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Tips for Restaurant and Coffee-shop Owners

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Restaurants Sections
Violations of Wage and Overtime Laws Can Come with a Hefty Price

Karina L. Schrengohst

Karina L. Schrengohst

State and federal laws pertaining to minimum wage, tips, overtime, and employing minors are complicated. As a result, these are areas where mistakes are often made. Employers, however, cannot afford these errors because the consequence of not complying with these laws can be very costly.
In fact, in Massachusetts, there are mandatory treble (triple) damages for violations of wage-and-hour laws relating to minimum wage, tips, and overtime. This means that, if an employer is found in violation of state law, at minimum, for every dollar an employer does not pay in accordance with wage and hour laws, that employer will have to pay three times that amount. And violations of child-labor laws bring civil and criminal penalties.
Thus, in order to reduce their risk of liability, restaurant and coffee-shop owners should consult with their employment counsel and familiarize themselves with state and federal laws.
Employers, such as restaurants and coffee shops, who employ individuals who receive gratuities must be familiar with minimum-wage and tip law. In Massachusetts, employees who receive at least $20 a month in gratuities ($30 a month under federal law) may be paid $2.63 per hour, provided that their hourly pay rate and tips together are at least equal to the state minimum wage of $8 per hour.
There are two areas in particular which relate to tips that employers should be aware of: tip pooling and service charges.
Amy Royal

Amy Royal

Tip pooling is permitted under Massachusetts law, but proceeds may be distributed only to waitstaff employees and bartenders. Individuals with any management responsibility may never receive any portion of pooled tips. In February 2011, in Matamoros v. Starbucks Corp., a Massachusetts federal court found that Starbucks’ tip-sharing policy, which divided tips weekly among baristas and shift supervisors, violated state law because shift supervisors have some management responsibility.
Under the Bay State’s tip law, if a restaurant chooses to impose a service charge on an invoice, which serves as the functional equivalent of a tip or gratuity, all the proceeds from that service charge must be paid to waitstaff employees or bartenders as a tip.
Employers may, however, charge a ‘house fee’ or ‘administrative fee,’ which they may use or distribute at their discretion, but only if the employer provides a designation or written description of that house or administrative fee, informing the patron that the fee does not represent a tip or service charge for waitstaff employees, bartenders, or other service employees. This language informs the patron that the fee is not a gratuity that goes to employees. Thus, any fees not intended as gratuities and not paid to employees should not be labeled a service charge.
Under Massachusetts law, restaurants are exempt from paying employees overtime; however, they may not be exempt under federal law. Restaurants with annual gross sales of at least $500,000 are subject to both state and federal law, the latter in the form of the Fair Labor Standards Act (FLSA). If subject to the FLSA, employees working in restaurants must be paid 1.5 times the minimum wage (not 1.5 times $2.63 per hour) for all hours worked in excess of 40 hours per week.

Minor Concerns
Child-labor laws are designed to protect minors from hazardous jobs and allow minors to balance education with employment. They prohibit employment based on age (minors under 14 years old may not work) and the hazardousness of a job. Minors must obtain work permits. And after 8 p.m., all minors must be under the direct and immediate supervision of an adult supervisor who is located and reasonably accessible in the workplace.
Child-labor laws restrict the time a minor may work, setting rules for the earliest permissible hour, the latest permissible hour, the number of hours per day and week, and the number of days per week. Restrictions vary based on age and whether it is a school day, school night, weekend, holiday, school year, or summertime.
Two recent examples of violations of child-labor laws reveal the hefty financial consequence of non-compliance. In June 2011, the owners of five Dunkin’ Donuts franchises were fined $6,000 for violating state child-labor laws. The franchises employed minors without work permits, before the earliest permissible hour, after the latest permissible hour, and beyond the maximum number of daily hours allowed under child labor laws.
And in October 2011, the owners of two Boston-area Chinese restaurants were ordered to pay more than $129,000 in penalties and $52,000 in restitution for violations of state laws, including minimum-wage and child-labor laws. One of the restaurants was cited for employing a 16-year-old for nine months without pay and allowing her to work beyond permissible work hours and in excess of maximum work hours.
Employers who violate Massachusetts wage and hour laws are subject to mandatory treble damages for any unpaid wages. In addition, a prevailing employee will be awarded attorneys’ fees and costs of the litigation. Because the damages are mandatory, even an employer who makes an honest mistake or takes reasonable steps to comply with wage and hour laws will be subject to these hefty damages.
In contrast, under the FLSA, employers may offer a good-faith defense for violations. Under state and federal law, employers who violate child labor laws are subject to civil and/or criminal penalties, including civil citations, civil fines, criminal fines, and imprisonment.
Considering the consequences of violations, restaurant owners should regularly consult with their employment counsel to review their practices and policies to ensure compliance with state and federal law.

