Saddleback BBQ Tipping & Pay Transparency
Restaurant worker pay has always been an important topic and it has never been more in the spotlight than now. We think our customers have a right to know the minimum amount that we compensate our newest employees.
We hope that this level of transparency will do three primary things.
- Give our customers assurance that we are treating our employees fairly.
- Provide specific detail about how the tips from our customers are used and who they benefit directly.
- Encourage great people to apply to come and work with us!
At Saddleback BBQ we believe our Employees and Customers are our most valuable resources. We operate with a set of Values & Principles that include having the ‘Best Communication in the industry’ and ‘operate with Logic, Facts & Numbers’. As a part of that, we are taking another step today by sharing details into how our hourly employees are compensated.
At Saddleback BBQ, we do not use the ‘Tipped Minimum Wage’. The tipped minimum wage allows employers in Michigan to pay as little as $3.67 to their employees as long as the employee receives tips equivalent to the regular minimum wage ($10.10 as of 1/1/23). The history of the Tipped Minimum Wage is very complicated and has a problematic past. At a later date, we may discuss the history of the tipped minimum wage but at this time we will leave it at this: We do not feel that paying our employees the tipped minimum wage is best for our customers or employees.
How are Saddleback Employees Paid?
All Saddleback BBQ employees are paid a standard hourly rate (Currently the minimum is $10.10/hour) PLUS an Equal Share of all of the tips earned from the pay period. (Tip’s Per Hour) If you look at the table below you will see that the Starting Hourly Rate is added to the ‘Tip’s Per Hour” to give the “Minimum Total Hourly Pay for SB Employee”. As an example, the lowest pay was $13.90 per hour for the pay period 12-1-2021. The highest pay was $19.78 per hour on the pay period of 12-15-2020.
Here is the Data. Below we will answer many Frequently Asked Questions about our Pay Policy.
|Date||Lowest Starting Hourly Rate||Tip's Per Hour||Minimum Total Hourly Pay for SB Employee|
Frequently Asked Questions about Saddleback BBQ Tipping & Pay Transparency:
How Do Other Restaurants Pay Their Employees?
Great question. At most other restaurants that have tipped employees, they are usually divided into two groups.
- Front of House (FOH): Servers, Cashiers, Bartenders, Busser’s, & Host’s.
- Back of House (BOH): Dishwasher, Cooks, & Chef’s.
In a typical restaurant, the Front of House (FOH) is usually paid the Tipped Minimum Wage ($3.67) by the restaurant owner and then they make up the rest of their pay by accepting tips from the customers. Typically, and legally, in a scenario like this, the Back of House (BOH) people do not receive any of the tips.
This does have positive and negatives that come with it. For instance, if you are a server and you get excellent shifts on Friday & Saturday night when the restaurant is busy and customers are tipping very generously, you may make $30, $40, $50, or More dollars per hour! If you are a server and you are working Friday and Saturday nights, you could make a really high hourly rate when factoring in your tips.
However, if you are not scheduled on the busy days, say for instance that you are instead scheduled to work Monday from 2pm to 5pm when the restaurant is very slow and customers are not tipping well, you may only make your $3.67* per hour because you didn’t receive any tips.*
*If the server doesn’t make the regular state or federal minimum wage, the employer must make up the difference.
What about for Back Of House Employees? BOH employees do not receive any of the tips. They only make their hourly pay rate. This is due to laws surrounding the Tipped Minimum Wage. So if you are a BOH employee working on a busy Friday & Saturday night, you may see your co-workers that are Servers make $50/ per hour, while you are only making $10 per hour. This is a very common thing that happens in many restaurants today.
Why don’t all restaurants do it this way?
We want to be very very clear here. This model isn’t right for many types of restaurants. This is just the model that we think is right for us. I would be very difficult or impossible to run a fine dining establishment with this model and still be profitable. We do not judge other restaurants that operate with the traditional tip system. There are pro’s and con’s with all decisions like this.
Why Does Saddleback BBQ Split Tips Like This Versus The Traditional Way?
- We feel this is a better way for our Customers & Employees.
- We were not comfortable paying our employees the tipped minimum wage of $3.67 per hour.
- We felt it was unfair that on a busy Friday & Saturday the Front of House Waiter could make $50 per hour while the line-cook made $10 per hour.
- We didn’t like the culture that it created with the employees. Fighting over the “best shifts”, not wanting to do “side work”, etc.
Did Saddleback Make Changes to be Able to Adopt This Type of Pay Structure?
There are some traditional restaurant practices that are hard to support with this type of pay structure. For instance, the traditional Bartender role usually relies greatly on tips as a large part of their compensation. It is very difficult to support a traditional Bartender roll with this pay structure. This is why we only offer simple canned alcoholic drinks at our locations that have a liquor license. Additionally, a traditional server that comes to your table to get your order and refill your drinks is hard to support with this pay structure. That is why our locations are counter service – where your order at the counter and we bring the food to your table.
