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Can a worker-owned restaurant work?

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Re: Can a worker-owned restaurant work?

#101

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…

>> If you work at McDonalds, in is 100% in your interest to do the absolute bare minimum possible to not be fired Or: If it's flipping hamburgers at McDonald's, be the best hamburger flipper in the world Ice Cube, or Abraham Lincoln, or Dave Ramsey said that. I forgot which one.

Horatio Alger stories were about humble, brave, smart and hardworking boys from troubled, deprived backgrounds who found terrible, unrewarding jobs or situations, worked hard, smart, or bravely at them, and were observed doing this by successful, wealthy, and wise men who recognized that raw merit, plucked those boys from their situations, moved them into their businesses and homes, and gave those boys real responsibility and a start on their road to inevitable success.

Horatio Alger was a pedophile who preyed on young homeless boys and orphans.

It is very easy for the best burger flipper at McDonald's to remain the best burger flipper at McDonald's forever. His job is safe. The harder he's willing to work without getting a raise, the longer he will be working without getting a raise. One day, he will probably become assistant manager, and his promotion will mean a pay cut because now he's on salary, and his responsibilities will become greater because he has to show up when others don't. They know he will, which is why they gave him the job. Meanwhile, he works under a series of managers transferred from other locations, or hired from other companies. Eventually he gets sick, and his awful health insurance runs out almost immediately. He's demoted, then fired because he can't keep up at the job anymore. Then he's homeless, then he's dead.

Goofus, however, did the least possible in order to keep from being fired, and went to community college at night. He eventually was able to wrangle a paid internship at a company where there was a career path, and quit McDonald's. Everybody was happy to see him go, because he was a person like them who managed to get a good job, and also because he was terrible to work with because he was always so tired from school and didn't put a ton of effort in. Goofus is now middle-class.

postscript: Goofus later also got sick, his insurance ran out, and he became homeless and died. US healthcare is terrible.

Re: Can a worker-owned restaurant work?

#102

San Jose and Sunnyvale in California has "A Slice of New York" which is a co-op pizza operation: https://asliceofny.com/about/ Video about the co-op https://www.youtube.com/watch?v=mhbupz-iuhU

Awesome, that's so good to see. IIRC the founder was ex-Cisco. I haven't lived in San Jose in over a decade but Slice of NY is the only thing I miss other than my friends.

Re: Can a worker-owned restaurant work?

#104
post #80

Worker-owned anything can work. It's democracy in the workplace.

Democracy only works when just about everyone wants the same thing. And even then leaders generally abuse power. The lower the stakes, the worse it gets.

I think I agree with the point but people don’t need to want all the same things so I think I’d rather phrase it this way:

“Democracy fails when the people and their leaders fail to realise that the thing they want above all is peace and general prosperity, and that neither of those is a naturally occurring phenomenon.”

Because the peaceful transfer of power as well as respect for the truth, and equality before the law is the absolute foundation that any prosperous democracy needs.

Re: Can a worker-owned restaurant work?

#105

Yes, absolutely, but there are pitfalls: * Somehow finances have to work, which is usually a harsh reality for some. Ex: Hey we can't pay workers $250/hr without raises prices to above what customers are willing to pay * Consumers despite "Least common denominator" which is often the result of "design by committee". Usually consumers are after something niche, unique, artistic, and creative, which is the inspiration…

> Somehow finances have to work, which is usually a harsh reality for some. Ex: Hey we can't pay workers $250/hr without raises prices to above what customers are willing to pay

If it was worker owned wouldn't you just pay everyone some reasonable wage that the business can afford and then also split profits evenly?

Re: Can a worker-owned restaurant work?

#106
post #22

Earlier quoted context omitted.

There is a lot more legal overhead to buying out an LLC owner against their will compared to firing an at-will employee.

Should a worker-owned company be an LLC? An LLC[1] is a union of assets put together for a common purpose. It's not a union of people. A worker-owned company should have a different legal structure, usually something created specifically for such an organization, though one would imagine partnerships would be suitable if the law doesn't provide for a special structure. [1]Granted, I'm thinking of European definitions…

Entity laws are all state-by-state in the US, but in most (all?) states, LLCs and corporations are essentially the same ownership-wise. A person buys membership interest/stock in an LLC/corporation, and becomes a partial owner. The organization is a separate legal entity then owning the contributed assets and the members/shareholders own the LLC/corporation. The bylaws will lay out how to divest a member/shareholder of his interest, usually involving the other members/shareholders or a board of managers/directors voting to buy out his shares.

