with other people.
And what other place to interactwith other people than when
we're enjoying a sharedexperience such as food at a or
a nice cocktail at a restaurantor other uh industry, industry
establishments.
So we're the only species thathas that ability, and I think we
inherently want to do that.
And more and more of the thingsthat we do are internal.
You know, we we do all of ourshopping on our phone, uh we
(03:57):
have our groceries delivered tous, uh, we're doing our shopping
on Amazon, you know, all thesedifferent things, all these
different human experiences thatwe don't have anymore.
The only one that we truly dohave is dining out and and
enjoying each other's company.
So I think that's why we'respending so much of our of our
food dollar away from home.
But it's a combination of theneed to feel a part of something
(04:18):
bigger, the convenience of it,and the high quality of it.
You know, it's a lot better.
Anything I was gonna make in mykitchen yesterday was gonna pale
in comparison to uh what weordered.
And and that ended up beingtrue.
SPEAKER_01 (04:31):
Well said.
And as the president of MRA, Idid not expect you to latch on
to the laziness argument.
SPEAKER_00 (04:39):
But uh Well, there is something to be said for uh I
can type in cheeseburger on myphone and I have 37 options and
a cheeseburger gets delivered tome.
So there is something inherentabout being able to do that that
we didn't have even five, six,seven years ago, never mind
twenty years ago.
So there is there is a segmentof the population that may
(05:01):
embrace the laziness side ofthings too, where the food gets
delivered to them as well.
SPEAKER_01 (05:07):
Okay, so now let's talk about a huge big event that
happened, um a very traumaticevent in our society, which is
COVID.
Um it highlighted the essentialnature of restaurants in our
society.
Um, you know, it showed us howimportant restaurants are to us
as a as like you just said, as acommunity, you know, we we crave
company of people and so forth.
(05:27):
But it also highlighted some uhcracks that are hidden below the
surface, you know, the need toincrease wages and benefits, for
example, uh the emotional laborand psychological stress of
restaurant work, long hours,slim profit margins, uh customer
behavior that you know sometimesit's very good and sometimes
it's it's very bad, rude and andin behavior inappropriate
(05:50):
behavior.
So what are some of the lessons,at least some of the good
lessons that came out of this umout of COVID and out of this
enlightened reflection on whatit takes to run a restaurant?
SPEAKER_00 (06:02):
So March 16th, 2020 is one of the darkest days in
our industry.
Uh we laid off about 85 percentof our entire workforce
overnight.
Uh I recall uh, you know, ouroffice is out in Westboro,
Massachusetts, um geared up forSt.
Patrick's Day.
I went into a restaurant tobring some corned beef home.
Again, not going to not orderingfood at home.
(06:22):
I mean, not preparing food athome, but ordering it.
Uh and I went into therestaurant and uh the Irish
music was playing, it was welldecorated, there was shamrocks
everywhere, and there was not aperson in the restaurant.
There was one person workingthere to facilitate some to-go
orders.
That was the darkest day.
We'll never get past that, butit certainly has had uh a
(06:42):
long-lasting impact on therestaurant industry.
A number of changes have comeout of the industry uh at a
number of different levels.
You know, the first one is interms of positive developments.
Uh we taught people how to getdelivery and how to eat at home.
Uh that hasn't gone away.
We've actually seen delivery andtakeout increase in most
restaurants, and that has led touh changing over of restaurant
(07:05):
landscape, of you know,reformatting the kitchen or
reformatting parts of the diningroom to facilitate more dining
and takeout options and doingthat.
The second one, and th this islocal to Massachusetts, but it's
important is outdoor dining.
Um if you think about the numberof people that dine outdoors
now.
We used to, you know, April, itwas still cold or October.
Now we have people that will puta sweater on, they'll build a
(07:26):
fire, and they'll eat in thosekind of shoulder seasons.
And there was very finiteopportunities in terms of
outdoor dining available, andnow that's actually part of the
ambiance, and most people areincorporating that into their
restaurant footprint.
Uh in terms of wages andbenefits for employees, uh, you
know, as I said, we laid offalmost our entire entirety of
our workforce and people startedto look in other places for
(07:49):
jobs.
Four years later, it seems thatpeople are starting to come back
and the job shortages are lessthan they were.
Uh, but owners and operators arekind of rethinking their
benefits package.
Uh at the MRA, we're happy tooffer, we offer a 401k program
for any restaurateur can joinand offer to their employees,
and you start to think aboutmore and more benefits that you
can uh uh offer to youremployees to make them want to
(08:12):
grow in the restaurant industry.
Many times people will stop by,grab a part-time job, leave on
their way to another job, buthow do you start to think about
a job in the restaurant industryas a career?
More professionalization, moregr more opportunities for
growth, 401k benefits, healthinsurance, all those things now
are pretty standard in therestaurant and we're getting
there.
So, you know, those are some ofthe evolutions that we've seen
(08:34):
with employees uh and and justthe commitment to growth in the
industry.
SPEAKER_01 (08:40):
So let me latch on to one thing that you mentioned
here, which is the growth of thethe takeout.
Um you know, we we are takingout so much more.
One of the issues, you know, uhone of the expenses of running a
restaurant is the space that youhave, the rent that you're
paying on the space, theambiance that you've created
through the furniture, throughfurnishings, through pictures,
(09:00):
and and all of that.
Um then the labor that isinvolved in providing the
service.
Yet when I go to take out food,I'm paying the same price as if
I am sitting inside and diningand consuming all of these.
So that has always, to someextent, bothered me that that
takeout pricing is notsignificantly different than in
(09:23):
house in dining in therestaurant.
SPEAKER_00 (09:26):
Aaron Ross Powell That's an interesting it's an
interesting question, aninteresting conversation to
explore.
So, you know, the the theinsurance for being in that
building and the cost to beinside that building hasn't
changed.
And the person who's preparingthat let's let's use a
cheeseburger.
A person who's preparing thatcheeseburger inside the
restaurant is still being paidthe same rate.
Um, so you you know, a lot ofthe built-in costs to produce
(09:48):
that cheeseburger forconsumption is still happening.
Uh now you have to build inpackaging to take it away.
You now you have to build in uhthe marketing of that
cheeseburger.
Uh it's a lot different ifyou're ordering off of a menu
sitting in the restaurant.
Uh now you're you're also you'renot adding anything else to it.
You're not having a couple ofdrinks, you're not adding a
dessert, you're not adding anappetizer.
(10:09):
So all of a sudden, you know,the the overall cost to produce
that meal is probably prettysimilar.
Um I I would think that that'sprobably why you're not seeing a
a huge price discrepancy.
You know, truthfully, I thinkthat, and we we talk about
third-party delivery companies alittle bit, is that you the
consumer ultimately is going toneed to pay more for that
(10:30):
experience.
Because not only are we payingfor all of the cost to go in to
make that cheeseburger for theconsumer, but now we're gonna
pay somebody to get in their caror get on their bike and drive
it one mile, two mile, threemile, five miles away, you know,
the cost structure is not reallythere to make it worthwhile.
And you know, it's notprofitable for the delivery
company, it's not profitable forthe restaurant.
(10:52):
So the consumer is ultimatelygonna have to pay more for that
experience to make that happen.
And so uh I actually think thedelivery price should be more uh
if you factor in all especiallyif you're utilizing third-party
delivery.
Um but if consumers want that umconvenience, they absolutely are
gonna have to pay for it.
And that's where I see theindustry heading, uh especially
in the third-party deliveryworld.
SPEAKER_01 (11:13):
Right.
I was actually more talkingabout pickup.
So not just delivery, but I goto pickup and I'm not sitting
there consuming you know all ofthat.
Okay, so let's um let's divedeeply into one of the outcomes
of COVID, which is the uhproliferation of tipping.
You know, everywhere there is anudge to tip.
(11:33):
Um even in um, you know, thereare some uh federally regulated
um uh professions where tip, youknow, uh subminimum wage is
allowed, where where everyonedoes expect a tip to happen and
the federal government But herenow, even in all kinds of
situations, there is we arebeing nudged to tip.
(11:54):
And so I think that a lot ofpeople seem to be hitting a
tipping fatigue.
What do you think?
SPEAKER_00 (12:00):
Uh absolutely I have it myself.
I was at a not a restaurant.
It was a a different type ofplace in Boston, and I bought a
diet Pepsi.
And this person flipped aroundthe screen and said, you know,
what what's the gratuity goingto be?
And it's not$1,$2,$3.
It's 15%, 20%, 25%.
So I think in certain instanceswhere every single transaction
(12:22):
you're making, you're gettingasked to make a gratuity.
Uh and it's not easy to changethe number, you know, even if
you make it zero or if you wantto do a custom amount, you know,
you're not necessarily going toleave a percentage of the
transaction.
Uh I think that's something thatwe have to work through.
I think one of the direct causesof that, though, is the paying
with the credit card.
And the credit card transactionmakes it more expensive for the
(12:43):
operator because credit cardfees are what they are.
So, you know, one way aroundthat is paying cash.
You pay cash, you don't have todeal with the question.
I think we also have to get morecomfortable pressing the no
button if it's not a job thatwas worthwhile of a tip.
Now, if you're picking up asandwich or someone makes a sub
or a salad for you,traditionally that wasn't tip,
(13:04):
but you want to leave them acouple dollars because they did
a great job?
Sure, absolutely.
Uh the full evolution of tippingin the non-full service
restaurant world is reallyfascinating.
Probably you can probably do apodcast on it just by itself,
but historically, it used to bejust leaving the change in the
cup because you didn't want tocarry the change around.
So you bought a coffee at thelocal coffee shop, you had a
(13:26):
couple of cents back, and youdropped it in the cup.
That has evolved into thisfull-on new economy of itself in
terms of tip for every job beingprovided.
You know, I I think we justcontinue to adjust to that and
and and learn with it.
And we and when no one's forcedto do it.
You know, if you if you feeluncomfortable, if you don't feel
like it was worthwhile, hit theno button, hit zero.
(13:48):
But it's definitely afascinating conversation as we
talk about tips outside of thefull service industry.
Obviously, tip your bartenders,tip your servers.
