A chef who offers health benefits, paid vacation, and a 401(k) plan raised base pay to $18 to $24 per hour and says he's not struggling to hire workers

dining out eating at restaurant pandemic coronavirus mask waiter cocktails — Irene Jiang/Business Insider

The restaurant industry is facing a staffing crisis, with 75% of operators struggling to hire.
Several restaurant owners are finding a solution by paying workers more, according to the NYT.
Chef Jason Hammel said adding a higher wage to his benefits package makes it easier to find staff.
See more stories on Insider's business page.

The past two decades have been busy for Chicago chef Jason Hammel, who opened Lula Cafe in 1999 with a four-burner stove and some thrifted pots and pans, growing the restaurant into an internationally recognized favorite.

When the pandemic forced a pause on eating out, Hammel told the New York Times it was also a chance to take a step back and think about how he did business.

"The pandemic gave me an opportunity to start with a blank slate and say, let's rebuild the model and the way we've always done things," he said.

Arguably the biggest change Hammel made was raising base pay for all employees to between $18 and $24 per hour - on top of Lula Cafe's existing benefits package that includes paid vacation time, as well as health and retirement benefits.

At a time when the biggest problem for 75% of operators is the struggle to hire and retain employees, according to the National Restaurant Association, Hammel says his approach is making it easier for him to land the 40 new staff he needs.

A 20% service charge on every check and distributing additional tips to the full team help make the math work.

Corrinna Stum, the owner of Ruby's West End in Maine, not only added a 20% service charge, she told the Times she also skipped on expensive scheduling and reservation software and passes the savings along to her staff.

The base wage at Ruby's is now $12.15, which is the full minimum wage for Maine, rather than the sub-minimum wage for tipped workers that is allowed in 43 states in the US, according to the worker advocacy group One Fair Wage.

A recent two-week study by One Fair Wage found 1,621 restaurants across 41 states who, like Lulu Cafe and Ruby's West End, provided the full minimum wage or more for tipped workers, with the average being $13.52 before tips.

Higher wages may be the biggest area where restaurants need to improve to attract workers, but it's far from the industry's only problem.

Richard Wahlquist, president of the American Staffing Association, the country's largest recruitment industry group, told Bloomberg his organization is still struggling to find 10 temporary workers for an upcoming conference, despite offering up to $25 per hour. He's found two.

Applications for restaurant jobs declined by about 3% each week for the past nine weeks, according to data from restaurant-management software company Restaurant365. Plus, the decline has even continued as enhanced unemployment benefits have ended.

Dozens of restaurant workers have shared with Insider deep frustrations with long hours, poor management, and abuse from customers, and said that change is long overdue. Matt Murphy, who has worked in restaurants for 25 years, told Insider he welcomes the disruption these labor difficulties bring to the workplace.

"It is causing some positive change in our industry," he said. "Employers who would ordinarily just treat people like disposable workers are now treating them like real employees. It's definitely changed perspectives on things."

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