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Bridging the Pay Gap
June 08, 2022

When the staff at Mazzola’s Italian Diner waited for their first paycheck in February this year, they held their breath. The tight-knit team was part of a pilot compensation plan being tested by Steamboat Springs-based, Rex’s Family of Restaurants. The intention is to bridge the gap between the historical income disparity between front and back-of-house staff.

In January, Kevin Charles, a multi-unit manager for the restaurant group set out a proposal to increase all tipped hourly staff to a rate equal to, or above, the Colorado minimum wage of $12.56 per hour and remove the tip credit. This meant for the first time ever, back-of-house staff would be entitled to a share of the tips. The server’s hourly rate was raised, and in return, they tip out up to 7% (up from an average of 3 to 4%), of total sales among front and back-of-house staff. Federal laws prevented back-of-house tip-outs, which meant only the host, bar staff and food runners were tipped out.
“There was definitely a feeling of anxiety among serving staff until we saw what it meant for our paychecks,” said Jennifer Merriett, a bartender at Mazzola’s and an eight-year employee of Rex’s Family of Restaurants.  “The reality is the paychecks aren’t really impacted by the change from tip-outs and everyone is better off, especially back-of-house which is a great thing.” For the back-of-house employees, their long hours and ability to serve up meal after meal are being rewarded financially.

“We are all one team,” said cook Anselmo Marquez. “It definitely motivates everyone to work hard as we are while sharing the profits of our labor on a daily basis.” A few years ago, Marquez opted out of the restaurant industry temporarily for a desk job in the healthcare industry, citing better hours, pay and benefits. He since returned to the kitchen after missing the camaraderie and fast pace. He now has a clear path of opportunity ahead, thanks to benefits added to the new pay plan.
Rex’s Family of Restaurants has offered paid time off for tenured employees, medical, dental, vision and life insurance for eligible employees, plus bonus pay plans for management and back of house employees. As part of the revised compensation plan, all employees are entitled to paid sick leave, funding for mental health, a 4% match in a 401K retirement plan and profit sharing for eligible employees.

“The impetus for revising compensation and benefits was not just a monetary focus, but a way to incentivize staff to grow with the business and see an opportunity for a career path with us,” Charles said. The new plan will impact staff 365 days of the year, with the most impact felt on busy days. Additionally, tips are divided based on tenure, hours worked and skill level. Staff commitment means everything to their bottom line. .