Karina L. Schrengohst, Esq. and Amy B. Royal, Esq. specialize exclusively in management-side labor and employment law at Royal LLP, a woman-owned, boutique, management-side labor and employment law firm; (413) 586-2288; [email protected]; [email protected]

Time Tested

By
Fred Gohr
Restaurants Sections
Success at Fitzwilly’s Comes from a Carefully Crafted Atmosphere

Fred Gohr

Fred Gohr says Fitzwilly’s was an immediate success in the 1970s, and it has remained popular despite much stiffer competition in Northampton today.

When Roger Kirwood purchased Mike’s Tavern in 1974, the seedy bar near the railroad tracks was going out of business.
“It was an awful place,” he said. “And there was nothing happening in Northampton at the time. But I always had a burning desire to own a casual restaurant, and the city had caught my eye.”
Today, the eatery he named Fitzwilly’s (after the 1967 movie starring Dick Van Dyke) has not only stood the test of time, but has become a destination in its own right that continues to draw patrons of all ages who appreciate the comfortable, eclectic atmosphere, the good but inexpensive food, and the jovial staff. Many have worked there for more than 30 years and carried on the tone set by Kirwood, who was nicknamed ‘Captain Fun’ by his employees.
The pub-style décor that has charmed patrons for decades was carefully staged. Kirwood visited antique shops and purchased items he believed would become conversation pieces, along with a number of enormous, shining brass planters. He kept the tavern’s original bar, exposed the brick walls, and established a uniform for waitresses that consisted of form-fitting Danskin tops and full-length wraparound skirts.
He also had art pieces made for his restaurant, including a funky submarine emblazoned as the ‘U.S.S. Fitzwilly’ that hangs from the ceiling and was once a gas tank in an old airplane.
“He had a great eye for those sorts of things and a real talent for decorating,” said Fred Gohr, who was hired by Kirwood in 1978 to run the kitchen and today owns Fitzwilly’s with three partners.
But Kirwood takes no credit, and said the funky atmosphere wasn’t an original idea. “T.G.I. Friday’s was just starting up in New York City, and it was an overwhelming success. So I copied everything they did,” he explained. “I put junk and interesting stuff on the walls, created an inexpensive menu, and hired a neat staff. And the place was a raging success from the time it opened. There was nothing like it in town. It was jammed, and everyone in it was laughing all the time.”
Staff members were happy because they were making money, the patrons loved the silly names and odd combinations of foods on the menu, and the fun-filled, friendly ambiance proved to be contagious.
Kirwood said word of mouth spread quickly, and he soon had patrons driving from as far away as New Haven. Many skiers stopped on their way to the northern states, and the college crowd and their parents also loved the establishment. In fact, Fitzwilly’s brought a new crowd of people to Northampton, which encouraged other young entrepreneurs to open clothing stores and boutiques.
“Many people credit Fitzwilly’s and Roger Kirwood with the beginning of the turnaround in downtown Northampton,” Gohr said. “Fitzwilly’s was opened as an exercise in comfort and informality that, coupled with good food and drink, would make a lot of people happy. It worked, and continues to make people happy today.”

