Another "How much should I be paid?" post, but kind of different.
Thanks in advance for any and all comments, by the way.
I'm posting something slightly different (I think) than posts regarding wages in the past. I can't seem to find a topic relating to my particular issue, and I'm looking for some feedback.
Here's the story.
I've got 8+ years of barista/coffee experience behind me. I've also got coffee shop management and supervisor positions on my resume.
I was hired at the end of May into a local catering company who was opening up a delicatessen housing a coffee station, a deli station, and a grocery area. We put in 3 months of training, education, and building in order to get the place up on its feet. I naturally stepped into a sort of "leader" position - communicating with the general manager about ordering and inventory, helping with training, etc. I put in extra time visiting the roasters who take care of our coffee, extra time, stocking and cleaning, and sometimes 13 hour days tying up loose ends and the like. Everyone was hired in at the same starting wage - 9 an hour, though it was communicated to me from the very beginning that the higher-ups saw me as someone with leadership abilities and the potential to go far with the business. I was hired in as full-time, 40 hours a week.
We're now about 4 months into the life of the business - a week and a half into it actually being open, and my second week of 40+ hours, and I've been approached about going salary. I'd become the official coffee head, but my responsibilities would essentially stay the same as they were before, since I naturally stepped into them - communicating to the GM about ordering and stocking, training, most likely opening the cafe on a daily basis, etc. I wouldn't be a manager, necessarily, since we have a GM who oversees the entire delicatessen and is in charge of hiring, payroll, inventory, scheduling, banking, etc. Also, I would be spending about 3-5 hours a week (above and beyond my full time bar shifts) brewing homemade chai for the purposes of selling it for profit in the coffee bar area - I do not pay for the ingredients out of pocket and if I do, they are reimbursed. I was also told that going onto a salary would potentially involve 40-50 hour work weeks sometimes - which I figure is normal. You go salary, and you work as much as is needed in order to accomplish your tasks.
Here are the issues that I'm struggling with, though. (And, mind you, being on salary would involve health insurance and paid time off, both of which I have yet to find out the exact details of, but still.) The salary quote offered would give me about a $1.50 an hour raise, based on a 40 hour work week (including shifts only - not including other coffee head stuff), and before taxes and health insurance costs. If I work more than 40 hours a week, which is not only likely but pretty much a fact at this point, I stand to be making even less than I am making now, as hourly barista. Also, we don't have a tip jar at work - any and all income would be in the form of my bi-weekly paycheck. And, while I understand that my position is basically a glorified (yet extremely experienced and knowledgable) barista, I can't help but feel like the quote given to me is a bit low, especially considering the extra responsibilities, the extra hours, the lack of tips, the chai brewing, etc.
I guess my question is this: what IS fair? I'm supposed to sit down with my boss in the next few days to discuss details, and while I have a list of questions and number crunches for him, I'd like to be a little more armed as far as wages go.
Again, thanks in advance for any and all advice. :)
I'm posting something slightly different (I think) than posts regarding wages in the past. I can't seem to find a topic relating to my particular issue, and I'm looking for some feedback.
Here's the story.
I've got 8+ years of barista/coffee experience behind me. I've also got coffee shop management and supervisor positions on my resume.
I was hired at the end of May into a local catering company who was opening up a delicatessen housing a coffee station, a deli station, and a grocery area. We put in 3 months of training, education, and building in order to get the place up on its feet. I naturally stepped into a sort of "leader" position - communicating with the general manager about ordering and inventory, helping with training, etc. I put in extra time visiting the roasters who take care of our coffee, extra time, stocking and cleaning, and sometimes 13 hour days tying up loose ends and the like. Everyone was hired in at the same starting wage - 9 an hour, though it was communicated to me from the very beginning that the higher-ups saw me as someone with leadership abilities and the potential to go far with the business. I was hired in as full-time, 40 hours a week.
We're now about 4 months into the life of the business - a week and a half into it actually being open, and my second week of 40+ hours, and I've been approached about going salary. I'd become the official coffee head, but my responsibilities would essentially stay the same as they were before, since I naturally stepped into them - communicating to the GM about ordering and stocking, training, most likely opening the cafe on a daily basis, etc. I wouldn't be a manager, necessarily, since we have a GM who oversees the entire delicatessen and is in charge of hiring, payroll, inventory, scheduling, banking, etc. Also, I would be spending about 3-5 hours a week (above and beyond my full time bar shifts) brewing homemade chai for the purposes of selling it for profit in the coffee bar area - I do not pay for the ingredients out of pocket and if I do, they are reimbursed. I was also told that going onto a salary would potentially involve 40-50 hour work weeks sometimes - which I figure is normal. You go salary, and you work as much as is needed in order to accomplish your tasks.
