Alex Balmer is the general manager of The Green Kitchen, which has a build-your-own soda bar with 13 flavors and serves what he describes as “vegan food for people who aren’t vegan.” (Photo by Mandy Kraynak)
Alex Balmer is a second-generation service worker, so he knows what it’s like trying to get by on tips and restaurant wages. His mother worked in the service industry full time, then part time while working a full-time job in the school system, and is now working as a bartender/server.
“No one makes enough money in the service industry at all. We are all passing around the same 20 bucks,” he said. “Most of us can barely get health insurance.”
Balmer is the general manager at The Green Kitchen, a new restaurant on W. 25th St. in Clark-Fulton and one of 10 restaurants named Cleveland’s first “High Road Kitchen Restaurants.”
These restaurants committed to scaling wages up to at least $15 an hour for all employees, not including tips. In exchange, they received $5,000 grants and training to help them recruit and retain staff and increase wages.
An initiative to increase Ohio’s minimum wage to $15 an hour by 2028 is collecting signatures and could be on the ballot in November 2024. As the One Fair Wage campaign pushes to increase wages and eliminate subminimum wages in multiple states, its affiliate network of restaurant owners, High Road Restaurants, is helping small independent food businesses in Cleveland navigate ways to remain profitable and grow while paying their employees higher wages.
Ohio’s 2023 minimum wage for tipped employees is $5.05, half the minimum wage for non-tipped employees. The ballot initiative would gradually increase the tipped employee minimum wage each year between 2025 and 2028, eventually eliminating the tipped minimum wage starting January 1, 2029, when employers would have to pay tipped employees the full minimum wage, with tips on top.
Molly Cheraso, the owner of Verbena Free Spirited, a cafe and dry bar that received one of the grants, said she doesn’t want to have employees unless she can pay them fairly, and Melissa Garrett-Hirsch, the owner of grant recipient UnBar Cafe, views $15 an hour as a stepping stone to even higher wages, rather than an end goal.
“We’re at the forefront of this,” said Chris Nguyen, the owner of Vietnamese restaurant Superior Pho, another grant recipient. “We’re ahead of the curve, not behind it.”
To help the restaurants scale their wages and retain and recruit staff, High Road Restaurants is offering wage model consultations and race and gender equity training. The George Gund Foundation provided the funding for the first round of grants, and the city of Cleveland committed an additional $50,000 to award 10 more restaurants next year.
How the grant program works
Forty-eight restaurants applied for the grant program. The Gund Foundation, the High Road Restaurants team, and Cleveland Mayor Justin Bibb’s team selected the recipients, factoring in geographic diversity, diversity of the restaurant’s workforce and ownership, time in business, and whether the restaurant was a full-service restaurant.
The first-round grant recipients are Superior Pho, UnBar Cafe, Verbena Free Spirited, the Green Kitchen, Cleveland Mofongo Latin Grill, Daiquiri Factory, JB Grill Soul Food, KafeLA, Ha Ahn Restaurant, and Miega Korean BBQ.
The $5,000 grants on their own won’t be enough to help the restaurants increase their wages long-term, said Mikey Knab, national director for High Road Restaurants. The funds will compensate restaurant owners for the time they spend participating in the training sessions and making changes to their systems.
“It takes ownership, upper management, whomever it is at your restaurant, time and resources to go through those trainings and implement those strategies, that’s what the grant covers,” Knab said.
The goal of the race and equity training is to help restaurants recruit staff and prevent turnover, which is expensive, he said.
The restaurants that received the grants are at varying stages in their business. Vegan restaurant the Green Kitchen, which previously operated out of The Little Rose Tavern, just opened its own location at 3182 W. 25th St. in Clark-Fulton. Superior Pho, which has been in business for two decades, recently revamped its beverage menu with a focus on quality ingredients and authentic Vietnamese tea flavors, and it’s looking to expand its catering services and eventually open more locations.
Cheraso said she already pays her employees above $15 an hour, not including tips, but she thinks the $5,000 grant will serve as a buffer and help the restaurant maintain its cash flow.
“Cash flow is the most important part of your business. We have really good weeks, and then September was a little bit slow. So it can get scary when you have a slower period because I still have to pay my employees,” Cheraso said.
High Road Kitchen grant recipient, UnBar Cafe, opened at 12635 Larchmere Blvd. in January 2020. (Photo by Mandy Kraynak)
How the program could help restaurants long-term
In the U.S., full-service restaurants have an average profit margin of 3–5%, and quick-service restaurants have an average profit margin of 6–9%, according to research from recruitment website Zippia.
Many restaurants are also dealing with staff shortages. Data from Restaurant Dive shows that restaurant employment was still slightly below pre-pandemic levels in October. Over the past five to 10 years, the competition for workers has become “as fierce or worse” than the competition for customers, Knab said.
One Fair Wage’s August 2021 guide on how restaurants can increase wages while staying afloat says that scaling up wages could mean “moderate” increases in menu prices. But, according to the guide, restaurants can also save costs and make money in other ways, such as negotiating contracts with credit card processing companies, preventing food waste, and offering additional products and services like catering and event-hosting.
High Road Restaurants will also look at the restaurants’ profit-and-loss statements to see where they can save money.
Garrett-Hirsch signed up for the grant program because of the wage consultation, which she hopes will help her business find a way to remain profitable while paying employees $15 an hour or more, plus tips.
“Everybody’s focusing on the $5,000. That’s nothing in the scheme of things. What it really is that helps me is we’re gonna have some mentors come in, look at our balance sheet and our P&L (profit and loss) with us and help us find ways to cut costs so that it won’t be such a burden to carry that payroll expense,” Garrett-Hirsch said.
Paying competitive wages is crucial for individual employees’ well-being and for recruiting and retaining employees, she said.
Tara Mitchell, who manages operations at UnBar Cafe, used to work at a large corporate company. Now, she’s training to be store manager at the Larchmere neighborhood cafe and sees Garrett-Hirsch as a mentor.
“It’s nice to be somewhere where I can be appreciated and seen, not just be like a number,” Mitchell said. “Her whole mindset is not having me locked in to just helping her business, driving her business. Her mindset is more so teaching me how she keeps a business afloat so that hopefully one day I can own something for me and my children.”
Molly Cheraso opened her cafe and dry bar Verbena Free Spirited in July. (Photo by Mandy Kraynak)
Pushes for wage increases beyond the grant program
High Road Restaurants and One Fair Wage want to “raise the floor on what’s expected without lowering the ceiling,” Knab said, which means increasing the wages restaurant workers receive from their employers without eliminating tips.
Paying workers $15 an hour with tips on top can put restaurants at a competitive disadvantage compared to restaurants that pay the subminimum wage and offer lower prices, Knab said. He sees policy that would increase wages as the best solution.
“If you talk about a policy that can close restaurants and make us limit our hours, it’s the one that keeps people from wanting to work in our industry in the first place. And that is why policy enacting One Fair Wage, is the way out,” Knab said.
Balmer, the general manager at the Green Kitchen, said that the employees deemed “essential workers” in the pandemic do not make a living wage. The grant program is a step in the right direction, but he said that there needs to be a “cultural shift” and changes in the system in order for service workers to be able to survive.
Business owners like Cheraso of Verbena Free Spirited hope that more businesses, and policy, will follow their lead and increase wages.
“I just hope that it becomes kind of the new norm and a new benchmark going forward, either through law or just like the employment market expectations, that this becomes the new baseline and we only go up from here,” Cheraso said.
Learn more about the High Road Kitchens grant program here. Contact Mikey Knab, director of High Road Restaurants, at mikey@onefairwage.org with questions or for more information.
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