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Can a worker-owned restaurant work?

southseattleemerald.com

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Re: Can a worker-owned restaurant work?

#11

Post by benjaminwootton »

SenoraRaton wrote: post #5

One thing that I never understood was, if an employees wages are tied to the success of the company, would that not incentivize better work ethic as a whole? That is how it works in the start-up world. You get equity, you have literally invested in the company, and you know that your work should (in theory) directly benefit you financially. Instead we end up in a system where the employee/employer relationship is inh…

At the lowest levels, most employees don’t stand to share in any gains or upside attributed to their hard work. At best there will be a small bonus if the company does well which will be weakly correlated with their individual efforts.

In white collar jobs and as you move into management then the bonus programmes become more aligned with business unit and company performance so maybe you can move the needle and get paid for it. Companies also have the carrots of promotions and pay rises.

Re: Can a worker-owned restaurant work?

#13

Post by werewrsdf »

jeffbee wrote: post #3

Why doesn't the word "rent" appear in here anywhere? If the landlord becomes aware that the restaurant pays way above industry norms, it will raise the rents at the earliest opportunity to squeeze that money back out of the business. Either they own the building or have an existing long-term lease.

That is generally not how things work. Your same argument could be made if they realized the restaurant was very popular/profitable (with low empoloyee wages). Rents have to be somewhat in line with market. They can't just increase rents ignoring the rest of the market. If you are arguing that switch costs are high, so they can. That may be somewhat true, but I know of multiple restaurants in my area that have moved. It's not that high and commercial real estate is not in the best place, so landlords aren't looking forward to vacant property

Re: Can a worker-owned restaurant work?

#14

Post by SenoraRaton »

deegles wrote: post #7
SenoraRaton wrote: post #5

One thing that I never understood was, if an employees wages are tied to the success of the company, would that not incentivize better work ethic as a whole? That is how it works in the start-up world. You get equity, you have literally invested in the company, and you know that your work should (in theory) directly benefit you financially. Instead we end up in a system where the employee/employer relationship is inh…

I (naively) think a restaurant would have an easier time detecting people who are doing the bare minimum. The issue becomes how to "punish" freeloaders who are also owners? Imagine the nightmare scenario of a restaurant where every employee is a part of the LLC that owns it. "Firing" someone becomes an onerous legal process.

Does it? If the rest of the community doesn't want you there, seems pretty cut and dry. There are no "managers" at Valve, yet they fire people all the time. You would simply receive your pay, and whatever your portion of the dividends owed to you up until your date of firing.

Re: Can a worker-owned restaurant work?

#15

Post by jeffbee »

wcerfgba wrote: post #4

Wonderful story, thanks for sharing. Do you know any worker-owned food businesses? Share in the comments! In Preston, UK, we have The Larder. Not sure about the ownership model but it is a social enterprise working on food justice: https://larder.org.uk/

We have tons of worker-owned cooperatives in Berkeley, including Cheese Board Collective that is successful, and one block from that The Local Butcher, also worker-owned. A few blocks down was the worker-owned bike shop but it went under for reasons related to having admitted a notorious bozo into the co-op. We also have Nabolom Bakery that failed after decades as a worker co-op but survives today as an owner-owned business.

Re: Can a worker-owned restaurant work?

#18

Post by yodon »

jeffbee wrote: post #15
wcerfgba wrote: post #4

Wonderful story, thanks for sharing. Do you know any worker-owned food businesses? Share in the comments! In Preston, UK, we have The Larder. Not sure about the ownership model but it is a social enterprise working on food justice: https://larder.org.uk/

We have tons of worker-owned cooperatives in Berkeley, including Cheese Board Collective that is successful, and one block from that The Local Butcher, also worker-owned. A few blocks down was the worker-owned bike shop but it went under for reasons related to having admitted a notorious bozo into the co-op. We also have Nabolom Bakery that failed after decades as a worker co-op but survives today as an owner-owned b…

Is Zachary's Pizza in the same category? (I seem to recall being told there was something unusual about their structure but I can't recall the details)

Re: Can a worker-owned restaurant work?

#19

Post by pc86 »

deegles wrote: post #7
SenoraRaton wrote: post #5

One thing that I never understood was, if an employees wages are tied to the success of the company, would that not incentivize better work ethic as a whole? That is how it works in the start-up world. You get equity, you have literally invested in the company, and you know that your work should (in theory) directly benefit you financially. Instead we end up in a system where the employee/employer relationship is inh…

I (naively) think a restaurant would have an easier time detecting people who are doing the bare minimum. The issue becomes how to "punish" freeloaders who are also owners? Imagine the nightmare scenario of a restaurant where every employee is a part of the LLC that owns it. "Firing" someone becomes an onerous legal process.

You can handle it in advance by requiring "vesting" periods where you are working but not an owner. The existing owners then get the chance to offer you ownership, or not. This is how most private physician practices work, and AFAIK a lot of law firms as well.

So if you're a lazy employee for your initial 2-year contract, you don't get any offer when your contract expires. If you're not, you might get a contract extension or an offer to buy in as an owner.

Re: Can a worker-owned restaurant work?

#20

Post by ARandumGuy »

jeffbee wrote: post #3

Why doesn't the word "rent" appear in here anywhere? If the landlord becomes aware that the restaurant pays way above industry norms, it will raise the rents at the earliest opportunity to squeeze that money back out of the business. Either they own the building or have an existing long-term lease.

Why would that be different in a worker-owned business compared to any other business? Wouldn't a landlord be equally likely to jack up the rent on a company that posts high profits?

I'm not an expert on commercial leasing, but I suspect a landlord who tried to do that would quickly find themselves with no tenants.

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