It's not really a union of assets nor people though. The former would be a trust or arguably a non-profit, and the later would be a partnership. And LLCs can elect to be taxed as a C corporation, although I can't fathom why one would. (And most small businesses can elect pass-through taxation!)

Re: Can a worker-owned restaurant work?

#107

Yes, absolutely, but there are pitfalls: * Somehow finances have to work, which is usually a harsh reality for some. Ex: Hey we can't pay workers $250/hr without raises prices to above what customers are willing to pay * Consumers despite "Least common denominator" which is often the result of "design by committee". Usually consumers are after something niche, unique, artistic, and creative, which is the inspiration…

In my experience the opposite is almost always true:

> Somehow finances have to work, which is usually a harsh reality for some

At most places I've been involved in the workers are more careful with money because they are standing together and want the business to succeed. They have transparency into the finances, so they know what's possible and try to make sure not to go overboard.

> Consumers despite "Least common denominator" which is often the result of "design by committee". Usually consumers are after something niche, unique, artistic, and creative, which is the inspiration or vision of an individual.

All of the worker owned places I've been have been exactly this: creative, interesting, and individual. These aren't giant chains designed in a megacorp boardroom.

> I don't see this working in the long term unfortunately unless a majority of the workers have a lot experience with business, especially something as cashflow-sensitive as a restaurant (which typically operate on razor-thin margins). But I do wish them luck in their experiment.

There are many of these and though I don't know the success rate compared to hierarchical businesses in the food industry in particular, co-ops have a higher success rate than hierarchical businesses in general and there's been a lot of research into it, though I don't know if an exact "why" has ever been established. I suspect it's that there's no handful of individuals who can get greedy and ruin things by trying to maximize profit. Even for-profit co-ops generally have a better sense of balance since the workers don't want their business to dry up and if one person gets greedy there are lots of other people to keep them in check.

Re: Can a worker-owned restaurant work?

#108

Yes, absolutely, but there are pitfalls: * Somehow finances have to work, which is usually a harsh reality for some. Ex: Hey we can't pay workers $250/hr without raises prices to above what customers are willing to pay * Consumers despite "Least common denominator" which is often the result of "design by committee". Usually consumers are after something niche, unique, artistic, and creative, which is the inspiration…

> Somehow finances have to work, which is usually a harsh reality for some. Ex: Hey we can't pay workers $250/hr without raises prices to above what customers are willing to pay If it was worker owned wouldn't you just pay everyone some reasonable wage that the business can afford and then also split profits evenly?

Don't forget to split the losses evenly as well!

Re: Can a worker-owned restaurant work?

#109
post #86

Earlier quoted context omitted.

It’s a hellish concept. The workers relationship to the company becomes less transactional, and they get all the stress of owning a business but without the outsized profits.

Most restaurant workers would gladly take the stress of owning a business over the stress of being paid 40 hours worth of near-minimum wage for 80 hours worth of actual work.

> stress of being paid 40 hours worth of near-minimum wage for 80 hours worth of actual work.

which restaurant workers is this true of? tipped FOH workers make a little to a lot more than minimum wage depending on the shift. BOH workers are indeed getting minimum wage or a little more, but wage theft to the tune of 50% of a paycheck is incredibly rare.

Re: Can a worker-owned restaurant work?

#110

Yes, absolutely, but there are pitfalls: * Somehow finances have to work, which is usually a harsh reality for some. Ex: Hey we can't pay workers $250/hr without raises prices to above what customers are willing to pay * Consumers despite "Least common denominator" which is often the result of "design by committee". Usually consumers are after something niche, unique, artistic, and creative, which is the inspiration…

>> Usually consumers are after something niche, unique, artistic, and creative, which is the inspiration or vision of an individual.

I mean, I feel like a quick survey of the american restaurant landscape implies that consumers are mostly after something reliable for their time and money.

but also the idea that front of house having a say in the business would mean the menu is anymore design by comittee than any other restaurant is weird, especially because menus aren't generally decided by the owner of the restaurant anyway.

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