The Barista and The $40,000 Pyramid

the business of coffee houses

Postby phaelon56 on Fri Feb 02, 2007 7:03 am

If a profit sharing program is developed and offered (to employees with a tenure of one year or longer - I don't believe in offering such to short-timers), a certain level of transparency and and shared numbers can be very helpful in motivating employees not only to work harder but to be more consciosu of helping to control costs.

My "day job" employer went through a rough stretch a few years back - dropping from $18 million in sales with a staff of 45 people down to $3 million and a staff of 13. The crash and the three rounds of lay-offs occurred in less than year - close to catastrophic. Those of us who were retained to assist in the recovery and rebuilding effort had to endure pay custs ranging from 20% to 50% - some of which remained in effect for years.

Ownership / management subsequently enacted a profit sharing program to serve as an an incentive and to lessen the need to bump salary levels back up as quickly as people wanted/needed them to be.

10% of the company's net profits - after all expenses and before taxes - goes to charitable causes and the next 15% goes straight to employee profit sharing. We have company-wide meetings monthly, quarterly and annually to review overall results. The CFO gives us only the "big numbers" - cost of goods, cost of sales, net profits and profit sharing contribution - in these meetings. None of the employees are privy to what any individuals or the owners salaries are or what year end retention of profit is nor is it any of our business.

But we all see the numbers every single day - how much business we're doing and how it stacks up relative to the previous year's numbers and where we stand relative to the plan for the current year. This program has been enormously successful both in delivering extra compensation and more specifically in motivating employees and giving them a sense of being valued.

I can't see any reason why such a model couldn't easily be adapted to the independent coffeeshop.
Owen O'Neill
Syracuse NY

Phaelon Coffee
and
New York Central Coffee Roasters
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Re: The Barista and The $40,000 Pyramid

Postby Kyle Larson on Fri Feb 02, 2007 12:48 pm

onocoffee wrote:What if we changed that and made the coffee bar more like an alcohol bar where everyone comes up to the bar and places their order with a barista who takes care of that order from start to finish much as a regular bartender would? Would that allow for better customer interaction and higher tips?

Thoughts?


.


You should check out the new Stumptown cafe opening up in the Ace Hotel if you're around Portland on Valentine's Day.
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Postby Matt Milletto on Mon Feb 05, 2007 9:43 am

Kyle thanks for the 10pm shots and the tour of the hotel, it looks great and I can't wait to see it in action. Love the vibe and ambiance, and those hot! mistrals.

- m

sneak peak.

Image
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Postby fleck on Tue Feb 06, 2007 7:23 pm

oh snap!

it's always the viva barista in there with the underground $hit.

seriously though. it is looking beautiful in there.

valentine's day...mistral, clover, stumptown.

--sv
stephen e. vick
chicago, illinois
svick[at]intelligentsiacoffee[dot]com
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Postby Ryan Willbur on Tue Feb 06, 2007 7:44 pm

Oh God, I miss home.
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Postby barry on Tue Feb 20, 2007 8:05 pm

Teri Lee wrote:Do you feel the staff should know what the owner's take-home pay is? And if so, why?



not necessarily, but you bet the staff can figure out if the owner is "doing well" or not. what car do you drive? ;)
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Postby nick on Tue Feb 20, 2007 9:32 pm

Ryan Willbur wrote:Oh God, I miss home.

Home is where you yank your 'spro.
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Postby Teri Lee on Wed Feb 21, 2007 7:25 am

barry wrote:not necessarily, but you bet the staff can figure out if the owner is "doing well" or not. what car do you drive? ;)


Well I'm in trouble, then! For two years I had no car, then I had an '84 Volvo wagon, and now I drive a 7 year old RAV!

Of course, this is Bellingham: the hip thing around here is to drive a Smart car, ride a bike, a Segway, take the bus, or just put one foot in front of the other, regardless of your income bracket.
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Postby cheapdialogue on Wed Feb 21, 2007 7:35 am

barry wrote: what car do you drive? ;)


Shit! My '79 brown cargo van puts me in financial distress.
-Alexarc Mastema-

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Postby barry on Wed Feb 21, 2007 11:12 am

cheapdialogue wrote:
barry wrote: what car do you drive? ;)


Shit! My '79 brown cargo van puts me in financial distress.



'89 Landcruiser with 316,000 miles... or the '80 MGB with over 100,000 miles. i must be broke. oh, that's right, i am!



right now we're looking at houses in the subdivision behind our new store. the thought of walking or biking to work instead of driving 30 miles each way is mind-boggling.


--barry "30 miles each way, for the last 18 years"
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Postby Robert Goble on Wed Feb 21, 2007 11:19 am

phaelon56 wrote:10% of the company's net profits - after all expenses and before taxes - goes to charitable causes and the next 15% goes straight to employee profit sharing.

Maybe they should share the whole 25% with you guys--- afterall they built and survived as a company on your hard work and goodwill (salary cuts etc) and until they get you all back up to market rate and pay you off for your sacrifices made (lost wages) I'd say the charitable causes should be you. Otherwise this just sounds like self-indulgent bs.... Altruism in this sense is just self serving.
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Postby Jimmy Oneschuk on Wed Feb 21, 2007 5:06 pm

Would that charitable 10% not be a tax write-off?
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Postby nick on Wed Feb 21, 2007 5:42 pm

Robert Goble wrote:Maybe they should share the whole 25% with you guys--- afterall they built and survived as a company on your hard work and goodwill (salary cuts etc) and until they get you all back up to market rate and pay you off for your sacrifices made (lost wages) I'd say the charitable causes should be you. Otherwise this just sounds like self-indulgent bs.... Altruism in this sense is just self serving.

Self serving? So what you're saying is, "Don't serve yourself... serve ME instead!"
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Re: The Barista and The $40,000 Pyramid

Postby Jimmy Oneschuk on Wed Feb 21, 2007 5:57 pm

Marshall wrote:I posted a while back about a conversation I had with one of my wife's relatives, a career bartender. I asked him what was different about liquor bars that let him earn a decent living behind the bar for 30 years. He said it was the big tips from people who understood that the best tippers got served first when a crowd bellied up to the bar. They even got served ahead of the waitresses....


This reminds me actually of a different model that is remarkably similar to the bar model a friend mentioned a while back. She worked at a coffee bar in Monterrey, California.

During a rush, they'd have two baristas and a four group machine. They'd work the line, taking coffee orders - not one customer at a time, but while the front customer was being served, the second barista would serve the next person or group in line. She mentioned the subtle effect was the customer would feel priviledged and mentioned they were paid a lot of tips this way.

I haven't implemented this at sola, since we're on a two group and only do this kind of volume on weekends - although somebody else out there with a four group and two espresso grinders (w/ 1 decaf) might.
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Postby Robert Goble on Wed Feb 21, 2007 6:01 pm

I don't want to derail the thread, but what I was saying was -- until the company has made good on their commitment to the employees regarding compensation for lost wages/cuts sacrifice.... splitting the profit share between them AND an outside charity seems.... well -- not fair. But I've been re-reading my Marx so I might have a hidden bias... :)
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