Um, they're working hard,they're providing a great
experience for you.
But you know, if you buy a to-goitem at the airport, you
probably don't need to leave agratuity for that transaction.
SPEAKER_01 (14:06):
So here you have it from the president of MRA
outside of the full servicerestaurant industry, feel
comfortable to hit the nobutton.
SPEAKER_00 (14:14):
Aaron Powell Just don't call me when that person
makes a dirty face at you.
SPEAKER_01 (14:19):
That sounds very good.
Okay, so let's uh move on tokitchen fees that are often
added to checks to raise thewages for the kitchen staff.
And the Biden administration isleading a crackdown on what it
is called junk fees ormisleading consumer-facing
surcharges that are usuallyincluded in the fine print
before a purchase is made, oryou just you know you're
(14:39):
surprising, you're surprised byit and it shows up.
So, what is the MRA's stance onthe issue of kitchen fees and
price transparency?
SPEAKER_00 (14:46):
Aaron Powell So I think the Biden administration
is making a mistake by blurringall these issues into one.
So we're talking about, youknow, Ticketmaster or an
airline.
You know, if you go toTicketmaster and you and you
want to buy a ticket, I won't Iwon't call out a Gantis Arena,
we'll go down the street to adifferent arena.
But so you're gonna go to in theand the baseline ticket is$35,
(15:07):
and you buy the ticket and youhit$35.
And then it's a 10% servicecharge, and then there's an
arena fee, and then there's theCOVID fee, and then there's all
these fees built into it.
At the end of the thing, your$35ticket costs$89.
You know, I think that's whatthey're actually trying to go
after.
Uh same with an airline.
You go to an airline website,it's$250 to fly from point A to
point B, and then it's bag fee,service fee, et cetera, and
(15:30):
you're up to$350.
That's probably where most ofthe targeted enforcement should
go.
I think a kitchen fee, in mostcases in the restaurant
industry, is pretty welldisclosed.
You know, either it's on themenu or if it's on a sign that
says, you know, kitch, you know,your transaction is subject to
3% kitchen fee.
This doesn't represent a tip orservice charge for tipped
(15:51):
employees, it's going to theback of the house.
Um, you know, so I would like tosee, and and we we've been
advocating with the NationalRestaurant Association on that
regulation and legislation tokind of separate those issues.
There's a huge differencebetween an online transaction
with a Ticketmaster or anairline or airline versus
mandatory gratuity for partiesof seven or more or three
(16:12):
percent kitchen fee.
Um and then you get into therestaurant industry, we talked a
little bit about third-partydeliveries.
The third-party delivery fee isdifferent.
It costs a lot more to deliverone hamburger than it does 12.
And the cost structure is gonnabe different.
So if you're ordering thatproduct through that site, how
can you get a direct price righton the original marking because
you're still building yourorder?
(16:33):
Um I think most restaurantswould be willing, would comply
and would disclose most of thosefees that are there anyway.
So I in practicality, I don'tthink it's gonna be a huge
impact because as I understandit, as long as all the fees are
disclosed up front, you're fine.
But you know, let's take itoutside the restaurant industry.
If you go to a catering functionand there's a cake cutting fee
(16:56):
or there's the winery corkingfee, you know, there's a whole
number of fees that aren'tnecessarily on your
advertisement of how much you'regonna pay, the DJ fee.
You know, so if you think aboutdifferent um fees that need to
be added on and are part of thetransaction, I don't think the
consumer wants that needs thatprice right away.
You know, I I think that thereneeds to be open dial.
(17:17):
It's not everything is cut anddry, not everything is paint by
number where it's this is whatthe number is.
Um I assume the the all-in feeto to come to BU maybe there's a
couple different line items onthere, right?
It's not it's not all that.
SPEAKER_01 (17:33):
Like you said, we leave that to a different part
of the Trevor Burrus.
SPEAKER_00 (17:35):
Exactly.
We'll talk about all theschools, not just BU.
SPEAKER_01 (17:39):
Trevor Burrus, Jr.: But I do want to get into one
one one thing that you just saidin here that uh the cost to
deliver 12 hamburgers to onelocation would be different than
delivering a single.
I'm not sure why that would beaccurate.
I mean, you're taking one box,whether it's at one hamburger or
twelve hamburgers, it's thesame, traveling the same
distance, same.
So I think to some extent thatuh I'm not sure I fully
(18:01):
understand.
SPEAKER_00 (18:02):
Trevor Burrus, Jr.: Yeah, I I think that's more of a
third-party delivery fee issuewith working out how much it's
going to be to get pro one thingto, you know.
If it's if it's 10 hamburger 10hamburgers, maybe it can't be
the guy on the bike that has todrive it, and it has to be the
car that has to drive it downthe road.
You know, so there are somefactors that are fully
determined until the final orderis decided.
(18:23):
So that would be that would bemy thought process on that.
SPEAKER_01 (18:26):
Aaron Ross Powell No, so I I understand that's
also it's outside your That'soutside our world.
Yeah.
But let's go back to the kitchenfees, which is are most
restaurants, when they uh havethis kitchen fee, are they
actually passing it on to thekitchen employees?
SPEAKER_00 (18:40):
Aaron Ross Powell I hope so.
Uh especially the ones thatmarket that they are.
Uh if you're saying that you'reyou're going to and what what's
the root of the kitchen fee?
Why do we have the kitchen fee?
There's a huge discrepancy, andI think we'll get into this
later.
There's a huge discrepancy in ina restaurant between
front-of-the-house employees andback-of-the-house employees.
And the front-of-the-houseemployees make more money.
And that's inherently true.
(19:01):
You know, no matter whether it'sa a breakfast place or a fine
dining establishment in front ofthe house are making more than
back of the house.
And the way the kit the kitchenfee is really just the end
around, raising the overallprice, because if you raise the
overall price, people tip more.
People tip on the end price.
And so that that that numberalways goes up.
So anytime menu and menuinflation averages, it's
(19:23):
probably a little higher thelast couple of years, but
averages three to five percentevery year.
That means people are leavingthree to five percent more in
tips every year, by and large.
Right.
The kitchen fee is really justthe end around putting that
price onto the onto the dinnerand uh and diverting it to the
to the back of the house.
So I think most operators thatare promoting that they're
trying to d direct three percentto the kitchen staff, they are
(19:45):
doing that.
And and and they are they aretruthful in their in their
marketing of that.
SPEAKER_01 (19:50):
But from a consumer perspective, if I am paying 20
percent to the to this, youknow, as a tip, as a gratuity,
but then now I'm having to payanother three percent.
So should I think that okay, nowI need to only tip 17 percent?
SPEAKER_00 (20:05):
So no.
Um so interestingly enough, uhsome studies have shown that
people actually tip more,because inevitably they just tip
on they don't want to do themath.
Right.
So they just tip to 20 percent.
So by and large, the tip goesup.
So again, it kind of contradictswhat the ultimate intention is.
Some people do tip less.
You know, the people that areactually carrying the decimal
(20:27):
and removing the alcohol,removing the tax and removing
all those things, might the tipgo down?
Sure.
But I think by and large it endsup being pretty cost neutral
from the consumer perspective.
SPEAKER_01 (20:36):
Aaron Ross Powell So let me just ask you in
Massachusetts, um, are youpassing on the entire tip to the
employees or are you subtractingthe credit card fees that you're
paying?
SPEAKER_00 (20:45):
Aaron Powell So we're uh in Massachusetts, we're
prohibited from doing that.
So um the the the gratuities100% belong to the employees
outside of a valid tip pool uhwith other um service employees,
uh the tips have to go to theemployee.
They 100% belong to theemployee.
So if anyone is out there doingthat, please stop that.
That is a violation uh of thewage statute.
(21:06):
So um all tips do belong to thetipped employee.
SPEAKER_01 (21:09):
Aaron Powell So greater the tip, greater the
credit card commission thatyou're paying, and the workers
are obviously getting thatentire number.
Aaron Powell Yeah.
SPEAKER_00 (21:18):
I mean credit cards, credit cards itself is a
fascinating conversation.
It's something we've spent a lotof time on.
So if you're in a in a typicalrestaurant operation, let's use
20% as the round number for thegratuity, let's use 7% as the
round number for taxes.
That's 27% of every restauranttransaction that you are now
paying a credit card fee on thatis putting zero dollars to the
(21:41):
bottom line.
There's no other industry thathas that type of impact on
credit card fees.
And that's probably the biggestissue we hear from operators
around the Commonwealth is whatare we doing about these credit
card fees?
And if you think about it, wewill all go home today and we'll
have a credit card offer in ourmailbox that says we've been pre
approved and we're going to getsix percent cash back on.
Restaurant transactions, etcetera.
(22:02):
I think we really had need tohave that conversation as a
society is where are thoserewards points coming from?
They're coming from the actualcost you're paying to swipe that
credit card every single time.
And there's a real impact on theunbanked consumer.
The unbanked consumer who'spaying cash is now paying more
for that restaurant experiencebecause of those rewards points.
And so there's a lengthyconversation happening
(22:25):
nationally.
There's uh some legislationhappening in Massachusetts
around those conversations, butcredit card fees is truly one of
those conversations that thecost keeps going up.
And never mind, there was astory in the paper this morning,
or I think it was yesterday, youknow, the chargeback, the
restaurant basically doesn'thave a leg to stand on when the
(22:46):
consumer challenges their creditcard.
And so it's it's really alopsided conversation right now
between the credit cardcompanies.
They have all the advantage.
And you know, that's why I madethe joke about cash, you know,
avoiding the tip question withcash.
But you know, we've had a lot ofdifferent issues come up with
credit card processing and theoverall cost of doing it.
It's probably the highest lineitem in a restaurant right now
(23:09):
outside of uh food and labor iscredit card costs.
And so that makes everythingmore expensive.
But again, in a restaurantindustry, 27% at a minimum of
all your transactions aresubject to credit card fees, and
you're not making any money onthat uh amount.
SPEAKER_01 (23:23):
Aaron Powell So two things, two questions here.