Here are the issues that I'm struggling with, though. (And, mind you, being on salary would involve health insurance and paid time off, both of which I have yet to find out the exact details of, but still.) The salary quote offered would give me about a $1.50 an hour raise, based on a 40 hour work week (including shifts only - not including other coffee head stuff), and before taxes and health insurance costs. If I work more than 40 hours a week, which is not only likely but pretty much a fact at this point, I stand to be making even less than I am making now, as hourly barista. Also, we don't have a tip jar at work - any and all income would be in the form of my bi-weekly paycheck. And, while I understand that my position is basically a glorified (yet extremely experienced and knowledgable) barista, I can't help but feel like the quote given to me is a bit low, especially considering the extra responsibilities, the extra hours, the lack of tips, the chai brewing, etc.
I guess my question is this: what IS fair? I'm supposed to sit down with my boss in the next few days to discuss details, and while I have a list of questions and number crunches for him, I'd like to be a little more armed as far as wages go.
Again, thanks in advance for any and all advice. :)
Replies to This Discussion
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Permalink Reply by Daniel King Pizzutti on
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I'm pretty much in the same boat as you. But a little more info is needed. Do you mind stating what the minimum wage is in your area? I would say that given the experience and dedication that you have already displayed, you are the one with the leverage. It would not be easy to find someone to replace you. And even if they did/could, it would very expensive. However, I wouldn't rest on that laurel. I think you should be clear about your responsibilities and how it affects the cafe as far as profit. Don't hesitate to be firm, but at the same time don't be pushy. Explain that you are an asset and can offer direct reputational and financial benefits to the cafe. As far as hours go, if you are comfortable working a lot, that is going to strengthen your case. It sounds to me, that your position is basically equal to a manager, maybe not GM. But the point is, that your responsibilities are contingent on skill, and without proper compensation, it doesn't make sense for you to be short changed. Salary can be dangerous, but negotiating compensation is part of business. You need to make a living, and if you feel good about your compensation, you will be happy. Which means, you will continue to be a hardworking, longtime employee. Something that with help them live a less stressed life. Which in turn allows them focus on increasing profit and lower loss. Bonus incentives are also things to consider, although it can be hard for a Coffee manager to apply numbers to such things as quality etc. It may be something worth bringing up, some owners like incentitive programs, because it allows more control for them in the P&L department. Something may see as value, as opposed to just cost. I would approach this position as more than a barista, since you doing much more then a typical barista. And it also seems that the coffee program is all your responsibility to maintain. At the very least, make sure you are comfortable about any outcome/decision made. Without that, all aspects related to you and the cafe, as well yourself, will only suffer. I hope that offers some help. I know it can be tough to deal with this, but just relax and be confident. It sounds like you're a hard, dedicated worker. I am, by no means, an expert in this sort of thing, but I thought I would offer my perspective. Ask away. With any addition questions/clarifications you may seek.
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Permalink Reply by Lindsey on
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Thanks for your relpy, Daniel.
The minimum wage just went up to $8.25 an hour here, as of July 1st, 2010.
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Permalink Reply by Simon Ouderkirk on
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http://www.espressovivace.com/archives/lucidcafe/LC23.pdf
This is an article (in .pdf form) by David Schomer, where he discusses the need for a person such as yourself in a coffee program. Check it out. It was written in 2000, so it is a bit dated, but he puts a skilled, quality-driven macchinesti's pay at around $40k, which seems about right.
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Permalink Reply by Jay Caragay on
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I don't know if I can really provide you with anything that will truly help you but here goes:
In my own position as owner/barista, the concern of wages, salaries and benefits is always on my mind. I'm concerned about my staff. I've had the opportunity to see much of the world and experience so much in life that it's important to me that we find ways for our staff to have similar opportunities. The difficult part is the economic realities of the world.
I'm going to work with some generalities and ideal conditions with the model I'm about to offer. Realize and keep in mind that, depending on your situation, that this may or may not be accurate to your situation.