Learning Curve
Kirwood may have gotten the idea for the décor from the T.G.I. Friday chain, but his belief system played a major role in the mood of his new restaurant.
“When I bought the place, I had the idea that no one liked to go out and eat formally. It’s expensive, and you’d better know which fork to use, which impinges on the comfort zone,” he said. “I wanted to create a place that had no rules — just quality, good food, and personality. And everyone I hired was very friendly.”
Fitzwilly’s was not his first venture in the restaurant business. In 1967, at age 25, the former insurance salesman bought a building on Memorial Drive in West Springfield and created a restaurant that he named the Red Gertrude. “At the time, the Red Garter was a popular chain across the country, and I had a banjo fascination,” he said.
His budget was very limited, so he created tables from sawhorses and sheets of plywood and promoted the banjo music. The concept worked well for a while, but when Gertrude’s popularity began to wane, he changed the name to Sweet Charity’s and hired a different rock ‘n’ roll band each week. “But eventually that bombed,” he said.
His next venture was Fitzwilly’s, and he did his best to ensure that customers received outstanding service. There were also special trademarks, such as napkins sewn from kettlecloth that became so popular that patrons took them when they left to use as headbands or scarves.
Kirwood also relied on colorful and unusual marketing, such a full page newspaper ad he ran with just one word — “Delicious” — on the entire page, and included nothing else but his logo in small print at the bottom.
The rules for staff were simple — all of the brass railings had to be shined every morning, and anyone who answered the phone had to identify themselves by name. “The real charm came from the people I hired,” he said, adding that bartender Jeff Spooner was among them and still has a very strong following.
As time went on, Kirwood opened other Fitzwilly’s sites in a New Haven firehouse and in Bridgeport and Danbury, Conn. He also purchased the entire building the Northampton eatery was housed in and expanded the establishment, adding two more dining areas, a second bar, and a loft.

Attention to Detail
When Gohr took over, he changed little about Fitzwilly’s, although he continued to scour antique shops for unusual pieces. “Art is important in this town. We are proud to say that Northampton was voted the best small arts town in America a few years back,” he said.
“It’s also like a family here. We have customers we see many, many times each week. We don’t try to pretend to be a fancy, upscale restaurant. But people can be assured that, when they come here, they will get excellent food, quality and service. “
The back bar has been nicknamed ‘Spooner’s Bar,’ due to the beloved barkeep, who has developed a large following on Friday and Saturday nights. “This has really become a local gathering place,” Gohr said, adding that patrons start out as college students, get married, bring their families there, and also use the restaurant for business lunches.
“We are one of the few places in town that serves lunch with table service where people can get waited on,” Gohr said. “But lunch has always been one of our fortes. The majority of our lunch patrons are here on business.”
Gohr has watched Northampton change since he began his career there decades ago. “I remember when Fitzwilly’s was very busy in the late ’70s. At that time, Northampton didn’t have the shops and art scene it has today,” he said. “We relied on the locals and college students and staff, and although they are still a large part of our clientele, folks from out of town have become a big part of our customer base today.”
Although the number of excellent restaurants in Northampton has grown and the scene has changed dramatically, it hasn’t affected Fitzwilly’s.
“We do a lot to make sure we maintain consistent service,” said Gohr. “And I can’t say enough about how the longevity and success of this restaurant has been fueled by the staff.”
People have their favorite nooks, but a focus that has been maintained is the ample space between tables, designed to afford diners a good deal of privacy.
“It’s another reason we are successful,” Gohr said. “We could probably squeeze in at least another 40 seats, but it would take away from the comfort of the dining experience. And we understand and respect the fact that business folks need privacy.”
The most popular spot is the loft, which holds two tables. It’s known as ‘the roost,’ and it’s regarded as the best seat in the house, giving patrons a birds-eye view of the entire restaurant. But no matter where people sit, the experience is the same. “It’s fun here,” Gohr said.

