In 2022, Kachka Wants to Create a More Equitable Pay Structure for its Employees

One day, while Kachka co-owner Israel Morales was working on payroll, he decided to do some additional math. He took the total tips the Russian restaurant had made that month and divided it by restaurant’s total number of employees. What he discovered blew him away: If the restaurant split its tips evenly, everyone at the restaurant could make at least $50,000 per year. “We started running the numbers, and it’s actually true, give or take,” says Bonnie Morales, the restaurant’s executive chef and co-owner. “If you take that 20 percent income that goes into the business, but distribute it more equitably, everyone can make at least $25 per hour.”

The Morales family have been thinking about their tipping structure since the restaurant first opened in 2014; with the weight of the COVID-19 pandemic bearing down on them, the Kachka team decided to prioritize a more stable, equitable pay and benefit structure for all of their employees. Starting this year, Kachka will institute a 22 percent service fee in place of tipping, which means employees’ wages will start at $25 per hour. It’s a part of the restaurant’s larger transition into a more equitable business model, which includes free health insurance for all employees and, by the end of the year, profit-sharing for its staff.

For the better part of a decade, industry workers and advocates have questioned the wage gap between front- and back-of-house workers tied to tipping. Oregon is one of seven states that pays its servers a full minimum wage before tips; in most of the country, servers are paid a fraction of the federal minimum wage, expected to make the rest up in tips. There are plenty of documented issues with the tipped wage model, but in states without a tipped minimum wage, the pay disparity between front-of-house workers and back-of-house workers is more significant. At Kachka, front-of-house workers were making, on average, 2.5 times as much as back-of-house workers. “We’re seeing our back-of-house employees have to move farther and farther and farther away from work because they can’t afford to live in the city,” Israel Morales says. In contrast, multiple front-of-house employees have been able to buy homes in Portland, according to the Moraleses.

Meanwhile, tipping also creates racist and sexist pay disparities within populations of tipped employees. In an analysis of federal wage data, Eater found that white servers were making about a dollar more than Latinx and Black servers in hourly tips, and over $2 more than Asian American servers. That wage gap has likely increased since the beginning of the pandemic, especially among Black and Latina servers compared to white male servers. “Personally, I’ve never had to witness it from a racial disparity, but Israel certainly has,” Bonnie Morales says. “I’ve definitely been a witness to and victim to feeling like I had to do things to earn my tip as a female. I’ve definitely dealt with gross businessmen who wanted me to act a certain way, and feeling like if I don’t, they’re going to stiff me.”

Often, when discussing a potential elimination of tips at a restaurant, restaurant owners worry that they can’t keep servers; instead, those servers leave for restaurants where they can make more. Back in September, the two began meeting with employees one-on-one to discuss the elimination of tipping, to gauge the feelings and concerns of employees. “Conversations with people in front-of-house are obviously more complex, but there hasn’t been a single front-of-house person who has said, ‘I deserve to make more money, my job is harder,’” Bonnie Morales says. From the perspective of the Moraleses, a service fee model provides for a more stable wage across the board. “It can’t fluctuate based on how you feel about your server. What even is service? It varies so much based on your customer’s understanding of what service is,” Bonnie Morales says. “We’re not even going to have an option for an optional tip; we don’t want it to be a complication.”

To bolster the new pay structure, Kachka will also implement more benefits for employees outside of monthly wages. Since the restaurant opened, Kachka has offered health insurance for its employees; back in October, however, the restaurant began covering insurance premiums as well. The restaurant is also developing a profit sharing program for its employees, which should start this summer. Twice each year, the Kachka team will sit down, go over the profit and loss statements, and offer employees a percentage of the restaurant’s net profits. Those percentages are still to be determined, but the Moraleses know that they will increase based on tenure and hours worked, as opposed to position seniority. “This isn’t a competitive move, going ‘Oh, we’re going to pay our restaurant workers more money,” Bonnie Morales says. “I imagine a Portland where this is the status quo, this is the norm, so Portland continues to feel like a food destination.”

Kachka will reopen for service January 6.

• Kachka [Official]
• Kachka Swaps Tips for a Flat Service Fee to Better Pay Staff [WWeek]
• Previous Kachka coverage [EPDX]