In an ideal world, if we use general foodservice metrics, we can break down the cost stream as follows:
10% - Rent
30% - Cost of Goods
30% - Utilities, Taxes and more
30% - Labor
5% - Miscellaneous
5% - Profit
If a shop averages about $700 per day in sales and is open 358 days per year (this includes seven general holidays), then that shop is generating $250,000 in sales revenue per year. Broken down into those costs above, this means that the company can spend the following:
Rent - $25,000
Cost of Goods - $60,000
Utilities & More - $60,000
Labor - $60,000
Misc - $12,500
Profit - $12,500
Bear in mind that these numbers presume that the company is being run correctly and very tightly. Losses due to shrinkage, spoilage and/or error are an absolute minimum. Bear in mind that most shops and businesses ARE NOT run this tightly and/or ARE NOT ABLE to make these percentages. In many cases, the labor and/or cost of goods are higher than these numbers. And remember that if the company only made $250,000 then it only has that $250,000 to spend.
Now let's talk about the topic most interesting to baristas: labor. If this shop only makes $250,000 then ideally it only has $60,000 to spend on labor. For one person, Six Large is a pretty good living, but one person working a shop is hardly realistic. Make that two and the salary drops to $30K each. Four people and you're down to $15,000 - and that's below the federal minimum wage of $7.25/hr.
Now you have a shop owner who wants to hire on great people and pay them something decent, let's say $9/hr plus tips. After you factor in company contributions to social security and medicare and that $9/hr is actually costing your company $9.69/hr - plus the costs associated with running payroll. Suddenly that 30% starts dwindling at a high rate of speed.
Of course, many people think the owner is making a lot of money, which most certainly is possible, but if you look at these numbers you'll see that it's not quite the fortune you may have been thinking. In the real world, chances are that the rent is costing more than ten percent and the labor is over 40% of revenue. Staff isn't careful with wasting product and ordering procurement is screwy and as a result, the cost of goods is way over 30%. The heating and air conditioning isn't used wisely and lights and everything are left running unnecessarily and now the utilities are threatening to hit 40%. Suddenly, the company is running at 125% of revenue and is getting deep into the red.
Remember, we're talking about a company operating in the real world. A small company. A company that's probably very much like the company you work for. This is not about the corporate, well-run companies like Starbucks that are able to control labor and costs to about 18% each.
Don't get me wrong, as an operator, I WANT to pay everyone more. I would like to see baristas making $12/hr plus tips. I would like to see baristas making $35K-$45K per year. I want baristas to remain in the profession and have a life, plan a future and have families. It would be ideal.
In fact, let's see how that can happen:
Taking the same metric of 30% labor cost and an ideal barista annual salary of $35K and say ten baristas to staff a great shop as that and we can readily see that we would need $350,000 to pay those salaries (or really about $380K including contributions). At 30% cost, that shop would have to do about $1.3 million in sales.
Needless to say, $1.3 million in sales is a lot of money in the specialty coffee business. Without a doubt, there are a few shops I know in America doing that kind of business (and more). Sadly, chances are that there's not one in your town doing that kind of business. IIRC, even the average Starbucks doesn't do that kind of revenue.
But let's take Starbucks and their average store revenue of roughly $600K and 18% labor - that's $108K to go around. With that, I could pay three baristas $35K, four baristas $27K or five baristas just under $22K per year. Mix full-time salaried with part-time hourly and you could create a better mix.
That said, the simple solution is to generate more revenue - or perhaps your shop is pushing over $500K per year and the owners are just greedy bastards. Remember that the Starbucks model is extremely tightly run - their labor is 18%. The ideal average is 30% - meaning that Starbucks really has their stuff together and is tight. Most shops are unable to hit 18% labor cost or control their costs correctly.
All of this conspires against the average operator who probably doesn't have a lot of business experience and opened the coffee shop because it's something they wanted to do for the community. They're regular people without experience trying to make it work. It all plots against the company.
So, why did I go into all of this? Because I think it's important for everyone to understand how business works. If you want better pay then work on ways to make it possible. It's great that you can froth and pour great latte art, but did you need to leave four ounces of milk in the pitcher to waste? Or ten grams of espresso from the grinder?
Maybe you "hooked up" your friend or that crew down the street in exchange for something from their shop - there goes the cost of goods. Maybe you decided not to turn down the A/C when you left or left things running, utility costs just went up.
Or perhaps you didn't properly store that case of milk in the fridge and it's turned - there four gallons down the drain.
Or maybe you're the kind of person who thinks that up selling is a bad thing - that generating more revenue isn't ideal or "nice." Maybe you should start thinking of ways or programs to increase revenue.