One is um on one side, have younegotiated with the credit card
companies to say, hey, don'tcharge us on this because this
is going straight to theemployees and this, you know, we
are now more they get the tips,the more expense we are paying
to you guys.
So ha has there been anydiscussion on that?
SPEAKER_00 (23:43):
There's been conversations nationally, uh
especially, but you know,there's very few credit card
companies and very few creditcard processors that are out
there.
It's hard to get Visa andMasterCard on the phone uh when
they are when they're out there.
But they have um it's aconversation that absolutely
needs to happen.
And and and I think that societyis becoming more aware of the
(24:03):
hidden costs of processingcredit cards, et cetera.
So I you know I'm I'm optimisticthat we'll continue to kind of
break up the duopoly that thosecredit card companies have.
SPEAKER_01 (24:13):
On the flip side, uh, what about legislation in
the legislature to sort of allowyou to subtract out the just the
cost of uh the credit card feeswhen you're giving to the, you
know, handing the tips back tothe employees?
SPEAKER_00 (24:28):
Aaron Ross Powell, Yeah, absolutely.
So there's been a there's been acouple different legislative
proposals that have kickedaround.
One of them is a a vendor creditfor the privilege of collecting
and remitting meals tax uh to arestaurant and to the state.
Um, Massachusetts restaurantscollect about a billion and a
half dollars in meals tax everyyear, um, not including the
(24:48):
local option meals tax that's onthere.
So three percent of that is is apretty significant amount of
money.
There has been legislationpending for a long time at the
State House to give a vendor taxcredit for anyone who's actually
collecting that money to puttoward those credit card fees.
Thus far, there hasn't been muchmomentum.
Uh you know, the state the statedoesn't give up revenue too
frequently, and and and I I Idon't know what the cost would
(25:10):
be on that vendor tax credit,but there have been
conversations around that.
And there's also beenconversations on when you
collect your meals tax and thenyou pay it to the state, you're
now paying a credit card fee onthat as well.
Oh my goodness.
So you're paying it, you'repaying it when it comes in and
when it goes out.
So um it's it's costly.
SPEAKER_01 (25:29):
Okay, so hiring and retaining the restaurant
workforce has been a realchallenge.
And you said slowly after theCOVID, people are coming back,
but at some point we did lose awhole lot of um workers to other
industries.
Wages and benefits haveincreased, like you said.
You're offering 401k, you'reoffering signing bonuses,
another incentive to recruitemployees.
(25:50):
The one fair wage, whichadvocates for minimum wage with
tips on top, has gainedmomentum.
MRA obviously opposes the ballotproposal that would eliminate
tip credit and mandate sharingof tips.
So what are your argumentsagainst this proposal, which is
elimination of the subminimumwage?
SPEAKER_00 (26:10):
So uh thank you for that question.
And one one correction isthere's no subminimum wage.
The Massachusetts law and thefederal law requires minimum
wage to be paid.
And in Massachusetts, itrequires a minimum wage to be
paid for every shift that getsworked.
So the word subminim wage doesnot apply.
There are subminimum wages inother industries, uh
agricultural, farming, etcetera.
And that is a true minimum wagebelow the state wage.
(26:33):
So it's a little bit oflinguistics, but it's important.
There's no sub minimum wage.
Every employee is guaranteedminimum wage.
Why are we opposed to thequestion?
It's simple.
The servers don't want it.
The tipped employees that areearning tipped income, as we've
talked about, are the highestpaid employees in the industry.
They don't want this change atall.
(26:53):
They are making$30,$40,$50 anhour in very limited hours of
working.
Um it's mostly a part-time job.
It's an opportunity for workingmothers and students and people
that need a second job to putfood on the table to get a
pretty high lucrative per hourjob.
So, first of all, they don'twant it.
And they and they don't want toshare their tips with
(27:15):
back-of-the-house employees thataren't generating tips.
Second, California, which has notip credit, uh, is the lowest
tipped percentage in the state.
They're both- I mean, I'm sorry,the lowest tipped percentage in
the country.
They uh they have the lowesttipped workers.
Um Massachusetts tippedemployees make$3 per hour more
(27:36):
than their Californiacounterparts.
And so I don't know, I mean,it's the it's a bit of a
misnomer.
It's more like one flat wagewhere everybody will make the
same amount of money, and theservers and bartenders don't
want it.
So that's why we're opposed tothe question.
And I would push back a littlebit, and again, semantics.
You say gaining momentum, I sayCalifornia activists trying to
(27:57):
spend some money to bring aballot question because this let
this proposal has been filed for10 years in the legislature and
it hasn't gone anywhere.
Uh so this is a multi-statecampaign where they're spending
millions of dollars to go intodifferent states and try to
change that.
Um but I I I would push backthat it's gaining momentum.
I think it's it's just gettingattention because it exists, but
I think by and large, mostpeople don't want it.
SPEAKER_01 (28:19):
Interesting.
Okay.
So um if if so then the thefollow-up question is um in
Massachusetts, you also are notallowed to spool tips with back
of the house employees.
And I'm presumably that'sbecause the tipped employees are
making up part of their minimumwage through the the tips that
they're getting.
(28:40):
Um so with this proposal, ifeveryone is being paid the
minimum wage from therestaurant, then you are then in
that case allowed to pool weighttips between the front and the
back.
SPEAKER_00 (28:54):
Uh well, under the language filed under the ballot
question, in theory, that's whatthe intent is.
There is some some conflictissues with existing tip law and
the the language that has beenfiled.
Uh, I believe that is the intentuh of what they want to do.
Unfortunately, we can't separatethe two questions out.
Right now it's eliminate the tipwage and permit tips.
That's that's that's twodifferent questions, really.
(29:16):
Um and you know, when you go tothe ballot, you're supposed to
be able to vote yes on one voteyes or no on one question.
Um voters are not legislators,they don't have the ability to
bisect um different questions.
Hopefully the SJC will weigh inon that question on that.
But so yeah, that that is a thatis a conversation that should be
happening in the restaurantindustry about where do we want
to share with tips.
(29:38):
But if you think about it, tipsharing is is micromanaged at
the government level, like thisthis is where you could go, this
is where you could go.
If we were building the tip lawfrom and remove- I'm removing
tip credit for right now, that'sa it's that's an important
discussion to have, but this isjust on tip sharing.
If we were building a tipsharing law from scratch, I
think, and I think a lot ofpeople would agree that when an
(29:58):
employee comes to the restaurantand applies for a job, the
employer says to them, this iswhat happens with the tips in
the restaurant.
Either they are kept here, theyare pooled with employee A, B,
and C, or they're pooled withemployee A, B, C, D, and E.
And this is what it's going tobe.
And you, as the individualemployee, should have the right
to choose to work in thatenvironment or go to a different
environment where it has a lessstrict or more strict pool.
(30:21):
It's a, you know, the tip poollaw is very almost looks like
it's a contractual agreementthat it can go here, it can't go
here, it can't go there.
And and that's what I think thetip law should be.
I think workers should be ableto choose the established.
I'm sorry, the employer shouldbe able to choose where
everything goes.
But in full disclosure, noticeto the employee, this is what
(30:42):
the, this is how we do it.
You can work here or you can notwork here.
It's the same way if you appliedfor a job at one university and
they have X, Y, and Z and youwent to a different university
and they have A, B, and C,you're choosing where to go.
I mean, that that's what theultimate what the uh a new tip
law should look like.
But again, I don't think that'sgonna happen anytime soon.
That's more uh aspirational tiplaw.
SPEAKER_01 (31:03):
Yeah, we have to live with the laws that we have
and laws that are beingproposed.
Um so uh let's go back to thistipping in a in a way you said
um waiters and servers andbartenders are making much more
than the minimum wage, and sothey are not interested in this
proposal.
Um But that that applies torestaurants where the average
check per customer is high.
(31:25):
What about the smaller diners?
What about you know, dinersoutside the city where um which
are very different from the bigbox, well-finance restaurants
are very high-check restaurants.
Um do you think this, you know,the the increase of the minimum
wage could benefit some of theemployees, the
front-of-the-house employees inthose restaurants?
SPEAKER_00 (31:45):
Aaron Powell So no, because those employees are
still making more than minimumwage.
And and so yes, there's there'sthe fine dining experience in
Boston, but it's the breakfastshop in Hopkinton,
Massachusetts, or if it's the uhyou're still making more than
minimum wage.
Maybe you're making$21.
And we did a survey of serversacross Massachusetts, and a 91%
said that the current systemworks for them.
(32:07):
But more importantly, 60 percentsaid they make more than$30 per
hour.
And 91% said they make more than$21 per hour.
So in a state with a$15 minimumwage, you're still making more
money.
The business model is different.
If you go out to breakfast on aSunday, you turn those tables
over quickly, um and then thetips add up versus a fine dining
experience.
You're probably sitting therefor two hours, you're ordering a
(32:30):
dessert, you're ordering a wine,and and the and the tip accrues
from the time that you're there.
But the the the model isdifferent at a breakfast place,
it's turn people over quickly.
You're still getting to theaverage hourly rate that exceeds
minimum wage.
So uh it doesn't matter whatlevel of the scale, you're still
making more than minimum wage.
And so I think it it it it mostservers are good with the system
(32:53):
the way it is.
SPEAKER_01 (32:56):
A few minutes ago you said that um you were
talking about the back of thehouse and and we were talking
about pooling with the back ofthe house.
So um what is the MRA'sperspective on pooling with back
of the house?
I know right now it's notallowed in Massachusetts, but
let's say we can wave a magicwand and say it's allowed.
(33:16):
What is MRA's position on shouldemployers uh do this, or is it
you're gonna say let eachrestaurant decide by itself?
SPEAKER_00 (33:26):
So if the magic wand has authorized it, then each
restaurant is gonna decide whatmakes sense for them.
At the end of the day, therestaurant needs to be able to
open its doors, needs to be ableto meet a business model that
allows it to stay open.
And if if that model is allowingmore tip sharing, then sure.
Um unfortunately, the magic wandtied to this question, we can't
(33:48):
uh extrapolate it up.
They're both they're bothlinked, inherently linked.
So sure, magic wand, uh utopiansociety.