How are the ‘Tips Per Hour’ Calculated?
All Saddleback Employees sign a “Tipping Policy” that details exactly how tips are handled in the restaurant. You can review the Saddleback Tipping Policy Document here.
All tips at Saddleback BBQ will be pooled into a “Tip-Pool” and shared among eligible staff. The Tip-Pool will include tips for in-restaurant service, online ordering, catering, and carry-out. The Tip-Pool will include both Credit Card tips and Cash tips. All Cash tips will be counted in Shift Review and deposited into the cash drawer. The Tip-Pool will be shared with all Front of House & Back of House employees with the exception of Managers & Owners.
The Tip-Pool will be divided among all eligible staff that worked during that pay period. The Tip-Pool will be divided proportionally based upon the number of hours worked in that period as follows:
- The total of all tips, less a 2.5% Credit Card Processing Fee for Credit Card tips (see below), received during each pay period will be divided by the total number of hours worked by all eligible employees to determine the average hourly tip rate for the period; and
- Each eligible employee will then receive an amount equal to the employee’s hours worked during the pay period multiplied by the average hourly tip rate for the period.
As an example, if the average hourly tip rate for a pay period is $5.00 per hour, and if Employee A works 40 hours during the pay period, Employee A will receive a distribution of $200 from the tip-pool, less applicable withholdings. If Employee B works 25 hours during the same period, Employee B will receive a distribution of $125 from the tip-pool, less applicable withholdings.
Why Do ‘Tips Per Hour’ go Up and Down? What Causes That?
Since ‘Tips Per Hour” are calculated by dividing Total Tips by Total Hourly Hours Worked, there are several things that could impact the ‘Tips Per Hour’. For instance, if customers tip less during the pay period, that will generally cause ‘Tips Per Hour’ to be reduced. Conversely, if customers tip more, that will cause them to go up. Similarly, if there are more hourly hours worked during a pay period, that will cause ‘Tips Per Hour’ to be reduced. If there are fewer hourly hours worked during the pay period, that will cause ‘Tip’s Per Hour’ to be higher. Why would we have more hourly hours worked in a pay period? There could be several reasons, but the biggest thing that generally impacts hourly hours worked in a pay period is training new staff. If we are training a lot of new staff members during a pay period, that can increase the hourly hours worked during the pay period and have the effect of possibly lowering the ‘Tips Per Hour’.
Are All Saddleback Employees Paid The Amount On This Chart?
No. This chart is only showing what the lowest paid or newest employee is paid. At Saddleback, we try to give raises every 3 months to 1 year. Our typical employee may receive between a 3% to 15% pay increase every year depending upon many factors. This chart is only showing the minimum that an employee would make at Saddleback. It is not showing what all employees make. Many of our employees make more than the minimum shown here.
When are tips paid to employees?
Saddleback BBQ employees are paid 2 times per month. The pay period runs from the 1st of the month to the 15th. And the 16th of the month until the last day of the month. All tip distributions will be paid through the next regular payroll.
How are Taxes Handled?
Saddleback BBQ employees are all paid their tips on their regular paycheck and all pay is subject to the standard withholdings for taxes, etc.
Why is 2.5% withheld for Credit Card Processing Fee for Credit Card tips?
When any customer pays with a credit card, the credit card processor subtracts a fee called the Credit Card Processing Fee. This fee can range from 2.5% plus 10 cents per transaction to 4% plus 10 cents per transaction depending upon which credit card the customer uses. To cover this cost, all Credit Card tips will have a Credit Card Processing Fee of 2.5% deducted from them. This is to cover the credit card processing fee that is incurred on all credit card payments.
Do Manager and Owners Take Tips?
No. Managers and Owners never take any tips from Saddleback BBQ for any reason.
Why aren’t you transparent with all wages? Why only the lowest?
We did consider making all pay rates public in an anonymous way and we may do that in the future. But for now we thought it was most important for our customers to know the minimum pay floor that any employee might receive.
Why doesn’t Saddleback BBQ just pay all their employees $25 per hour or something higher than this amount?
Restaurants price their food and menu items off of two main costs. Food Cost & Labor Cost. We would love to increase the amount that we pay our staff members and we are always trying to do that. If we were to increase our Labor Cost it would mean that we would have to increase our Menu Prices. This could put us at risk of going out of business if the menu cost got too high and customers stopped eating with us. Here is a video that explains this a bit more.
Why don’t you just stop taking tips?
This is something that we would consider. But just as we mentioned above, our Menu prices would have to go up. Would our customers tolerate the increased Menu Price because they are not required to tip? We don’t know the answer to that.