All of these are some of the many ways that are killing small companies like all of ours. You may think it's a small and minor thing, but they do add up and interfere with the company's ability to pay you higher wages.
I tell my staff that while I know that talk of profitability might be "too corporate" it is the reality of business. Without profit, the company is not sustainable and will not survive. If the company fails then everyone is out of work. Some people take a very idealistic mindset that profit is "greed" and "bad" - however, profit is very much an integral and important component to everyone's wages, salary and lifestyle.
There are ways to pay you higher wages, but you need to be part of that equation. Want to make $30K per year? You now have the basic knowledge to figure out how to make it work. Generate more sales revenue while controlling/lowering costs to accommodate the wages necessary.
Good luck!
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Well said Jay. Thank you for the insight. I have taken note of a few things, and appreciate the gesture.
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Permalink Reply by Jared Rutledge on
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i think asking for a tip jar will help a ton - i pay my employees $10/hr and they average between $3-$7 an hour in tips, depending on the shift. people also enjoy being able to tip.
as far as breakdown of costs, we have 14 shifts a week (7a-2p, 2p-9p each day), one person on shift. i work ~4 shifts a week, and in august we turned a $400 profit after being in business only 9 months. our COGS is holding steady at 30%. i'm not getting paid yet, and cashflow can still be an issue sometimes, but it's a pretty good start. looking at jay's percentages, i think i'm making up the difference in our utilities cost. water, gas, electricity, taxes combined are all less than our rent, and we pay $1 per square foot or so.
definitely take a long hard look at jay's numbers and advice, and perhaps show it to your bosses. i think overhead can consume a business, and that might be why your salary is looking meager. but definitely ask about a tip jar, that will help a TON.
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JC: As always, hugely insightful. This post is printed out and taped to the back of my desk, now.
JR: In most situations, salaried employees don't share in tips, right? I know that when I went from hourly to salaried, it was a strange transition not leaving work every day with a little walking around money. Also: $1/sq foot is an AWESOME rent cost - lower than most manufacturing spaces, even. Well done on negotiating that one!
I might be wrong here, but I recall at one point a pretty well-off shop whose ownership totally opened the books to the employees. I think the offer to employees was something like this: here's how much we make, here is where the money goes. Any profit from espresso sales over X (I think it was like 10% over breaking even) will be divided among the baristi according to hours worked - or something like that. I may be flying the socialist flag here, but that sounds like a pretty good setup, no?
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I'm heading out the door at the moment, so I'll post a more detailed reply later.
Thank you for all of the incredible advice so far - and as far as tip jars go, the answer is a resounding NO. We mentioned it to him, briefly, and he actually took offense to it.
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then maybe it's time to take offense to his non-living wages
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Permalink Reply by Lisa Kettyle on
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Yes, yes, yes.
Jay Caragay said:I don't know if I can really provide you with anything that will truly help you but here goes:
In my own position as owner/barista, the concern of wages, salaries and benefits is always on my mind. I'm concerned about my staff. I've had the opportunity to see much of the world and experience so much in life that it's important to me that we find ways for our staff to have similar opportunities. The difficult part is the economic realities of the world.
I'm going to work with some generalities and ideal conditions with the model I'm about to offer. Realize and keep in mind that, depending on your situation, that this may or may not be accurate to your situation.
In an ideal world, if we use general foodservice metrics, we can break down the cost stream as follows:
10% - Rent
30% - Cost of Goods
30% - Utilities, Taxes and more
30% - Labor
5% - Miscellaneous
5% - Profit
If a shop averages about $700 per day in sales and is open 358 days per year (this includes seven general holidays), then that shop is generating $250,000 in sales revenue per year. Broken down into those costs above, this means that the company can spend the following:
Rent - $25,000
Cost of Goods - $60,000
Utilities & More - $60,000
Labor - $60,000
Misc - $12,500
Profit - $12,500
Bear in mind that these numbers presume that the company is being run correctly and very tightly. Losses due to shrinkage, spoilage and/or error are an absolute minimum. Bear in mind that most shops and businesses ARE NOT run this tightly and/or ARE NOT ABLE to make these percentages. In many cases, the labor and/or cost of goods are higher than these numbers. And remember that if the company only made $250,000 then it only has that $250,000 to spend.
Now let's talk about the topic most interesting to baristas: labor. If this shop only makes $250,000 then ideally it only has $60,000 to spend on labor. For one person, Six Large is a pretty good living, but one person working a shop is hardly realistic. Make that two and the salary drops to $30K each. Four people and you're down to $15,000 - and that's below the federal minimum wage of $7.25/hr.