I think some restaurants wouldchoose to share tips with
everyone.
I think some restaurants wouldchoose to not share tips.
Um, and I think that that choiceis good.
It it shouldn't really be begoverned to that.
But yes, if in a magic wandsociety, yes, I think uh
(34:08):
restaurants would share more uhif they could.
SPEAKER_01 (34:11):
So um you did mention some front-of-the-house
staff are making thirty dollars,forty dollars, even fifty
dollars.
But I'm assuming that mostrestaurants are not paying fifty
dollars to the back-of-the-housestaff.
If there is tip sharing allowed,then back of the house staff get
an increase in their wages inthe take-home pay that they
(34:33):
have.
Um wouldn't that help inattracting back of the house
staff?
Right now, I think allrestaurants are suffering from
not having uh back-of-the-housestaff.
SPEAKER_00 (34:45):
So you're assuming that the financial decisions are
made in a vacuum, thatback-of-the-house staff that
that tipping won't go down, thatprice increases won't happen,
that there won't be service feesand all these things that
happen.
So if if we could share tipswith the back of the house,
what's to say theback-of-the-house base wage
wouldn't be lowered?
Why wouldn't if if I'm if youcould pay X and get Y tips, and
(35:09):
then if it's a quiet weekend,you've now made less.
So we're only assuming that theprice is gonna go up in in that
vacuum.
But you know, I think that's thefalse premise of the activists
from California, is that it'sreally one flat wage.
They want everybody to make thesame amount of money.
And if there's somebody that wasthat was really good, they're
gonna pay they get paid the sameamount.
(35:30):
If there's somebody that waslacking and not as good, they're
gonna get paid the same.
I think that's ultimately whatthey're trying to get to, is
everyone gets paid the sameamount.
And I don't think that's the waythat our society works.
I you know, there are peoplethat make more money that are
better at their job, there arepeople that make less money that
are not as skilled at their joband not have, don't have as much
experience.
So that's that's a an assumptionthat everything is just gonna go
(35:50):
up, but I I think that you knowthat's not necessarily gonna
happen.
That could lowerback-of-the-house wages as well
if if it becomes one flat wage.
SPEAKER_01 (35:59):
Some people argue that tipping incentivizes
workers to provide betterservice.
But some servers say thattipping culture has attributed
to servers being subjected tosexual harassment, racism,
verbal and emotional abuse,among many other problems of
mistreatment and inequities.
There is no doubt that tippingis ingrained in the American
(36:20):
culture.
So how can tipping engender bothgood service and fair treatment?
SPEAKER_00 (36:26):
So a couple things.
Um no one should ever be sexualor be subject to sexual
harassment in their job ever.
Uh unfortunately, sexualharassment is a is is is in our
society.
It happens in newsrooms, ithappens in college campuses, it
happens at the Statehouse, ithappens in law firms, it happens
unfortunately everywhere.
There's no tipping in any ofthose industries.
(36:46):
And to link the two is isunfortunately when an agenda is
being pushed, reality takes aback seat.
Uh and according to the Equal UmEqual Up Employment, Equal
Opportunity Commission, statesthat have no tip credit and
states that have a tip credithave the same level of sexual
harassment.
And again, sexual harassment atat any level is inexcusable.
And occasionally owners have tofire employees that violate that
(37:11):
trust.
They have to fire guests thatviolate that trust and say,
you're not welcome here.
But to drive that agenda that itis linked, I've talked to many
employees in the industry andand and they disagree with those
per that that that that's notthe case.
And so um I think tipping doesincentivize um good service and
allows people to earn a verylucrative per hour wage.
(37:33):
But there's problems in societyat every level in every
workforce, and there's many thatdon't have tipping.
So to link them inherently Ithink is more agenda pushing
than it's based in fact.
SPEAKER_01 (37:45):
So many times now I've I've brought up the one
fair wage and these theseproposals, and you've talked
about them as well.
Um I wonder if um, you know,obviously everyone's positions
are pretty well staked out andeveryone is, you know, a lot of
discussion is happening in themedia and articles and uh news
reports and so forth.
(38:05):
I wonder if people would sitaround a table without the glare
of the media and have adiscussion to find out, okay,
what's broken, what needs to befixed, and what is uh working
fine and what doesn't need to befixed.
You think some progress can bemade in terms of what the sides
trying to appreciate eachother's position?
SPEAKER_00 (38:27):
Who knows?
I mean we this has been aconversation that's been ongoing
for for 10, 15 years.
Um I think that I don't knowwhat the ultimate end game is
for the activists fromCalifornia.
They're spending a lot of moneyin a lot of states.
Uh they're not all altruistic.
Why why are they doing this?
Why ultimately why are theycoming to this?
Is it because um you know thatthere's a greater need to try a
(38:52):
greater demand to to maybe uhunionize operations?
I've heard people say that,well, you know, you can't
collect tips from union youcan't collect union dues from
tips.
You know, what is the broaderask?
What are they ultimately tryingto accomplish by spending all of
this money?
And so uh until the we know whatour role is.
Our role is to protect therestaurant industry, to grow and
advance the restaurant industry.
(39:13):
It's unclear what theirlong-term goal is.
But to go around to differentstates to spend millions of
dollars to try to change thislaw, it's not altruistic.
Like at the end of the day, whatis trying to be accomplished?
So until their goals long-termare established, I don't think
there can be meaningfulconversation.
And you say outside the glare inthe lights.
A lot of times the glare in thelights come with that, with the
(39:35):
circus, you know, that that isthere.
So I don't know if there's anopportunity to have those
conversations.
Uh I hope there is, uh,eventually at some point, but
where things are right now andand how much money is being
spent, uh, I don't think thatthere's an opportunity for that
right now.
SPEAKER_01 (39:51):
Interestingly, in a couple of weeks, Saru Jereman
will be sitting in the same seatthat you're sitting, and I'll be
happy to ask her the questionsthat you posed to her.
So at the end, we want toconclude this podcast with a
slightly different turn ofevents, a little bit more fun,
quick fire round of questions.
How many times per week do yougo out to eat?
(40:13):
I think I've already heard youeat out a lot.
SPEAKER_00 (40:16):
It's I mean it's at least seven or eight.
If we factor in more, yeah, I'llI'll stay with seven or eight
for for right now.
That's that's a that's a goodhealthy number once a day,
right?
At least once a day, yeah.
SPEAKER_01 (40:27):
That's a good answer for the president of MMR to give
out as well.
Um when you visit a new city,are you more excited about
visiting casual eateries or finedining establishments?
SPEAKER_00 (40:37):
Aaron Powell Definitely casual eateries.
Give me give me five places Ican go to with a cocktail and an
app, and I can work my waythrough and see different
people, different um menus,different um high-quality
cocktails.
Give me give me multiple placesin a couple hours versus one
long dinner.
SPEAKER_01 (40:54):
In your own kitchen, which job do you choose?
Planning the menu, setting thetable, creating the ambiance,
cooking the meal, or cleaningthe dishes?
SPEAKER_00 (41:02):
Aaron Powell I think it's more of where you want to
order from tonight, but uhprobably planning the menu and
cleaning the dishes.
My wife and I have a goodpartnership and it we really
kind of split the duties uhpretty evenly.
So it it it works well.
You're a good husband.
SPEAKER_01 (41:18):
Just ask her.
Just ask her.
Exactly.
And being a good leader of MRA.
Thank you, Steve, for deliveringa guest lecture at our school
and coming here for the podcast.
It's been a pleasure to have youfor the distinguished podcast.
SPEAKER_00 (41:31):
Thank you for having me on.
This has been great.
I really appreciate it, and I'mlooking forward to more ways
that the MRA and the BU SchoolHospitality can uh can interact
and find some common place toadvance the industry.
Thank you.
Thank you.
SPEAKER_01 (41:44):
And thank you all for listening today to our
distinguished podcast.
If you like what you're hearing,be sure to follow up and give us
a five-star rating.
If you want to join theconversation and share your
thoughts and suggestions, emailme at shaden at bu.edu.
That's sardine at bu.edu.
(42:04):
Special thanks to the team whoproduced this podcast, Mara
Littman, Andy Halleck, and theentire team at BU School of
Hospitality Administration.
To keep up with DistinguishedPodcast, be sure to subscribe
wherever you listen to yourfavorite podcast.
You can also learn more aboutour undergraduate and graduate
programs at BU School ofHospitality by visiting
(42:27):
pu.eduslash hospitality.
Have a wonderful day and thankyou for listening.
As Dean of Boston University School of Hospitality
Administration, we areinterested in the topic of wages
and compensation in the serviceindustry and will be presenting
various vantage points.
In this podcast, theorganization One Fair Wage,
proponents of the minimum wagefor all tipped employees, is
named by its opponents asCalifornia activists, which
(00:21):
conveys a political stance.
As an academic institution, weprovide the platform but do not
take a stance on the issue.
Now I welcome you to listen tothe podcast and form your own
opinion.
Welcome to the DistinguishedPodcast, where we delve into the
heart of the restaurantindustry, an integral part of
our lives.
(00:42):
Dining out not only nourishesour bodies, but also provides an
experience that feeds our souls.
Yet, behind the scenes,restaurant work is undeniably
tough.
Long hours, fierce competition,and thin profit margins
characterize this demandingprofession.
The challenges only intensifiedduring the COVID-19 pandemic,
(01:03):
testing the resilience ofworkers and business owners
alike.
Today we are privileged to haveSteve Clark, president and CEO
of the Massachusetts RestaurantAssociation, joining us to
explore the future of thisdynamic industry.
The MRA is an advocate for foodand beverage providers, offering
essential support througheducation, cost-saving programs,
(01:24):
networking, and governmentadvocacy.
I'm your host, Arun Ubnaja, Deanof the BU School of Hospitality
Administration.
Thank you for tuning in as wenavigate the evolving landscape
of restaurants and hospitality.
And Steve, welcome to our schooland the Distinguished Podcast.
SPEAKER_00 (01:42):
Dean, thank you very much for having me.
It's exciting to be here in yourbeautiful podcast studio on
right here on campus at BU.
Really excited to get into ourconversation today.
