30-30-30-10
A general rule of thumb when referring to restaurants' operating costs and profit margins.
30% labor
30% food
30% fixed costs
10% profit
Pay “The Man"
7.5%: City of Richmond meals tax (1.5% dedicated to Richmond Public Schools)
4%: Henrico County meals tax (all proceeds benefit Henrico County Public Schools)
0%: Chesterfield County meals tax
In the 2020 fiscal year (July 1-June 30), the city of Richmond collected $35.5 million in meals tax, while in 2019, that figure was $41.8 million.
(At press time, the 2020 fiscal year did not include information for the month of June.)
Donnie Glass of Grisette (Photo by Eileen Mellon)
Insider Insight
“Little restaurants like us, we’re not going to do crazy dollars, we don’t do millions a year. I choose to make 10% profit or less if it means I pay my people better. To me, it’s worth it. No one should rely on their restaurant being busy to make money. It’s taking care of your people 101.”
—Donnie Glass, chef and co-owner of Grisette
“Once you start messing with the way [servers’] tips are done, they aren’t going to make as much money. Today, a typical restaurant has about 70% of staff that are tipped employees; when you go from the $2.13 per hour … the whole way you run the restaurant has changed. [The tipped wages system] doesn’t need to be changed, there’s no way to change to a European model, that’s not the way [restaurants] are set up. I think it would be devastating to the industry, and I think you would see a lot of restaurant closures, and you would see a lot of people who look at it and go, ‘I can’t make my full-service restaurant work.’ ”
—Eric Terry, president of the Virginia Restaurant, Lodging and Travel Association
Patrick Phelan of Longoven (Photo courtesy Longoven)
“We’re building for the long haul and building a foundation [that is] less based on some tipped employees making $300 a night and someone standing in the dish pit making $75 after taxes. I think those days are gone. We’re in a shift on so many levels, from protests to the pandemic; all these things are an opportunity to challenge these norms. It’s forced us to use our imagination and have deeper and more meaningful discussions about what it means to spend 40-plus hours of your life in a place [each week].”
—Patrick Phelan, chef and co-owner of Longoven
Tipping Point
Tipping is one of the most ingrained components of dining out, often subsidizing the salaries of restaurant workers and making diners the driving force behind their wages. Employers are required to pay tipped employees only $2.13 per hour; however, their wages including tips must equal the national minimum wage of $7.25 per hour.
The Great Debate
In recent years, there has been an industry-wide discussion with business owners and in government about the practice that was first introduced in the 18th century, looking toward a more European model that includes higher minimum wages, the elimination of tipping and/or the addition of service charges.
Tipped Employee: Someone who regularly receives more than $30 per month in tips, often bartenders and servers in restaurants. The IRS suggests that tipped employees whose tips are paid out at the end of each shift set aside 10% to 15% of their income each week for taxes.
Pros of Tipping
- Lower operating costs for restaurants
- Earning flexibility for staff
- Encourages up-selling
- It's the system restaurants were built upon
Cons of Tipping
- Wage disparities between front-of-house and back-of-house employees
- Rooted in racism and sexism
- Inconsistent and sometimes inequitable income
- Competition among tipped employees
The original meaning of tip: T.I.P. = TO INSURE PROMPTNESS
To Each Its Own
Each restaurant pays its staff and allocates tips differently.
Grisette: Front-of-house and kitchen staff (minus owners) collectively work together on the floor and receive an hourly wage. Credit card tips are split among staff and included in their weekly paycheck. Cash tips are also split and distributed weekly.
Laura Lee’s, The Roosevelt, Garnett’s Cafe: Tipped employees pool both credit card and cash tips. Credit card tips are paid through biweekly paychecks and cash tips split at the end of each shift.
R&L Hospitality Group (Brunch, Lunch, Supper): Starting in September, tipped employees will pool all credit card and cash tips which will then be distributed in biweekly paychecks.
The Boathouse/Casa Del Barco locations: Front-of-house employees are paid an hourly wage, with a 20% service charge automatically included in the bill. If guests tip, the money is split among all employees.
Bang for Your Booze
To sell alcohol, restaurants must apply for an on-premise Virginia ABC license.
Annual License Fees
Beer: $145
Wine and Beer: $300
Mixed Beverage (liquor, does not include wine and beer): 1-100 seats = $560, 101-150 seats = $975, 151 or more = $1,430
(During the pandemic, off-premise privileges have been temporarily granted to all Virginia restaurants.)
