The Barista and The $40,000 Pyramid

the business of coffee houses

The Barista and The $40,000 Pyramid

Postby onocoffee on Sun Dec 03, 2006 10:34 am

Hung out with a bartender friend of mine yesterday and got to picking his brain about what it takes to make a good bartender and how a bartender can make a career out of that vocation.

A little bit about my friend:
He's been in the bar business for at least 15 years as a bartender. He tends bar at one of Baltimore's busiest bars. He's a consummate professional who knows his beverages, knows his customers and knows what it takes to make a living being a bartender, while supporting a wife (who he just bought a Range Rover for) and kids. His hourly base rate is: $2.35/hour and he brings in roughly $120K per year, working about 50-60 hours per week.

The question was simple: what kind of salary does one need to make in order to be a career barista/bartender? He thought that $40K is the minimum to find someone qualified, someone good and someone that will be committed to the cause.

So, let's take that and run with it, shall we?

If we're talking $40K per year then a barista should be making about $19-20/hour. If we follow my friend's model and a barista makes $2.35/hour then he's making almost $17/hour in tips. Is this even possible? How much revenue does a shop have to pull in per hour to generate this level of tip revenue? Has anyone done a study correlating their baristas tips with revenue?

If we follow the extreme and take my friends' revenue, then he's making $76/hour with $74/hour in tips. Is this achievable? If so, what kind of coffeeshop could support that level?


Currently, most of us follow the fast food line of production, i.e. customer orders with one person and one to three others process that order and deliver it at the end of the counter to the customer. Everything is pooled and tips are shared.

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?


.
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Postby Robert Csar on Sun Dec 03, 2006 10:48 am

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?


They have those all over Montreal and Quebec City. And, I imagine all throughout Europe as well. It would work depending on the volume I suppose. Just be warned, moms with their strollers looking up at the menu board might not get the 'bar' feel.
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Postby Jim Saborio on Sun Dec 03, 2006 11:39 am

As far as increasing tips for your staff goes, I've seen some pretty lousy tip jar set-ups at local coffee shops.

Here are my observations:
1. Money attracts money... a glass tip jar is a must, and it should have bills visible in it. It needs to be baited at the start of a shift.

2. Too much visible money is bad... if it appears the baristas have much more than $20, the tips slow.

3. The tip jar should be positioned so that it is under the exact spot where the cashier's hand meets the customer's with change.


Using the bartender set-up does give the baristas more incentive to cut labor during slow times (this backfires sometimes).
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Postby Sandy on Sun Dec 03, 2006 11:57 am

Alcohol, i believe is the major player here regarding free flowing money and the high(er) earned tip income.
Back in my waitressing days, i remember clearly tips were always better when the folks were drinking. Not only was the check average higher, but when the booze is flowing freely, so is the cash.

Now, comparing the average coffee shop and the(alcoholic)bar establishment AND patron....the two are very much different.

At the average cafe', (most) people are on the go or will sit and sip an average of maybe two drinks. (too much caffeine consumption freaks some people out :roll: )

Most of the (alcoholic) bar patrons are consuming well over the two drink max.

In my experience in the restaurant industry, most, if not all of the "good" money was made late into the evenings and weekends.

To compare that to the coffee shop, most of our business is during the weekday mornings.

We have repeat business, but it's spread out over the week in small incrememnts. Business at a bar is usually spread out over a several hour minimum.


I dunno, i like the idea of being able to bring home 102k a year (!!), but i just don't see it in a coffee only establishment.

But, I could be wrong....
Last edited by Sandy on Sun Dec 03, 2006 12:51 pm, edited 1 time in total.
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Postby Rich Westerfield on Sun Dec 03, 2006 12:13 pm

Jay,
Mornings and afternoons we do pretty much the "one order, one barternder" setup you mention. Seems that the average tip on weekday afternoon are generally slightly better than in the morning - usually people in the afternoon are hanging out for awhile while the morning folks are go-cuppers.

What I personally beleive (from anecdotal research, not empirical) is that pricing has a lot to do with tipping.