SPEAKER_01 (01:50):
Thank you.
So let's uh start with the roleof restaurants in our society.
So today you can order food froman app and have it delivered in
very little time to almostanywhere.
Work, home, or even an outdoorsetting such as a beach or a
park.
We have seen the rise of starchefs and restaurants with
theatrics designed to rival aBroadway show.
(02:12):
How do you explain the expansionof dining options in our
society?
And why do we love to eat out somuch?
Is it for entertainment value?
Is it need for community?
Are we just lazy?
What is that the reason that asa society we are spending more
money on food than ever before?
SPEAKER_00 (02:30):
So that's a great question.
And it's probably all of theabove.
There are different segments ofthe industry that attracted
different people at all times.
I think just in terms of howquick we are, uh how busy we are
in our life, uh, the ability togo out and acquire a good
quality meal at any opportunityis is is is entirely necessary.
(02:52):
So for example, last night, Ihave a 13-year-old son, I have
an 11-year-old daughter, son hada baseball game, and then CCD
afterwards, daughter had thecross practice, it was 7
o'clock.
You know, we hadn't fed anyoneyet, they hadn't been home from
school.
It was a lot easier to walk downto the local restaurant, grab
something and go than it wouldbe to actually go home, plan a
menu, put out a plate, clean upafter ourselves.
And also the stuff at our houseisn't that good.
(03:14):
I mean, I was able to get, youknow, a uh a well-made barbecue
pork sandwich.
I don't have pork at my house, Idon't have time to smoke it, I
don't have barbecue sauce.
So all of those things that areavailable that that quickly, uh
and and inherently, so that'sone, you know, just we're so
busy as a society.
Two, we have an innate desidesire as humans to interact
(03:35):
with other people.
And what other place to interactwith other people than when
we're enjoying a sharedexperience such as food at a or
a nice cocktail at a restaurantor other uh industry, industry
establishments.
So we're the only species thathas that ability, and I think we
inherently want to do that.
And more and more of the thingsthat we do are internal.
You know, we we do all of ourshopping on our phone, uh we
(03:57):
have our groceries delivered tous, uh, we're doing our shopping
on Amazon, you know, all thesedifferent things, all these
different human experiences thatwe don't have anymore.
The only one that we truly dohave is dining out and and
enjoying each other's company.
So I think that's why we'respending so much of our of our
food dollar away from home.
But it's a combination of theneed to feel a part of something
(04:18):
bigger, the convenience of it,and the high quality of it.
You know, it's a lot better.
Anything I was gonna make in mykitchen yesterday was gonna pale
in comparison to uh what weordered.
And and that ended up beingtrue.
SPEAKER_01 (04:31):
Well said.
And as the president of MRA, Idid not expect you to latch on
to the laziness argument.
SPEAKER_00 (04:39):
But uh Well, there is something to be said for uh I
can type in cheeseburger on myphone and I have 37 options and
a cheeseburger gets delivered tome.
So there is something inherentabout being able to do that that
we didn't have even five, six,seven years ago, never mind
twenty years ago.
So there is there is a segmentof the population that may
(05:01):
embrace the laziness side ofthings too, where the food gets
delivered to them as well.
SPEAKER_01 (05:07):
Okay, so now let's talk about a huge big event that
happened, um a very traumaticevent in our society, which is
COVID.
Um it highlighted the essentialnature of restaurants in our
society.
Um, you know, it showed us howimportant restaurants are to us
as a as like you just said, as acommunity, you know, we we crave
company of people and so forth.
(05:27):
But it also highlighted some uhcracks that are hidden below the
surface, you know, the need toincrease wages and benefits, for
example, uh the emotional laborand psychological stress of
restaurant work, long hours,slim profit margins, uh customer
behavior that you know sometimesit's very good and sometimes
it's it's very bad, rude and andin behavior inappropriate
(05:50):
behavior.
So what are some of the lessons,at least some of the good
lessons that came out of this umout of COVID and out of this
enlightened reflection on whatit takes to run a restaurant?
SPEAKER_00 (06:02):
So March 16th, 2020 is one of the darkest days in
our industry.
Uh we laid off about 85 percentof our entire workforce
overnight.
Uh I recall uh, you know, ouroffice is out in Westboro,
Massachusetts, um geared up forSt.
Patrick's Day.
I went into a restaurant tobring some corned beef home.
Again, not going to not orderingfood at home.
(06:22):
I mean, not preparing food athome, but ordering it.
Uh and I went into therestaurant and uh the Irish
music was playing, it was welldecorated, there was shamrocks
everywhere, and there was not aperson in the restaurant.
There was one person workingthere to facilitate some to-go
orders.
That was the darkest day.
We'll never get past that, butit certainly has had uh a
(06:42):
long-lasting impact on therestaurant industry.
A number of changes have comeout of the industry uh at a
number of different levels.
You know, the first one is interms of positive developments.
Uh we taught people how to getdelivery and how to eat at home.
Uh that hasn't gone away.
We've actually seen delivery andtakeout increase in most
restaurants, and that has led touh changing over of restaurant
(07:05):
landscape, of you know,reformatting the kitchen or
reformatting parts of the diningroom to facilitate more dining
and takeout options and doingthat.
The second one, and th this islocal to Massachusetts, but it's
important is outdoor dining.
Um if you think about the numberof people that dine outdoors
now.
We used to, you know, April, itwas still cold or October.
Now we have people that will puta sweater on, they'll build a
(07:26):
fire, and they'll eat in thosekind of shoulder seasons.
And there was very finiteopportunities in terms of
outdoor dining available, andnow that's actually part of the
ambiance, and most people areincorporating that into their
restaurant footprint.
Uh in terms of wages andbenefits for employees, uh, you
know, as I said, we laid offalmost our entire entirety of
our workforce and people startedto look in other places for
(07:49):
jobs.
Four years later, it seems thatpeople are starting to come back
and the job shortages are lessthan they were.
Uh, but owners and operators arekind of rethinking their
benefits package.
Uh at the MRA, we're happy tooffer, we offer a 401k program
for any restaurateur can joinand offer to their employees,
and you start to think aboutmore and more benefits that you
can uh uh offer to youremployees to make them want to
(08:12):
grow in the restaurant industry.
Many times people will stop by,grab a part-time job, leave on
their way to another job, buthow do you start to think about
a job in the restaurant industryas a career?
More professionalization, moregr more opportunities for
growth, 401k benefits, healthinsurance, all those things now
are pretty standard in therestaurant and we're getting
there.
So, you know, those are some ofthe evolutions that we've seen
(08:34):
with employees uh and and justthe commitment to growth in the
industry.
SPEAKER_01 (08:40):
So let me latch on to one thing that you mentioned
here, which is the growth of thethe takeout.
Um you know, we we are takingout so much more.
One of the issues, you know, uhone of the expenses of running a
restaurant is the space that youhave, the rent that you're
paying on the space, theambiance that you've created
through the furniture, throughfurnishings, through pictures,
(09:00):
and and all of that.
Um then the labor that isinvolved in providing the
service.
Yet when I go to take out food,I'm paying the same price as if
I am sitting inside and diningand consuming all of these.
So that has always, to someextent, bothered me that that
takeout pricing is notsignificantly different than in
(09:23):
house in dining in therestaurant.
SPEAKER_00 (09:26):
Aaron Ross Powell That's an interesting it's an
interesting question, aninteresting conversation to
explore.
So, you know, the the theinsurance for being in that
building and the cost to beinside that building hasn't
changed.
And the person who's preparingthat let's let's use a
cheeseburger.
A person who's preparing thatcheeseburger inside the
restaurant is still being paidthe same rate.
Um, so you you know, a lot ofthe built-in costs to produce
(09:48):
that cheeseburger forconsumption is still happening.
Uh now you have to build inpackaging to take it away.
You now you have to build in uhthe marketing of that
cheeseburger.
Uh it's a lot different ifyou're ordering off of a menu
sitting in the restaurant.
Uh now you're you're also you'renot adding anything else to it.
You're not having a couple ofdrinks, you're not adding a
dessert, you're not adding anappetizer.
(10:09):
So all of a sudden, you know,the the overall cost to produce
that meal is probably prettysimilar.
Um I I would think that that'sprobably why you're not seeing a
a huge price discrepancy.
You know, truthfully, I thinkthat, and we we talk about
third-party delivery companies alittle bit, is that you the
consumer ultimately is going toneed to pay more for that
(10:30):
experience.
Because not only are we payingfor all of the cost to go in to
make that cheeseburger for theconsumer, but now we're gonna
pay somebody to get in their caror get on their bike and drive
it one mile, two mile, threemile, five miles away, you know,
the cost structure is not reallythere to make it worthwhile.
And you know, it's notprofitable for the delivery
company, it's not profitable forthe restaurant.
(10:52):
So the consumer is ultimatelygonna have to pay more for that
experience to make that happen.
And so uh I actually think thedelivery price should be more uh
if you factor in all especiallyif you're utilizing third-party
delivery.
Um but if consumers want that umconvenience, they absolutely are
gonna have to pay for it.
And that's where I see theindustry heading, uh especially
in the third-party deliveryworld.
SPEAKER_01 (11:13):
Right.
I was actually more talkingabout pickup.
So not just delivery, but I goto pickup and I'm not sitting
there consuming you know all ofthat.
Okay, so let's um let's divedeeply into one of the outcomes
of COVID, which is the uhproliferation of tipping.
You know, everywhere there is anudge to tip.
(11:33):
Um even in um, you know, thereare some uh federally regulated
um uh professions where tip, youknow, uh subminimum wage is
allowed, where where everyonedoes expect a tip to happen and
the federal government But herenow, even in all kinds of
situations, there is we arebeing nudged to tip.
(11:54):
And so I think that a lot ofpeople seem to be hitting a
tipping fatigue.
What do you think?
SPEAKER_00 (12:00):
Uh absolutely I have it myself.
I was at a not a restaurant.
It was a a different type ofplace in Boston, and I bought a
diet Pepsi.
And this person flipped aroundthe screen and said, you know,
what what's the gratuity goingto be?
And it's not$1,$2,$3.
