Canthook

Most waiters and waitresses (and at Isaac's, waitrons) don't realize it, and neither do most of their bosses, but a waiter/waitress/waitron is essentially a self-employed person.

According to Federal law, waitresses don't have to be paid anything if their tips amount to more than the federal minimum wage. State law applies, however, and it varies from state to state. In Indiana, a waitress gets at least $2.13/hour plus tips. Here in Pennsylvania, it's $2.83/hour plus tips. If the tips are lousy, they get minimum wage.

That stinks. Fast food wages here were $8/hour to start five years ago. But waiters make decisions all the time that affect their incomes. Pampering four tables of customes, while giving terrible service to a fifth table might produce twice the time as giving so-so service to all five tables.

It Doesn't Always Suck

Of course, waitperson income doesn't always suck. I once had an employee who previously had worked at the Beverly Hills Supper Club, just south of Cincinnati, before it burned down. She told me that instead of the restaurant paying her wages, she had to pay the restaurant for the job. In theory, they gave her $1/hour, and then they charged her to rent her uniform - and the rent was far more than the $1/hour - but it was worth it, because she made $350-400 after uniform rent in tips per week, in an era when the federal minimum wage was $2.10/hour.

My jaw dropped when I heard that, but she said it was a high-end restaurant so tips were typically 20-25% of a really high check, and she really worked her fanny off to avoid getting fired. She was 35 when she came to work for me for substantially less. She'd had to quit the job because her husband got transferred to another city, and she didn't seek a similar job because her stamina and her back were giving out.

But Let's Talk Low-End

I'd like to talk about a low-end buffet called "Cactus Willie's". They have five stores, including one in Lancaster, and they offer steaks and a fairly large buffet including baked goods. I don't like to give bad reviews, because frankly, I figure if a restaurant (or other business) stays in business, it's meeting the needs of somebody, and it's not my job as a reviewer to completely steer people away from a restaurant unless I thought the health department really ought to shut down the restaurant. I've given one such review, of Damon's Grill.

Besides that, I like Cactus Willie's - especially the way it used to be. When they opened up, Ponderosa ended up closing both their Lancaster locations. That's not entirely due to Cactus Willie's - the Lancaster locations of Ponderosa were very poorly managed, and there's also Old Country Buffet in Lancaster, which is exceptionally well-run, and a number of chinese buffets, many of which are OK.

How Cactus Willie's Works

One "gimmick" at Cactus Willie's is that they have a bakery. There are soft yeast rolls, and brownies, and cookies, and pizza. Pizza on a buffet is a bad idea; it doesn't keep. (Pasta doesn't do very well, either. You aren't going to see a glowing review of Cici's here soon. It's not because of bad management, because they seem to be doing exceptionally well, considering, but because the concept itself seems fatally flawed.)

The other gimmick is that you walk up and ask for a steak of the doneness you prefer. The guy on duty slices into the steak, and offers it for your approval before you get it.

Otherwise, it's your typical low-end buffet. The steaks aren't going to compete with Doc Holliday's, they always are going to have inexpensive foods like green beans, cottage cheese, baked potatoes and jello on the buffet. You might not want to take Miss America here, hoping to impress her, but they seem to have a wide variety of foods, and most of them are cooked acceptably well.

What Makes It Work

What makes it work is that they get you to tip their wait staff. That's actually a misnomer, because the biggest part of their job is to clear away dishes. They bring you your beverage.

When I was there on Friday, the elderly couple at the next table was trying to figure out where to get straws. If you're young and have good teeth, you may not realize that a straw is necessary for some folks to drink iced beverages without pain. The straws come from the waiter, I informed them, and as soon as one passed by, they flagged him down, and that solved their problem.

But in this huge restaurant, there were only two waiters. A couple of years ago, they had four or five waiters working at a time, plus a hostess that assigned seating. Waiters brought you your silverware, which you now fetch for yourself, and when your meal was nearing its completion, instead of offering to bring you another refill of your Pepsi, they offered you coffee to go with your dessert. They'd bring you a tray with a couple of Starlight mints and a comment card, and you'd leave your tip on the tray.

The Economy Went Into The Dumper

When the economy went south, restaurants went with it. IHOP staged a pancake giveaway to remind people that they exist, KFC did a grilled chicken giveaway in connection with Oprah that went badly, badly, wrong, Denny's gave away Grand Slam breakfasts to a gazillion people and although people waited in incredibly long lines, they gave away excellent food, served by smiling, efficient waitresses and it probably was the best promotion any business will do this year. In some places, they're even offering live entertainment in casual-dining restaurants to attract a crowd.

Now, the economy affects different restaurants different ways, just as it affects different demographics in different ways. When nobody has money, the price of expensive beef cuts goes down, because nobody can afford them, but the price of the cheapest cuts goes up, because everybody's switching to those cuts. If you were already buying the cheapest cuts, uh, oh.

And a place like Cactus Willie's was already buying those cheap cuts.

The president of Harbor Bank in Baltimore testified before Congress that restaurant business dropped in half when the economy fell out of bed. That's gotta hurt, too.

Tips Took A Nosedive

It's likely that tips took a nosedive as well. It doesn't take rocket scientist to figure out that people tend to eat out when they're away from home - which includes lunches at work. If they're feeling the pinch, though, they are going to leave 15% instead of 20%, 10% instead of 15%, and instead of 10%, they're going to, oops, forgot to leave a tip.