Bottom Line
The atmosphere in the building originally built as a Masonic temple remains informal, and the chairs at Fitzwilly’s still don’t match. But generations of people have found a home there and have formed relationships with its longstanding employees.
“There really is something on the menu for every occasion,” said Gohr. “You can have a beer and share an appetizer or sit at a table and have a great filet mignon or the finest seafood available; we also have burgers and reubens and serve food until midnight. Folks know that, when other restaurants are closed, you can still get a bite at Fitzwilly’s.”
In short, it has never lost its style. “It’s the kind of place that is just a lot of fun,” Kirwood said. “It has stayed consistent since I opened it years ago. And that’s the whole story.”

Food for Thought

By
Antonio DiBenedetto
Restaurants Sections
Restaurant Owners Hope to Emerge from Recession Stronger

Gina Campiti

Gina Campiti says the economics of the restaurant industry may have changed, but its focus on customers should not.

Area restaurants report increased numbers of people dining out. But is this a sign that the industry is out of the weeds? Numerous restaurant closures have been on the front pages for the past year, but most owners and managers say that, if a business has come this far, the year ahead promises to put a little more on their plates.

Reflecting on the three high-profile restaurants that have closed within a scone’s throw of her restaurant in the last year — Sitar, Onyx, and Pazzo — Gina Campiti said, “it was scary. It is scary.”
Campiti is the general manager of Samuel’s Sports Bar at the Basketball Hall of Fame, and for her, such closures aren’t good for her business and the spirit of healthy competition — but, most importantly, they’re not good for the city of Springfield.
“I feel terrible for those people that went out of business,” she said. “That’s an incredible loss of money for the owners, a loss for the staff, and a loss for those people who enjoyed the restaurants. It’s depressing in such high-profile parts of the city.”
But the space formerly housing Onyx isn’t dark anymore. The Spoleto Group, owner of seven area restaurants, including their namesake Italian dining room in Northampton, unveiled their latest “concept,” as Bill Collins calls them, this past summer. And with three bars and 450 seats, this second Mama Iguana’s location is anything but quiet.
Collins is the chief operating officer of the Spoleto Group, and he and owner Claudio Guerra both say this location has been one of the most exciting for the pair. “It’s our busiest location out of all our restaurants,” Collins said.
“The reason why is that, if you take a look at what has closed there,” he said, “places were selling food at $25 to $28 a plate, with $12, $15 martinis. And here we are, selling a quality house margarita for $7.50. We’re selling entrees for $9 to $12. Our focus is keep it cheap, keep it fun, and they will come. We’ve had great success with people reacting to our prices in this downturn.”

Bill Collins (right, with Claudio Guerra)

Bill Collins (right, with Claudio Guerra) says patrons respond to reasonable prices and a fun atmosphere.

Springfield isn’t alone in high-profile closures along all price points in the restaurant industry. As it navigates Chapter 11 bankruptcy, Friendly’s closed four regional branch locations in January, with another 37 shutting their doors across the country — all this in addition to 63 locations that closed nationwide in October. And Northampton has one fewer fine-dining choice, as the longtime haunt Green Street Café is set to close at the end of January.
At the same time, the nation’s restaurateurs are claiming a rebound in 2011 after two lean years. The National Restaurant Assoc. reports that restaurants added a net 230,000 jobs during 2011, their strongest performance since 2006. In addition, the restaurant industry finished the year only 20,000 jobs shy of fully adding back the 366,000 jobs lost during the recession. Complete recovery is expected in early 2012.
In talking to area restaurateurs, their news was more like fine wine than sour grapes, and in addition to some strong sales numbers, most offered that the gradual crawl out of the economic downturn has given them hope for the year ahead. If they made it this far, they said, 2012 holds the promise of a rebounding marketplace along with the business acumen honed from staying afloat through the Great Recession.
So, what’s on the menu for 2012? BusinessWest sat down with chefs and operators of area restaurants and gathered some food for thought.