It's 15%, 20%, 25%.
So I think in certain instanceswhere every single transaction
(12:22):
you're making, you're gettingasked to make a gratuity.
Uh and it's not easy to changethe number, you know, even if
you make it zero or if you wantto do a custom amount, you know,
you're not necessarily going toleave a percentage of the
transaction.
Uh I think that's something thatwe have to work through.
I think one of the direct causesof that, though, is the paying
with the credit card.
And the credit card transactionmakes it more expensive for the
(12:43):
operator because credit cardfees are what they are.
So, you know, one way aroundthat is paying cash.
You pay cash, you don't have todeal with the question.
I think we also have to get morecomfortable pressing the no
button if it's not a job thatwas worthwhile of a tip.
Now, if you're picking up asandwich or someone makes a sub
or a salad for you,traditionally that wasn't tip,
(13:04):
but you want to leave them acouple dollars because they did
a great job?
Sure, absolutely.
Uh the full evolution of tippingin the non-full service
restaurant world is reallyfascinating.
Probably you can probably do apodcast on it just by itself,
but historically, it used to bejust leaving the change in the
cup because you didn't want tocarry the change around.
So you bought a coffee at thelocal coffee shop, you had a
(13:26):
couple of cents back, and youdropped it in the cup.
That has evolved into thisfull-on new economy of itself in
terms of tip for every job beingprovided.
You know, I I think we justcontinue to adjust to that and
and and learn with it.
And we and when no one's forcedto do it.
You know, if you if you feeluncomfortable, if you don't feel
like it was worthwhile, hit theno button, hit zero.
(13:48):
But it's definitely afascinating conversation as we
talk about tips outside of thefull service industry.
Obviously, tip your bartenders,tip your servers.
Um, they're working hard,they're providing a great
experience for you.
But you know, if you buy a to-goitem at the airport, you
probably don't need to leave agratuity for that transaction.
SPEAKER_01 (14:06):
So here you have it from the president of MRA
outside of the full servicerestaurant industry, feel
comfortable to hit the nobutton.
SPEAKER_00 (14:14):
Aaron Powell Just don't call me when that person
makes a dirty face at you.
SPEAKER_01 (14:19):
That sounds very good.
Okay, so let's uh move on tokitchen fees that are often
added to checks to raise thewages for the kitchen staff.
And the Biden administration isleading a crackdown on what it
is called junk fees ormisleading consumer-facing
surcharges that are usuallyincluded in the fine print
before a purchase is made, oryou just you know you're
(14:39):
surprising, you're surprised byit and it shows up.
So, what is the MRA's stance onthe issue of kitchen fees and
price transparency?
SPEAKER_00 (14:46):
Aaron Powell So I think the Biden administration
is making a mistake by blurringall these issues into one.
So we're talking about, youknow, Ticketmaster or an
airline.
You know, if you go toTicketmaster and you and you
want to buy a ticket, I won't Iwon't call out a Gantis Arena,
we'll go down the street to adifferent arena.
But so you're gonna go to in theand the baseline ticket is$35,
(15:07):
and you buy the ticket and youhit$35.
And then it's a 10% servicecharge, and then there's an
arena fee, and then there's theCOVID fee, and then there's all
these fees built into it.
At the end of the thing, your$35ticket costs$89.
You know, I think that's whatthey're actually trying to go
after.
Uh same with an airline.
You go to an airline website,it's$250 to fly from point A to
point B, and then it's bag fee,service fee, et cetera, and
(15:30):
you're up to$350.
That's probably where most ofthe targeted enforcement should
go.
I think a kitchen fee, in mostcases in the restaurant
industry, is pretty welldisclosed.
You know, either it's on themenu or if it's on a sign that
says, you know, kitch, you know,your transaction is subject to
3% kitchen fee.
This doesn't represent a tip orservice charge for tipped
(15:51):
employees, it's going to theback of the house.
Um, you know, so I would like tosee, and and we we've been
advocating with the NationalRestaurant Association on that
regulation and legislation tokind of separate those issues.
There's a huge differencebetween an online transaction
with a Ticketmaster or anairline or airline versus
mandatory gratuity for partiesof seven or more or three
(16:12):
percent kitchen fee.
Um and then you get into therestaurant industry, we talked a
little bit about third-partydeliveries.
The third-party delivery fee isdifferent.
It costs a lot more to deliverone hamburger than it does 12.
And the cost structure is gonnabe different.
So if you're ordering thatproduct through that site, how
can you get a direct price righton the original marking because
you're still building yourorder?
(16:33):
Um I think most restaurantswould be willing, would comply
and would disclose most of thosefees that are there anyway.
So I in practicality, I don'tthink it's gonna be a huge
impact because as I understandit, as long as all the fees are
disclosed up front, you're fine.
But you know, let's take itoutside the restaurant industry.
If you go to a catering functionand there's a cake cutting fee
(16:56):
or there's the winery corkingfee, you know, there's a whole
number of fees that aren'tnecessarily on your
advertisement of how much you'regonna pay, the DJ fee.
You know, so if you think aboutdifferent um fees that need to
be added on and are part of thetransaction, I don't think the
consumer wants that needs thatprice right away.
You know, I I think that thereneeds to be open dial.
(17:17):
It's not everything is cut anddry, not everything is paint by
number where it's this is whatthe number is.
Um I assume the the all-in feeto to come to BU maybe there's a
couple different line items onthere, right?
It's not it's not all that.
SPEAKER_01 (17:33):
Like you said, we leave that to a different part
of the Trevor Burrus.
SPEAKER_00 (17:35):
Exactly.
We'll talk about all theschools, not just BU.
SPEAKER_01 (17:39):
Trevor Burrus, Jr.: But I do want to get into one
one one thing that you just saidin here that uh the cost to
deliver 12 hamburgers to onelocation would be different than
delivering a single.
I'm not sure why that would beaccurate.
I mean, you're taking one box,whether it's at one hamburger or
twelve hamburgers, it's thesame, traveling the same
distance, same.
So I think to some extent thatuh I'm not sure I fully
(18:01):
understand.
SPEAKER_00 (18:02):
Trevor Burrus, Jr.: Yeah, I I think that's more of a
third-party delivery fee issuewith working out how much it's
going to be to get pro one thingto, you know.
If it's if it's 10 hamburger 10hamburgers, maybe it can't be
the guy on the bike that has todrive it, and it has to be the
car that has to drive it downthe road.
You know, so there are somefactors that are fully
determined until the final orderis decided.
(18:23):
So that would be that would bemy thought process on that.
SPEAKER_01 (18:26):
Aaron Ross Powell No, so I I understand that's
also it's outside your That'soutside our world.
Yeah.
But let's go back to the kitchenfees, which is are most
restaurants, when they uh havethis kitchen fee, are they
actually passing it on to thekitchen employees?
SPEAKER_00 (18:40):
Aaron Ross Powell I hope so.
Uh especially the ones thatmarket that they are.
Uh if you're saying that you'reyou're going to and what what's
the root of the kitchen fee?
Why do we have the kitchen fee?
There's a huge discrepancy, andI think we'll get into this
later.
There's a huge discrepancy in ina restaurant between
front-of-the-house employees andback-of-the-house employees.
And the front-of-the-houseemployees make more money.
And that's inherently true.
(19:01):
You know, no matter whether it'sa a breakfast place or a fine
dining establishment in front ofthe house are making more than
back of the house.
And the way the kit the kitchenfee is really just the end
around, raising the overallprice, because if you raise the
overall price, people tip more.
People tip on the end price.
And so that that that numberalways goes up.
So anytime menu and menuinflation averages, it's
(19:23):
probably a little higher thelast couple of years, but
averages three to five percentevery year.
That means people are leavingthree to five percent more in
tips every year, by and large.
Right.
The kitchen fee is really justthe end around putting that
price onto the onto the dinnerand uh and diverting it to the
to the back of the house.
So I think most operators thatare promoting that they're
trying to d direct three percentto the kitchen staff, they are
(19:45):
doing that.
And and and they are they aretruthful in their in their
marketing of that.
SPEAKER_01 (19:50):
But from a consumer perspective, if I am paying 20
percent to the to this, youknow, as a tip, as a gratuity,
but then now I'm having to payanother three percent.
So should I think that okay, nowI need to only tip 17 percent?
SPEAKER_00 (20:05):
So no.
Um so interestingly enough, uhsome studies have shown that
people actually tip more,because inevitably they just tip
on they don't want to do themath.
Right.
So they just tip to 20 percent.
So by and large, the tip goesup.
So again, it kind of contradictswhat the ultimate intention is.
Some people do tip less.
You know, the people that areactually carrying the decimal
(20:27):
and removing the alcohol,removing the tax and removing
all those things, might the tipgo down?
Sure.
But I think by and large it endsup being pretty cost neutral
from the consumer perspective.
SPEAKER_01 (20:36):
Aaron Ross Powell So let me just ask you in
Massachusetts, um, are youpassing on the entire tip to the
employees or are you subtractingthe credit card fees that you're
paying?
SPEAKER_00 (20:45):
Aaron Powell So we're uh in Massachusetts, we're
prohibited from doing that.
So um the the the gratuities100% belong to the employees
outside of a valid tip pool uhwith other um service employees,
uh the tips have to go to theemployee.
They 100% belong to theemployee.
So if anyone is out there doingthat, please stop that.
That is a violation uh of thewage statute.
(21:06):
So um all tips do belong to thetipped employee.
SPEAKER_01 (21:09):
Aaron Powell So greater the tip, greater the
credit card commission thatyou're paying, and the workers
are obviously getting thatentire number.
Aaron Powell Yeah.
SPEAKER_00 (21:18):
I mean credit cards, credit cards itself is a
fascinating conversation.
It's something we've spent a lotof time on.
So if you're in a in a typicalrestaurant operation, let's use
20% as the round number for thegratuity, let's use 7% as the
round number for taxes.
That's 27% of every restauranttransaction that you are now
paying a credit card fee on thatis putting zero dollars to the
(21:41):
bottom line.
There's no other industry thathas that type of impact on
credit card fees.
