To Good Health

Restaurant king Stephen Starr doesn't provide benefits to line cooks, dishwasher, waiters, busboys or bartenders. But should he?

By Peter Woodall
Add Comment Add Comment | Comments: 0 | Posted Mar. 17, 2004

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Stephen Starr--having bought Striped Bass in December from Neil Stein, his one and only real rival--is the undisputed king of the Philadelphia restaurant world. But deep within Starr's empire, there are rumblings of discontent.

People generally like working for Starr. His employees say he's not a tyrant like many restaurant owners, his businesses run smoothly, and most of all he makes some of them lots of money.

Yet Starr sometimes displays a fiscal style toward his employees that at times might be generously described as austere. He doesn't hold a company Christmas party, and his one nod to the holiday spirit, a $50 gift certificate to any of his restaurants, was cut to $25 this past year. Workers joked about using the certificates to start a bonfire.

But the real source of discontent among the troops is that Starr provides no benefits to nonmanagement employees such as line cooks, dishwashers, waiters, busboys or bartenders--this at a time when he's opening multimillion-dollar restaurants at an extraordinary clip.

Not offering benefits scarcely makes Starr unique--restaurants that provide benefits to non-salaried employees are by far the exception. But Starr's no mom-and-pop restaurateur struggling to pay the bills. He and his investors own nine restaurants in Philadelphia, with as many as five more in the works. They employ upward of 500 people. And his restaurants are immensely profitable. In 2001, according to one published report, they generated a $5.4 million profit on $30 million in revenue.

All that isn't lost on the cooks and waiters who smoke by the dumpsters behind Starr's swank eateries. "Of course we want benefits," one says. "But so what? We're not holding our breath."

Starr does offer access to an insurance broker, but the rates are discounted little, if at all, so few people use the service. He says he simply can't afford to offer full benefits to nonmanagement employees at this time.

"I'd love to provide health insurance, but when it affects our financial stability, it's impossible," says Starr. "We're doing well, but we also have enormous investments--millions of dollars. You don't make that back in a year or two or three."

Starr, who recently created a buzz when he told a writer for The New York Times that he had placed ads in New York for front-of-the-house people because he couldn't "find enough qualified people in Philadelphia," says he shouldn't be singled out because of the size of his organization, since each of his restaurants is its own separate investment. "Why is Tangerine [a Starr restaurant] any different than Susanna Foo, Le Bec-Fin or Django?" he asks.

"We're getting bigger," says Starr, "but we're still small. We're half-child, half-man. We just hired a CFO. We definitely would look at [benefits] later, but we couldn't do it now."

Dissatisfied employees can always quit, of course. That's what one line cook who spoke on the condition of anonymity did this winter after two years with Starr. He's now at a smaller restaurant that offers limited benefits.

"You would imagine the company you pour your heart and soul into would give you something," says the cook, who was making $11 an hour and paying $340 a month out of pocket to pay for insurance for himself and his daughter. "From a line cook's perspective, we don't clock in until 1, but we get there at 10 or 11. The gratitude is what a lot of us are missing. He needs to look back at the people working for him before he opens his next four restaurants."

Starr defends his wages as competitive and says that the system, flawed as it is, does work for many people. "Most of these guys are not aspiring to be a line cook forever," he says. "Once they achieve sous chef or chef, those benefits and salaries come along with it."

Unionizing is another possibility. But that's an option Starr's employees rarely mention. And for good reason--labor has no plans to organize Starr's restaurants.

The problem, says R. Thurston Hyman, president of Local 274 of the Hotel Employees and Restaurant Employees, is that restaurants are tough to organize.

"That has to do with the short shelf life of trendy restaurants," says Hyman, whose local represents several hundred workers at hotel restaurants. "It's difficult for us to sink resources into something like that. Also, the turnover of employees. One more element--it's a cash business. No one wants anything interfering with tips."

Offering benefits isn't easy, say restaurant owners. It's expensive, and high turnover creates stacks of paperwork. Yet it can be done. Larger chains, such as McCormick & Schmick's and the Capital Grille, offer some benefits, as do several smaller owner/operators, such as the Melrose Diner, the Standard Tap and the White Dog Cafe.

Fork owner Ellen Yin began offering benefits in 1998. She pays 90 percent of basic health insurance costs for line cooks after a year and a half. Other non-salaried employees can pay for health insurance out of pretax earnings, Yin says, which results in savings of an estimated 25 percent. Yin also chips in $10 per month after their first year of service, $20 per month their second year and so on. She also matches 401(k) contributions up to 3 percent of yearly earnings.

Yin says her benefits plan costs about $24,000 a year.

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