So where does a restaurant like Cactus Willie's cut corners, to try to remain profitable? Well, they get rid of the hostess, and let people find their own seats. Unfortunately, with a huge dining room, and probably half the customers they had before, that means customers tend to sprawl, giving themselves more privacy - and making waiters work harder to deliver the same level of service.

Except waiters can't work harder. They were already working their butts off. So in order to take some of the load off them, the restaurant started putting silverware out where customers could help themselves.

How To Get Great Tips

The job of a restaurant manager has many facets, but the most important part of his job is to make his waitresses rich. People who tip well are people who are happy with the food and the service - and they're more likely to return than poor tippers.

But with waiters spread out more, service deteriorates. One of the reasons they have their cola dispensers in the back of the house is that it gives waitresses an opportunity to stop by and offer refills to the customers. Customers don't like to be bothered - but they love being pampered. Now, the overworked waiters can only fetch refills when the customers ask, and they don't have time to play that nice little game of offering coffee with dessert. Instead of waiters getting tips because they are pampering customers, they're getting tips because customers feel sorry for them, which is a whole 'nother dynamic. Customers don't like seeing waiters being overworked - and they tend to look for another place to eat.

Another change they've made is to decrease the portion size of the steaks. You can go back as many times as you care to - but they used to give a steak that was 6 or 8 ounces, I'd judge. Now, they're giving one that's 3 or 4 ounces. My bet is that they're serving less steak per customer. It's not clear, however, whether that's a profitable strategy.

Ice Cream And Hot Dogs

In the 1950s, they started making ice milk, partly because of concerns about cholesterol, and partly because of concerns about price. The sales of frozen dairy dessert dropped year after year after year until the 1980s, when Haagen Daz, Ben & Jerry's, and other "superpremium" ice creams started coming out. When the product was worth buying, people bought it.

Similarly, when Ralph Nader made a stink in the 1960s about some of the beef and pork byproducts being used in hot dogs, meat processors changed their recipes. Most were concerned about price, so they replaced those byproducts with grain and other fillers. A few companies, however, stuck with quality, and continued to make hot dogs with meat instead of cereal fillers. By the 1980s, the two best-selling hot dogs in America were Oscar Meyer and Eckrich - both of which were meat dogs, rather than cereal dogs. Other leading brands today, companies like Hebrew National, Nathan's, are still all-beef or all-pork hot dogs. Eckrich, interestingly, was owned by Beatrice Foods, which also owned the Butterball turkey brand. They turned over the Eckrich brand to the turkey folks, and soon, many of Eckrich's products were formulated with turkey replacing beef and pork. Sales have dropped of those Eckrich products, and the whole outfit was sold to Corn Products, which continues to mismanage the product line.

Price Isn't Everything

The lesson of ice cream and hot dogs doesn't just fail to be appreciated by restaurateurs. Businessmen of all sorts seem to think that low cost is automatically better for business. It's also infected the GOP. They want to use private insurance companies, for instance, even though they only deliver 65c of health care for every insurance premium dollar, rather than the government, which delivers 93c of health care for every Medicare dollar.

Back in the 1960s, Fortune Magazine published a feature story which pointed out that most businessmen think their best strategy is to offer value, by selling a medium-quality product that suits most people for a competitive price. When times get tough, researchers found, the businesses that survived were those offering premium quality products, or offered the rock-bottom prices. The customers for Corvettes would have no shortage of dollars, and if you were offering Volkswagen Beetles, well, people have to drive something, and if that's the cheapest ride, that's what they'd buy. It's the company producing Pontiac Bonnevilles and Ford Galaxy 500s that got in trouble in hard times.

Based on that theory, many people are investing in WalMart. They've got the cheapest prices. The problem with WalMart since Sam died, though, is that they seem to have forgotten the cardinal rule: you can't sell goods from an empty cart. They are so concerned with avoiding excess inventory that they often fail to have sufficient inventory - and if you don't have time to shop twice for everything you need, you end up shopping elsewhere.

I Feel Sorry

I feel sorry for the folks that own Cactus Willie's. They seem to have lost their way. Instead of trying to cut costs, they needed to increase costs. They needed to continue operating their restaurant as they had, but do guerilla promotion.

They could have stuck a grand piano in the corner with an electronic player mechanism, as the Lancaster General Health Campus has, and provided music during meals. That would be a $10,000 investment, but only about $200/year ongoing expense. They could have wallpapered nearby businesses with coupons and advertising. They could have had set up a fund-raising package, where boy scouts sell a package of 10 buy-one-get-one-free coupons door to door for $5, with the scouts keeping $4 of the $5.

They could have sent out scratch-off pieces, and you have to go to the restaurant, no purchase necessary, to see if you won the prize. The answer, in other words, is not to batten down the hatches, but to open the front doors wide, and herd people into the restaurant. And yes it would be expensive. But I suspect they're operating at a loss right now anyhow.

The key for any business is to survive this downturn, and be well-positioned for the boom that will follow. Some will. Many won't.

Other Bloggers On Related Topics:
Ben and Jerry - Beverly Hills Supper Club - Butterball - Cactus Willie's - Denny's - Eckrich - entrepreneurism - Fortune Magazine - guerilla promotions - Haagen Daz - Harbor Bank - Hebrew National - IHOP - KFC - maximizing tips - Nathan's - Old Country Buffet - Oprah - Oscar Mayer - Player Piano - Ponderosa - Ralph Nader - straws - survival strategy - waiting on tables - WalMart