And that's probably the biggestissue we hear from operators
around the Commonwealth is whatare we doing about these credit
card fees?
And if you think about it, wewill all go home today and we'll
have a credit card offer in ourmailbox that says we've been pre
approved and we're going to getsix percent cash back on.
Restaurant transactions, etcetera.
(22:02):
I think we really had need tohave that conversation as a
society is where are thoserewards points coming from?
They're coming from the actualcost you're paying to swipe that
credit card every single time.
And there's a real impact on theunbanked consumer.
The unbanked consumer who'spaying cash is now paying more
for that restaurant experiencebecause of those rewards points.
And so there's a lengthyconversation happening
(22:25):
nationally.
There's uh some legislationhappening in Massachusetts
around those conversations, butcredit card fees is truly one of
those conversations that thecost keeps going up.
And never mind, there was astory in the paper this morning,
or I think it was yesterday, youknow, the chargeback, the
restaurant basically doesn'thave a leg to stand on when the
(22:46):
consumer challenges their creditcard.
And so it's it's really alopsided conversation right now
between the credit cardcompanies.
They have all the advantage.
And you know, that's why I madethe joke about cash, you know,
avoiding the tip question withcash.
But you know, we've had a lot ofdifferent issues come up with
credit card processing and theoverall cost of doing it.
It's probably the highest lineitem in a restaurant right now
(23:09):
outside of uh food and labor iscredit card costs.
And so that makes everythingmore expensive.
But again, in a restaurantindustry, 27% at a minimum of
all your transactions aresubject to credit card fees, and
you're not making any money onthat uh amount.
SPEAKER_01 (23:23):
Aaron Powell So two things, two questions here.
One is um on one side, have younegotiated with the credit card
companies to say, hey, don'tcharge us on this because this
is going straight to theemployees and this, you know, we
are now more they get the tips,the more expense we are paying
to you guys.
So ha has there been anydiscussion on that?
SPEAKER_00 (23:43):
There's been conversations nationally, uh
especially, but you know,there's very few credit card
companies and very few creditcard processors that are out
there.
It's hard to get Visa andMasterCard on the phone uh when
they are when they're out there.
But they have um it's aconversation that absolutely
needs to happen.
And and and I think that societyis becoming more aware of the
(24:03):
hidden costs of processingcredit cards, et cetera.
So I you know I'm I'm optimisticthat we'll continue to kind of
break up the duopoly that thosecredit card companies have.
SPEAKER_01 (24:13):
On the flip side, uh, what about legislation in
the legislature to sort of allowyou to subtract out the just the
cost of uh the credit card feeswhen you're giving to the, you
know, handing the tips back tothe employees?
SPEAKER_00 (24:28):
Aaron Ross Powell, Yeah, absolutely.
So there's been a there's been acouple different legislative
proposals that have kickedaround.
One of them is a a vendor creditfor the privilege of collecting
and remitting meals tax uh to arestaurant and to the state.
Um, Massachusetts restaurantscollect about a billion and a
half dollars in meals tax everyyear, um, not including the
(24:48):
local option meals tax that's onthere.
So three percent of that is is apretty significant amount of
money.
There has been legislationpending for a long time at the
State House to give a vendor taxcredit for anyone who's actually
collecting that money to puttoward those credit card fees.
Thus far, there hasn't been muchmomentum.
Uh you know, the state the statedoesn't give up revenue too
frequently, and and and I I Idon't know what the cost would
(25:10):
be on that vendor tax credit,but there have been
conversations around that.
And there's also beenconversations on when you
collect your meals tax and thenyou pay it to the state, you're
now paying a credit card fee onthat as well.
Oh my goodness.
So you're paying it, you'repaying it when it comes in and
when it goes out.
So um it's it's costly.
SPEAKER_01 (25:29):
Okay, so hiring and retaining the restaurant
workforce has been a realchallenge.
And you said slowly after theCOVID, people are coming back,
but at some point we did lose awhole lot of um workers to other
industries.
Wages and benefits haveincreased, like you said.
You're offering 401k, you'reoffering signing bonuses,
another incentive to recruitemployees.
(25:50):
The one fair wage, whichadvocates for minimum wage with
tips on top, has gainedmomentum.
MRA obviously opposes the ballotproposal that would eliminate
tip credit and mandate sharingof tips.
So what are your argumentsagainst this proposal, which is
elimination of the subminimumwage?
SPEAKER_00 (26:10):
So uh thank you for that question.
And one one correction isthere's no subminimum wage.
The Massachusetts law and thefederal law requires minimum
wage to be paid.
And in Massachusetts, itrequires a minimum wage to be
paid for every shift that getsworked.
So the word subminim wage doesnot apply.
There are subminimum wages inother industries, uh
agricultural, farming, etcetera.
And that is a true minimum wagebelow the state wage.
(26:33):
So it's a little bit oflinguistics, but it's important.
There's no sub minimum wage.
Every employee is guaranteedminimum wage.
Why are we opposed to thequestion?
It's simple.
The servers don't want it.
The tipped employees that areearning tipped income, as we've
talked about, are the highestpaid employees in the industry.
They don't want this change atall.
(26:53):
They are making$30,$40,$50 anhour in very limited hours of
working.
Um it's mostly a part-time job.
It's an opportunity for workingmothers and students and people
that need a second job to putfood on the table to get a
pretty high lucrative per hourjob.
So, first of all, they don'twant it.
And they and they don't want toshare their tips with
(27:15):
back-of-the-house employees thataren't generating tips.
Second, California, which has notip credit, uh, is the lowest
tipped percentage in the state.
They're both- I mean, I'm sorry,the lowest tipped percentage in
the country.
They uh they have the lowesttipped workers.
Um Massachusetts tippedemployees make$3 per hour more
(27:36):
than their Californiacounterparts.
And so I don't know, I mean,it's the it's a bit of a
misnomer.
It's more like one flat wagewhere everybody will make the
same amount of money, and theservers and bartenders don't
want it.
So that's why we're opposed tothe question.
And I would push back a littlebit, and again, semantics.
You say gaining momentum, I sayCalifornia activists trying to
(27:57):
spend some money to bring aballot question because this let
this proposal has been filed for10 years in the legislature and
it hasn't gone anywhere.
Uh so this is a multi-statecampaign where they're spending
millions of dollars to go intodifferent states and try to
change that.
Um but I I I would push backthat it's gaining momentum.
I think it's it's just gettingattention because it exists, but
I think by and large, mostpeople don't want it.
SPEAKER_01 (28:19):
Interesting.
Okay.
So um if if so then the thefollow-up question is um in
Massachusetts, you also are notallowed to spool tips with back
of the house employees.
And I'm presumably that'sbecause the tipped employees are
making up part of their minimumwage through the the tips that
they're getting.
(28:40):
Um so with this proposal, ifeveryone is being paid the
minimum wage from therestaurant, then you are then in
that case allowed to pool weighttips between the front and the
back.
SPEAKER_00 (28:54):
Uh well, under the language filed under the ballot
question, in theory, that's whatthe intent is.
There is some some conflictissues with existing tip law and
the the language that has beenfiled.
Uh, I believe that is the intentuh of what they want to do.
Unfortunately, we can't separatethe two questions out.
Right now it's eliminate the tipwage and permit tips.
That's that's that's twodifferent questions, really.
(29:16):
Um and you know, when you go tothe ballot, you're supposed to
be able to vote yes on one voteyes or no on one question.
Um voters are not legislators,they don't have the ability to
bisect um different questions.
Hopefully the SJC will weigh inon that question on that.
But so yeah, that that is a thatis a conversation that should be
happening in the restaurantindustry about where do we want
to share with tips.
(29:38):
But if you think about it, tipsharing is is micromanaged at
the government level, like thisthis is where you could go, this
is where you could go.
If we were building the tip lawfrom and remove- I'm removing
tip credit for right now, that'sa it's that's an important
discussion to have, but this isjust on tip sharing.
If we were building a tipsharing law from scratch, I
think, and I think a lot ofpeople would agree that when an
(29:58):
employee comes to the restaurantand applies for a job, the
employer says to them, this iswhat happens with the tips in
the restaurant.
Either they are kept here, theyare pooled with employee A, B,
and C, or they're pooled withemployee A, B, C, D, and E.
And this is what it's going tobe.
And you, as the individualemployee, should have the right
to choose to work in thatenvironment or go to a different
environment where it has a lessstrict or more strict pool.
(30:21):
It's a, you know, the tip poollaw is very almost looks like
it's a contractual agreementthat it can go here, it can't go
here, it can't go there.
And and that's what I think thetip law should be.
I think workers should be ableto choose the established.
I'm sorry, the employer shouldbe able to choose where
everything goes.
But in full disclosure, noticeto the employee, this is what
(30:42):
the, this is how we do it.
You can work here or you can notwork here.
It's the same way if you appliedfor a job at one university and
they have X, Y, and Z and youwent to a different university
and they have A, B, and C,you're choosing where to go.
I mean, that that's what theultimate what the uh a new tip
law should look like.
But again, I don't think that'sgonna happen anytime soon.
That's more uh aspirational tiplaw.
SPEAKER_01 (31:03):
Yeah, we have to live with the laws that we have
and laws that are beingproposed.
Um so uh let's go back to thistipping in a in a way you said
um waiters and servers andbartenders are making much more
than the minimum wage, and sothey are not interested in this
proposal.
Um But that that applies torestaurants where the average
check per customer is high.
(31:25):
What about the smaller diners?
What about you know, dinersoutside the city where um which
are very different from the bigbox, well-finance restaurants
are very high-check restaurants.
Um do you think this, you know,the the increase of the minimum
wage could benefit some of theemployees, the
front-of-the-house employees inthose restaurants?
SPEAKER_00 (31:45):
Aaron Powell So no, because those employees are
still making more than minimumwage.
And and so yes, there's there'sthe fine dining experience in
Boston, but it's the breakfastshop in Hopkinton,
Massachusetts, or if it's the uhyou're still making more than
minimum wage.
Maybe you're making$21.
And we did a survey of serversacross Massachusetts, and a 91%
said that the current systemworks for them.
(32:07):
But more importantly, 60 percentsaid they make more than$30 per
hour.