Now you have a shop owner who wants to hire on great people and pay them something decent, let's say $9/hr plus tips. After you factor in company contributions to social security and medicare and that $9/hr is actually costing your company $9.69/hr - plus the costs associated with running payroll. Suddenly that 30% starts dwindling at a high rate of speed.
Of course, many people think the owner is making a lot of money, which most certainly is possible, but if you look at these numbers you'll see that it's not quite the fortune you may have been thinking. In the real world, chances are that the rent is costing more than ten percent and the labor is over 40% of revenue. Staff isn't careful with wasting product and ordering procurement is screwy and as a result, the cost of goods is way over 30%. The heating and air conditioning isn't used wisely and lights and everything are left running unnecessarily and now the utilities are threatening to hit 40%. Suddenly, the company is running at 125% of revenue and is getting deep into the red.
Remember, we're talking about a company operating in the real world. A small company. A company that's probably very much like the company you work for. This is not about the corporate, well-run companies like Starbucks that are able to control labor and costs to about 18% each.
Don't get me wrong, as an operator, I WANT to pay everyone more. I would like to see baristas making $12/hr plus tips. I would like to see baristas making $35K-$45K per year. I want baristas to remain in the profession and have a life, plan a future and have families. It would be ideal.
In fact, let's see how that can happen:
Taking the same metric of 30% labor cost and an ideal barista annual salary of $35K and say ten baristas to staff a great shop as that and we can readily see that we would need $350,000 to pay those salaries (or really about $380K including contributions). At 30% cost, that shop would have to do about $1.3 million in sales.
Needless to say, $1.3 million in sales is a lot of money in the specialty coffee business. Without a doubt, there are a few shops I know in America doing that kind of business (and more). Sadly, chances are that there's not one in your town doing that kind of business. IIRC, even the average Starbucks doesn't do that kind of revenue.
But let's take Starbucks and their average store revenue of roughly $600K and 18% labor - that's $108K to go around. With that, I could pay three baristas $35K, four baristas $27K or five baristas just under $22K per year. Mix full-time salaried with part-time hourly and you could create a better mix.
That said, the simple solution is to generate more revenue - or perhaps your shop is pushing over $500K per year and the owners are just greedy bastards. Remember that the Starbucks model is extremely tightly run - their labor is 18%. The ideal average is 30% - meaning that Starbucks really has their stuff together and is tight. Most shops are unable to hit 18% labor cost or control their costs correctly.
All of this conspires against the average operator who probably doesn't have a lot of business experience and opened the coffee shop because it's something they wanted to do for the community. They're regular people without experience trying to make it work. It all plots against the company.
So, why did I go into all of this? Because I think it's important for everyone to understand how business works. If you want better pay then work on ways to make it possible. It's great that you can froth and pour great latte art, but did you need to leave four ounces of milk in the pitcher to waste? Or ten grams of espresso from the grinder?
Maybe you "hooked up" your friend or that crew down the street in exchange for something from their shop - there goes the cost of goods. Maybe you decided not to turn down the A/C when you left or left things running, utility costs just went up.
Or perhaps you didn't properly store that case of milk in the fridge and it's turned - there four gallons down the drain.
Or maybe you're the kind of person who thinks that up selling is a bad thing - that generating more revenue isn't ideal or "nice." Maybe you should start thinking of ways or programs to increase revenue.
All of these are some of the many ways that are killing small companies like all of ours. You may think it's a small and minor thing, but they do add up and interfere with the company's ability to pay you higher wages.
I tell my staff that while I know that talk of profitability might be "too corporate" it is the reality of business. Without profit, the company is not sustainable and will not survive. If the company fails then everyone is out of work. Some people take a very idealistic mindset that profit is "greed" and "bad" - however, profit is very much an integral and important component to everyone's wages, salary and lifestyle.
There are ways to pay you higher wages, but you need to be part of that equation. Want to make $30K per year? You now have the basic knowledge to figure out how to make it work. Generate more sales revenue while controlling/lowering costs to accommodate the wages necessary.
Good luck!
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Permalink Reply by Southeast Grind on
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Very interesting ideas here!
I'm curious how these percentages work:
10% - Rent
30% - Cost of Goods
30% - Utilities, Taxes and more
30% - Labor
5% - Miscellaneous
5% - Profit
In my math that makes 110%...
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Southeast -
Take the Miscellaneous and Profit, lose them and you've got the real equation for small businesses.
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