For instance, if an item is $3.65, the tip will likely be $.35. But if the price is either $3.50 or $3.75, the tip is only a quarter. At $3.85 it's only $.15.

Anyone else with similar observations?

We haven't yet adjusted pricing to affect the tips, but it's certainly a thought as a possible way to increase barista income.

As an aside, if baristas were making $120K a year behing the bar, none would ever be dumb enough to want to start their own shop :lol:
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Re: The Barista and The $40,000 Pyramid

Postby Marshall on Sun Dec 03, 2006 6:11 pm

onocoffee wrote:Hung out with a bartender friend of mine yesterday and got to picking his brain about what it takes to make a good bartender and how a bartender can make a career out of that vocation.


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.

I don't think that will fly at a coffee bar. First, letting customers compete for better service with cash will ruin the 3rd Wave vibe you want. Second, for obvious reasons you don't want people jostling at a crowded bar holding hot coffee in their hands.

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Re: The Barista and The $40,000 Pyramid

Postby nick on Sun Dec 03, 2006 6:46 pm

Marshall wrote:Second, for obvious reasons you don't want people jostling at a crowded bar holding hot coffee in their hands.

You beat me to the punch Mr. Fuss Esq.

Almost every drink at a busy alcohol bar is drippy, over-poured, or otherwise spills a bit, including on people. When my Sapphire & Tonic spills on my hand, I give it nary a thought. Try that with an Americano.

Coffee lends itself to a fairly orderly work-flow. Even the slightest awkwardness results in liquid burns... and they're not sexy. That, and you can't do espresso body-shots.
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Postby Richard Hartnell on Sun Dec 03, 2006 8:17 pm

Let's also consider, as Sandy said above, that coffee patrons rarely order a second drink. 'Course, this might change if a coffeehouse were to go 4/6/8/12 ounces instead of 8/12/16/20 ounces.

For me, tips are always one of two options:

1. The leftover change. A $1.50 gets a .50 tip, but so does a $4.50 drink.

2. $1 even. This is why I always make sure there's at least one single in the change back; a $4.50 drink paid with a $20 gets five ones and a ten.

This seems to go by customer. The bad tippers will tip $0.15 on a single cup of coffee, but they'll also tip that $0.15 on a $18.85 order for their friends and family. Coversely, there are the guys who will always tip $1 or $2 on everything they drink, from refillable drip to triple vanilla latte.
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Postby onocoffee on Mon Dec 04, 2006 6:32 am

I think you guys are letting the issue at hand slip under the radar of whether or not the Americano is hot.

The question here, that everyone should be asking, is how to make a sustainable model work? If $40K is the magic number, then is there a system that can allow the professional barista to make that much money (possibly more) and have a career?
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Postby Deferio on Mon Dec 04, 2006 10:17 am

I believe that we should be actively recruiting baristas that are more like business partners than part time help.
The cycle of training-maturing-leaving-re-training is keeping that "carreer" possability out of reach. One thing common between the two example above is that they have been a bartender for over a decade...they seem to be driven and dedicated. I doubt the money was as good when they started as it may be now.
One well trained, high paid/comp'd, Barista with a 40-50 hour a week work load is way better than two part time baristas trained at a passable base line level with 20+ hours/wk each.And I'd be willing to bet that the longer a barista works the same bar...the higher the tips get as the customer becomes more and more familiar with them.
I think that in order for that to happen we have to start expecting more of baristas in general. It may mean having to have a skeleton crew until you can recruit someone to fill that full time career position (the same way chefs recruit from culinary schools). Either way...to get from here to there is going to require that the owner eat some of the cost in transfering to a different staffing model, may also mean letting some staff go to free up money to pay for that one baristas salary. Sacrifice is not a happy word but may be the only way to ensure a stable career staff.
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Postby Marshall on Mon Dec 04, 2006 1:20 pm

