Newsletter: Volume 45

3% Health Care Surchage

We’re really excited to announce that beginning October 1st, we at the Rustic Canyon Family of Restaurants will be offering fully covered health care coverage to all of our employees who work 30 or more hours a week. Offering health care is something we’ve always wanted to do, but for a long time felt it was financially unrealistic. We’ve recently sat down with other like-minded local chefs and restaurant owners like Suzanne Goin, Carolyn Stein & David Lentz, Jon Shook & Vinny Dotolo, and Josiah Citrin to come up with a plan to offer coverage and have decided to implement a 3% employee benefit surcharge added to all of our checks beginning September 1st to pay the October 1 premium. This will cover the majority of the cost of providing this benefit. Everyone on this list will also be offering health care plans to all full time staff beginning on October 1st or by the end of the year.

We understand that health care related surcharges have been a hot topic at times, both in San Francisco, where they’re widely used in many of the best restaurants in the city, and here locally when Walter Manske and Bill Chaite introduced the first charge of that sort at Republique. We felt that it was best that we take a minute to explain why and how we’ll be offering benefits, the reason for the surcharge, and how we intend to show transparency so that our customers can understand how the money is spent. The major point is that this is not a political statement or endorsement of any kind. Our desire to offer health benefits is not even really tied to the Affordable Care Act, which at this point wouldn’t require businesses to provide health benefits to their employees until January 2016 at the earliest, and where ultimately businesses of our size might not be required to provide health benefits at all. Our desire to do this is because, quite frankly, we believe it’s the right thing to do, and that as a community of independent and family run restaurants we want to provide the best work environment we can so that we can provide long term jobs and careers for our staff instead of the usual transient employment that is associated with the restaurant business.

The plan to roll out health care coverage is pretty simple. We will be offering all staff members who work full time (30 hours a week) an opportunity to have a fully covered HMO plan with a top tier carrier, or if they choose, we’ll pay a significant portion of a PPO plan if the employee chooses a more specialized plan. In addition we’ve pledged to work with any employee who is currently below the minimum hours threshold to give them enough hours to meet the minimum so that they can qualify for benefits.

The cost of offering these benefits is significant and the reality is that restaurants, particularly smaller restaurants like the ones many of us own, have a very high ratio of staff members to revenue and run on very slim profit margins. Successfully run restaurants generally make between 5-10% net profits so a health care benefit which eats away 3% of gross sales will take away anywhere from 30% to 50% of annual profits for a restaurant. We’ve discussed simply raising menu prices, but ultimately food prices are tied in many ways to the ingredients we purchase . Those ingredient costs have increased astronomically recently so we’re already struggling with working creatively to keep menu prices down and don’t feel it’s right to try to factor health care costs into menu prices as well. We’d rather keep our menu costs as an accurate refection of our ingredient prices so that customers know that if we have to raise them it’s because we can’t avoid passing on our increased costs.. So that leaves with us a surcharge, which based on our calculations of 3% allows us to cover 100% of our employees in full. In addition, a 3% charge on your bill gives the customer options they wouldn’t have if the cost was simply folded into menu prices. Customers can simply pay the surcharge and support a healthier staff, choose to adjust their gratuity down by 3% in order to end up paying the same amount they originally anticipated while still supporting health benefits for the entire staff, or if they strongly oppose, ask to have the charge removed from their bill. In addition, to avoid any misconceptions, we as a group pledge to post total transparency on our websites by the end of the first quarter of each year for the previous calendar year showing the total that was collected for employee benefit surcharges the previous year, how it was spent, and in the case of a surplus how every dollar of that surplus will be applied to employee benefits. Rest assured that none of us would use any of this surcharge for anything other than wellness benefits for our staff.

We’re extremely happy to be able to offer these health benefits to our staff and our staff has been extremely excited to get signed up to receive them. Many of our staff were not previously covered or were covered but it was a significant financial burden. Feel free to check in with our staff and ask questions about the health plan or the surcharge on your next visit and we’ll happily address them in a candid and transparent manner. We are eternally grateful to you, our customers, who support our restaurants and allow us to do what we love for a living. We thank you all for your support and as always will constantly strive to be the best restaurants we can be day in and day out.