And 91% said they make more than$21 per hour.
So in a state with a$15 minimumwage, you're still making more
money.
The business model is different.
If you go out to breakfast on aSunday, you turn those tables
over quickly, um and then thetips add up versus a fine dining
experience.
You're probably sitting therefor two hours, you're ordering a
(32:30):
dessert, you're ordering a wine,and and the and the tip accrues
from the time that you're there.
But the the the model isdifferent at a breakfast place,
it's turn people over quickly.
You're still getting to theaverage hourly rate that exceeds
minimum wage.
So uh it doesn't matter whatlevel of the scale, you're still
making more than minimum wage.
And so I think it it it it mostservers are good with the system
(32:53):
the way it is.
SPEAKER_01 (32:56):
A few minutes ago you said that um you were
talking about the back of thehouse and and we were talking
about pooling with the back ofthe house.
So um what is the MRA'sperspective on pooling with back
of the house?
I know right now it's notallowed in Massachusetts, but
let's say we can wave a magicwand and say it's allowed.
(33:16):
What is MRA's position on shouldemployers uh do this, or is it
you're gonna say let eachrestaurant decide by itself?
SPEAKER_00 (33:26):
So if the magic wand has authorized it, then each
restaurant is gonna decide whatmakes sense for them.
At the end of the day, therestaurant needs to be able to
open its doors, needs to be ableto meet a business model that
allows it to stay open.
And if if that model is allowingmore tip sharing, then sure.
Um unfortunately, the magic wandtied to this question, we can't
(33:48):
uh extrapolate it up.
They're both they're bothlinked, inherently linked.
So sure, magic wand, uh utopiansociety.
I think some restaurants wouldchoose to share tips with
everyone.
I think some restaurants wouldchoose to not share tips.
Um, and I think that that choiceis good.
It it shouldn't really be begoverned to that.
But yes, if in a magic wandsociety, yes, I think uh
(34:08):
restaurants would share more uhif they could.
SPEAKER_01 (34:11):
So um you did mention some front-of-the-house
staff are making thirty dollars,forty dollars, even fifty
dollars.
But I'm assuming that mostrestaurants are not paying fifty
dollars to the back-of-the-housestaff.
If there is tip sharing allowed,then back of the house staff get
an increase in their wages inthe take-home pay that they
(34:33):
have.
Um wouldn't that help inattracting back of the house
staff?
Right now, I think allrestaurants are suffering from
not having uh back-of-the-housestaff.
SPEAKER_00 (34:45):
So you're assuming that the financial decisions are
made in a vacuum, thatback-of-the-house staff that
that tipping won't go down, thatprice increases won't happen,
that there won't be service feesand all these things that
happen.
So if if we could share tipswith the back of the house,
what's to say theback-of-the-house base wage
wouldn't be lowered?
Why wouldn't if if I'm if youcould pay X and get Y tips, and
(35:09):
then if it's a quiet weekend,you've now made less.
So we're only assuming that theprice is gonna go up in in that
vacuum.
But you know, I think that's thefalse premise of the activists
from California, is that it'sreally one flat wage.
They want everybody to make thesame amount of money.
And if there's somebody that wasthat was really good, they're
gonna pay they get paid the sameamount.
(35:30):
If there's somebody that waslacking and not as good, they're
gonna get paid the same.
I think that's ultimately whatthey're trying to get to, is
everyone gets paid the sameamount.
And I don't think that's the waythat our society works.
I you know, there are peoplethat make more money that are
better at their job, there arepeople that make less money that
are not as skilled at their joband not have, don't have as much
experience.
So that's that's a an assumptionthat everything is just gonna go
(35:50):
up, but I I think that you knowthat's not necessarily gonna
happen.
That could lowerback-of-the-house wages as well
if if it becomes one flat wage.
SPEAKER_01 (35:59):
Some people argue that tipping incentivizes
workers to provide betterservice.
But some servers say thattipping culture has attributed
to servers being subjected tosexual harassment, racism,
verbal and emotional abuse,among many other problems of
mistreatment and inequities.
There is no doubt that tippingis ingrained in the American
(36:20):
culture.
So how can tipping engender bothgood service and fair treatment?
SPEAKER_00 (36:26):
So a couple things.
Um no one should ever be sexualor be subject to sexual
harassment in their job ever.
Uh unfortunately, sexualharassment is a is is is in our
society.
It happens in newsrooms, ithappens in college campuses, it
happens at the Statehouse, ithappens in law firms, it happens
unfortunately everywhere.
There's no tipping in any ofthose industries.
(36:46):
And to link the two is isunfortunately when an agenda is
being pushed, reality takes aback seat.
Uh and according to the Equal UmEqual Up Employment, Equal
Opportunity Commission, statesthat have no tip credit and
states that have a tip credithave the same level of sexual
harassment.
And again, sexual harassment atat any level is inexcusable.
And occasionally owners have tofire employees that violate that
(37:11):
trust.
They have to fire guests thatviolate that trust and say,
you're not welcome here.
But to drive that agenda that itis linked, I've talked to many
employees in the industry andand and they disagree with those
per that that that that's notthe case.
And so um I think tipping doesincentivize um good service and
allows people to earn a verylucrative per hour wage.
(37:33):
But there's problems in societyat every level in every
workforce, and there's many thatdon't have tipping.
So to link them inherently Ithink is more agenda pushing
than it's based in fact.
SPEAKER_01 (37:45):
So many times now I've I've brought up the one
fair wage and these theseproposals, and you've talked
about them as well.
Um I wonder if um, you know,obviously everyone's positions
are pretty well staked out andeveryone is, you know, a lot of
discussion is happening in themedia and articles and uh news
reports and so forth.
(38:05):
I wonder if people would sitaround a table without the glare
of the media and have adiscussion to find out, okay,
what's broken, what needs to befixed, and what is uh working
fine and what doesn't need to befixed.
You think some progress can bemade in terms of what the sides
trying to appreciate eachother's position?
SPEAKER_00 (38:27):
Who knows?
I mean we this has been aconversation that's been ongoing
for for 10, 15 years.
Um I think that I don't knowwhat the ultimate end game is
for the activists fromCalifornia.
They're spending a lot of moneyin a lot of states.
Uh they're not all altruistic.
Why why are they doing this?
Why ultimately why are theycoming to this?
Is it because um you know thatthere's a greater need to try a
(38:52):
greater demand to to maybe uhunionize operations?
I've heard people say that,well, you know, you can't
collect tips from union youcan't collect union dues from
tips.
You know, what is the broaderask?
What are they ultimately tryingto accomplish by spending all of
this money?
And so uh until the we know whatour role is.
Our role is to protect therestaurant industry, to grow and
advance the restaurant industry.
(39:13):
It's unclear what theirlong-term goal is.
But to go around to differentstates to spend millions of
dollars to try to change thislaw, it's not altruistic.
Like at the end of the day, whatis trying to be accomplished?
So until their goals long-termare established, I don't think
there can be meaningfulconversation.
And you say outside the glare inthe lights.
A lot of times the glare in thelights come with that, with the
(39:35):
circus, you know, that that isthere.
So I don't know if there's anopportunity to have those
conversations.
Uh I hope there is, uh,eventually at some point, but
where things are right now andand how much money is being
spent, uh, I don't think thatthere's an opportunity for that
right now.
SPEAKER_01 (39:51):
Interestingly, in a couple of weeks, Saru Jereman
will be sitting in the same seatthat you're sitting, and I'll be
happy to ask her the questionsthat you posed to her.
So at the end, we want toconclude this podcast with a
slightly different turn ofevents, a little bit more fun,
quick fire round of questions.
How many times per week do yougo out to eat?
(40:13):
I think I've already heard youeat out a lot.
SPEAKER_00 (40:16):
It's I mean it's at least seven or eight.
If we factor in more, yeah, I'llI'll stay with seven or eight
for for right now.
That's that's a that's a goodhealthy number once a day,
right?
At least once a day, yeah.
SPEAKER_01 (40:27):
That's a good answer for the president of MMR to give
out as well.
Um when you visit a new city,are you more excited about
visiting casual eateries or finedining establishments?
SPEAKER_00 (40:37):
Aaron Powell Definitely casual eateries.
Give me give me five places Ican go to with a cocktail and an
app, and I can work my waythrough and see different
people, different um menus,different um high-quality
cocktails.
Give me give me multiple placesin a couple hours versus one
long dinner.
SPEAKER_01 (40:54):
In your own kitchen, which job do you choose?
Planning the menu, setting thetable, creating the ambiance,
cooking the meal, or cleaningthe dishes?
SPEAKER_00 (41:02):
Aaron Powell I think it's more of where you want to
order from tonight, but uhprobably planning the menu and
cleaning the dishes.
My wife and I have a goodpartnership and it we really
kind of split the duties uhpretty evenly.
So it it it works well.
You're a good husband.
SPEAKER_01 (41:18):
Just ask her.
Just ask her.
Exactly.
And being a good leader of MRA.
Thank you, Steve, for deliveringa guest lecture at our school
and coming here for the podcast.
It's been a pleasure to have youfor the distinguished podcast.
SPEAKER_00 (41:31):
Thank you for having me on.
This has been great.
I really appreciate it, and I'mlooking forward to more ways
that the MRA and the BU SchoolHospitality can uh can interact
and find some common place toadvance the industry.
Thank you.
Thank you.
SPEAKER_01 (41:44):
And thank you all for listening today to our
distinguished podcast.
If you like what you're hearing,be sure to follow up and give us
a five-star rating.
If you want to join theconversation and share your
thoughts and suggestions, emailme at shaden at bu.edu.
That's sardine at bu.edu.
(42:04):
Special thanks to the team whoproduced this podcast, Mara
Littman, Andy Halleck, and theentire team at BU School of
Hospitality Administration.
To keep up with DistinguishedPodcast, be sure to subscribe
wherever you listen to yourfavorite podcast.
You can also learn more aboutour undergraduate and graduate
programs at BU School ofHospitality by visiting
(42:27):
pu.eduslash hospitality.
Have a wonderful day and thankyou for listening.
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