Deferio wrote:I believe that we should be actively recruiting baristas that are more like business partners than part time help.
The cycle of training-maturing-leaving-re-training is keeping that "carreer" possability out of reach. One thing common between the two example above is that they have been a bartender for over a decade...they seem to be driven and dedicated. I doubt the money was as good when they started as it may be now.
One well trained, high paid/comp'd, Barista with a 40-50 hour a week work load is way better than two part time baristas trained at a passable base line level with 20+ hours/wk each.And I'd be willing to bet that the longer a barista works the same bar...the higher the tips get as the customer becomes more and more familiar with them.
I think that in order for that to happen we have to start expecting more of baristas in general. It may mean having to have a skeleton crew until you can recruit someone to fill that full time career position (the same way chefs recruit from culinary schools).


Chris,

How does that pencil out for you? And how do you staff for the difference between busy and light hours?

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Postby Bill Sze on Mon Dec 04, 2006 1:34 pm

PaniniGuy wrote:
What I personally beleive (from anecdotal research, not empirical) is that pricing has a lot to do with tipping.

For instance, if an item is $3.65, the tip will likely be $.35. But if the price is either $3.50 or $3.75, the tip is only a quarter. At $3.85 it's only $.15.

Anyone else with similar observations?

We haven't yet adjusted pricing to affect the tips, but it's certainly a thought as a possible way to increase barista income.


I've noticed that as well. Sometime the net result of up selling is that the staff actually received less in tips.

Also is there an average tipping percentage for coffeehouse? We have plenty of people who drop a dollar on a two dollars coffee, we also have plenty of customers who don't tip. My guestimate is that we average out to about 7%. For barista to make a livable wage, tips will not be enough, their hourly rate has to be be about $12.00 an hour, adding tips, that will bring them to $40,000. In some area, 40K is barely livable.

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Postby Richard Hartnell on Mon Dec 04, 2006 1:56 pm

My average rate is about $12/hour as is. Given steady business, I make $4/hr. in tips with a roughly $8/hr. minimum wage.

'Course, I've (almost) never worked more than 30 hours a week, but I'm not exactly trying to sustain a family either.
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Postby Jim Schulman on Mon Dec 04, 2006 2:03 pm

At the moment, most coffee shop businss in the US is people picking up to-go drinks during their working hours. This is more like an espresso bar in Italy than the "sit down for an hour and schmooze" cafes I grew up with in the rest of Europe.

In the old european cafes, the coffee was usually joined with cake, apertifs or brandy chasers, the prices were high, and the servers seemed to be roughly as well off as restaurant waiters. The cafes were big enough so there was the usual career ladder for staff going from busboy to head waiter, chef de salle, and partner in the business.

The typical Italian bars I saw were two people operations, a presumably low paid cashier collecting 80 cents for the cafe, and a usually skilled barista serving the shots and collecting the other 20 cents as a tip. Unlike the states, 95% of the business were these 1 euro (80 cents cost, 20 cents tip) singles which the barista could churn out very quickly. My guess is that such Italian baristas are making a good deal more than their US counterparts who have to make time consuming milk drinks for a much lower percentage of tip money. I would think they are pulling in as much as a barkeeper.

If you look at these two models, the old european cafe and the Italian bar, where people do make a living; it seems like the people working at "post starbucks" cafes are caught in a trap: they have to make time consuming fare in a fast food environment where tips are considered, by the customers, as an arbitrary imposition rather than something obligatory.

I hate to be pessimistic; but I can't see barista as a career in this environment. At best, being a barista will become a new entry level job into the wider coffee business. For a life time career, third wave cafes will have to distinguish themesleves fundamentally from the "pick up a cardboard coffee to wash down the munchies in my cubicle" Starbucks model. Unfortunately, this would also mean not riding the transformations of everyday work which is fueling starbuck's expansion
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Postby Sandy on Mon Dec 04, 2006 2:34 pm

For me, it looks like it's up to the owners of cafes to sustain the Barista as a career position.
I look at cafe's that care about quality. While I don't know the average pay of Barista's in settings such as CCC, Zoka, Stumptown, Intelligentsia, etc. I would assume that the Barista's are conpensated fairly well for their time.

I am very fortunate to have the luxery of being a "career Barista" in the community college that i work at. I have a full time position, with forty hours a week, paid holidays, benefits and flex spending.

Yet, there are only two of these positions at my place of employment. All other positions are part time temps with pay starting at $8.73 an hour plus meal compensation and free drinks.

So, it seems that one would have to be more than a Barista. *trainer, manager, etc.
Yet, I would think that to be a professional Barista, the goal or desire would be more than *just* preparing drinks as we are all on a learning curve striving to be more, learn more and share our knowledge with others.

So, back to my original thought. With the tip structure as it currently is....it would seem that yes, it would be up to the cafe owners to pay their Barista's with enough compensation to allow the position to be a true *career* position. Compare a Chef to a line cook. More is required of the chef and they are compensated likewise.
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Postby nick on Mon Dec 04, 2006 2:47 pm

Sandy wrote:I look at cafe's that care about quality. While I don't know the average pay of Barista's in settings such as CCC, Zoka, Stumptown, Intelligentsia, etc. I would assume that the Barista's are conpensated fairly well for their time.

I hate to leak this information here, but it had to be done: "CCC," a.k.a. "Counter Culture Coffee," pays their shop baristas WAAAY less than you think. I mean, LESS than minimum wage!!! Seriously... take minimum wage, then subtract from that, minimum wage... and that's what they pay. I can't hold on to this secret any longer. :twisted:
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Postby Chris Owens on Mon Dec 04, 2006 3:32 pm

:wink:
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Postby Matt Milletto on Mon Dec 04, 2006 3:45 pm

Tips are an obvious income supplement, but what are peoples thoughts on offering benefits to their baristas. I know that this is a practice of a few shops and one roaster in particular here in Portland ... and I think it is a big step in employee retention and a big help to baristas. Many of my friends who are great baristas are in there late 20's early 30's ...

Many food service posistions have "lifer's" and "non-lifer's" ... this includes, bartenders, wait staff, chef's, managers, etc. With minimum wage increasing a barista position averaging $5-8/hr in tips looks pretty appealing vs. an office job paying a flat $13/hr.

Jay - what does your friend claim each year in tips? I have bartended at a couple places that would take a flat 8% off each paycheck ... but as a barista, I have found many do not claim their tips ... (making the income from tips even higher).

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Postby Rich Westerfield on Mon Dec 04, 2006 5:56 pm

MattBellissimo wrote:what are peoples thoughts on offering benefits to their baristas. ... I think it is a big step in employee retention and a big help to baristas.


We offer partial benefits for 20+ hours - and while five barista would qualify, only one wanted it. The rest get bennies from other sources that are generally 100% paid. And 100% paid is a quite a bit out of reach for us at this time.

Maybe what's needed to increase the career appeal is a movie like "Cocktail" but in a coffeehouse.

Except not with Tom Cruise.

Although truthfully, I don't see myself doing a Heather Perry five-shaker pour anytime soon.
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Postby gee on Mon Dec 04, 2006 6:05 pm

nick wrote:I hate to leak this information here, but it had to be done: "CCC," a.k.a. "Counter Culture Coffee," pays their shop baristas WAAAY less than you think. I mean, LESS than minimum wage!!! Seriously... take minimum wage, then subtract from that, minimum wage... and that's what they pay. I can't hold on to this secret any longer. :twisted:


it's all about the bennies, my friend...
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Postby Sandy on Mon Dec 04, 2006 7:28 pm

yeah but....
yeahbutt....(one word)

starbucks offers bennies. does that qualify as/for a "Career Barista"?
Perhaps the CB needs to be defined as other than making lots of dough.
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Postby Robert Csar on Mon Dec 04, 2006 7:50 pm

Perhaps we need to downsize as a community? Start a cafe with one person that takes on an apprentice and together they build the business. Compensation, quality of service, and customer satisfaction I think would be easier to attain if we just start two person shows.
Look at all of these respected cafes that fall apart when it gets busy because they are too big, and too much staff (part-time and full-time).
I find as a barista I am a hell of a lot more effective with only two people on the floor. One on cash, and taking care of the floor during lulls, and the other of course on bar. During the not so busy hours the apprentice is on, during the busy hours the owner is on.
If we all start building smaller cafes that are more feasible for what we do, we'd be the anti-Starbucks.
I figure the master and apprentice model is a good way to get us recognized as a skilled trade with a higher standard of compensation (and tips, split between two? Nice.)
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Postby Richard Hartnell on Mon Dec 04, 2006 7:56 pm

Y'know, my mentor and I were talking about that a while ago. You want to become a tattoo artist in Japan? First, become a better artist than anyone you know. Then find a master and convince him that you love tattoos more than he does. Then spend six months drawing koi fish, and another six drawing dragons.

Let's compare that to a common barista's education: in many (second-wave) coffeehouses, you're on bar as soon as they're convinced you won't scald yourself too badly. Yet we often talk about how we can't afford, as people who claim that espresso is fscking awesome and deserves love and attention and money, not to serve a perfect shot every time.

Imagine, just for the sake of argument, what would happen if a master barista was held to the standard of a tattoo artist.
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Postby mandy on Mon Dec 04, 2006 10:26 pm

I've been putting off joining coffeed for several months now, primarily because, even though I was an avid forum reader, I was afraid that if I joined the coffeed community, I might not ever be able to leave the coffee industry, itself. After almost three years of working in two of the best cafes in North America, I've found that I genuinely love working as a barista. I look forward to going to work, and when I'm away, I miss it. But I'm increasingly frustrated by the fact that my job is not sustainable.

I'm twenty-five years old, I have a Master's degree, and my parents pay my health insurance. If I were to apply to an office job today, I could make as much as $45k a year, entry level. And I don't believe my photo-copying and filing skills are nearly as fine-tuned as my barista skills. While there are many great injustices in the world, this is certainly a small one. However, I can't help but see paying baristas a living wage as step toward making many of the industry changes currently under discussion in this thread. Do I think I deserve $45k a year? Probably not, but I do think I deserve the financial space to continue to develop as a skilled barista.

How can you shift the current perspective from commodity to specialty coffee if you aren't willing to pay baristas more than $8 or $10 an hour? The current turn-over rate in the barista community is incredibly high because most of us finish school, or decide to start a family, or somehow arrive at the conclusion that barista-ing isn't a long-term option. If cafe owners aren't willing to invest in the people who prepare and serve their coffees, how will we see the leaps in quality (and thus public perception) we in the third wave are sorely missing? The paradigm shift must occur here within the third wave before we can expect to change the way others view our product.

Why is it that most of the competition-winning baristas are not working line baristas? I don't believe it's because they have more financial backing or greater company support. I think it's because these are the people who can afford to stay in the coffee industry for more than a year or two. The longer I stay in the industry, the more exponentially my knowledge grows, and the more avid my curiosity. While I was disappointed with my first barista competition results, I think I could've given Nick Cho a run for his money in Southeast this year. (That's right, Cho, bring it on!) In fact, it's taken me two years to develop confindence in my espresso. But now that I have it, I can't help but wonder what kind of product I could produce if every work day was as good as one of those days where all the shots are flowing effortlessly.
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Postby Marshall on Tue Dec 05, 2006 6:07 pm

mandy wrote:Why is it that most of the competition-winning baristas are not working line baristas? I don't believe it's because they have more financial backing or greater company support. I think it's because these are the people who can afford to stay in the coffee industry for more than a year or two. The longer I stay in the industry, the more exponentially my knowledge grows, and the more avid my curiosity.


Let's look at it from another direction. Maybe, after a few years, the people who have the creativity, competitive drive, and curiousity about the world to win barista championships don't find complete job satisfaction in spending all of their time at the espresso machine. While they certainly love the time they spend there, eventually they need additional challenges to maintain their excitement about their jobs.

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