Dish Network
Campiti unfolded the leatherbound menu on the table in front of her, which now offers 51 tapas dishes to choose from.
“This menu is a big change for us,” she explained, “and I think it’s headed in the right direction. We were successful with half the number of tapas that we had on there before. I’m hoping for even half of the excitement that we had after we changed our menu the last time.”
She explained that the little dishes are a different concept in dining, and the past year’s successful operations at Samuel’s are a direct result of that.
“Some would say, if you give people too much choice, they’ll never make up their mind,” she explained. “But you don’t need to make up your mind! A tapa is a small plate. Instead of concentrating on one entrée in front of you, you’ve got a bunch of different plates on your table that you pick from. You talk, you share. You put a big entrée in front of someone, and that’s the center of their attention. Put a variety of plates around the table, and it promotes conversation.”
Her restaurant’s location in the Hall of Fame building is a slam dunk, she said, even with the number of other eateries in close proximity.
“People go where people are,” she continued. “If it’s a busy area, people will come out. It’s an attraction. It’s not competitive to us. It can actually complement the businesses around it. Everyone has their own brand, and customers want variety.”
Ralph Santaniello, co-owner of the Federal in Agawam, agreed with that sentiment. “I’m of the belief that there aren’t just a set number of restaurants that can survive. If you do a good job, there’s room for everyone.
“At the end of the day,” he went on, “the more diners that we can keep in the Springfield area, that’s a good thing for all of the restaurants around us — not to lose them to Northampton or West Hartford.”
He and Mike Presnal, his business partner and head chef, said that 2011 was a strong year. “Not only were we up around 20% over the year before, saleswise,” Santaniello said, “but our gift-certificate sales were up even higher. In December, that was around 35%.”
Asked for the secret ingredient to their success, Santaniello said it was simple: consistency and quality.
“Number one, we have never had a different chef,” he said. “And the fact is, we’re a chef-owned restaurant, a chef-driven restaurant. It’s hard to make it when you’re an owner but not an operator. We know what goes in and out of the kitchen and bar and dining room every night of operation.”

Antonio DiBenedetto

Antonio DiBenedetto says consistency is one key to keeping diners returning to a restaurant often.

Antonio DiBenedetto said that consistency is not only a key aspect of success in running a restaurant, but one of the main reasons for a house’s success. He’s been the owner of Amedeo’s Restaurant in Holyoke for 11 years, but the business has been in the family for almost 30 years.
“It can be tough out there,” he noted, “but I think that places are closing down because there’s a lack of complete attention. You have to keep an eye on everything going on around you, every aspect of the business, not just food. It’s not one thing, it’s a million things, and consistency is a big one. The same person has made the sauces here for years. There’s no book for recipes; our food has been the same for decades.”
He joked that no one makes meatballs like his mother — “but every Italian cook will tell you that!” — and that his restaurant has weekly specials to offer some variety beyond what people might find locally. “Whatever looks good, or whatever’s in season,” he said — “osso buco, veal chops. One of my favorites is chicken carbonara, since I was a kid and my mom would make it. I try to duplicate it, but of course it’s not as good as hers.”

New World Order
The Farm Table restaurant is the newest business venture from the Kittredge family, owners of Kringle Candle. It’s housed in one of the oldest structures in Bernardston, across from the candle company’s retail flagship, and after a meticulous renovation both historic and green, it opened for lunch and dinner this past October.
Rubén Eduardo is the general manager of the restaurant, and he said that opening a restaurant in what many acknowledge to be a still-sluggish economy offered nothing but uncertainty. “We all know that the national economy was in a pretty low gear,” he added, “so we had no clear idea what would be the response when we opened.”
But what followed exceeded even their highest expectations. “I thought that we would hit about 30 reservations during the nighttime and about the same at lunch, and to my surprise, especially in this economy, it has been quite the opposite direction. Day one, for example, when we were open for lunch, we were expecting 30 or 40 people to join us. We had more than 200. So then we said, ‘OK, maybe that’s more like friends and family.’ But that trend didn’t go down.”
Early on, he realized that his reservation operation needed to be re-evaluated. With one person acting as host and fielding calls for reservations, it wasn’t enough for peak performance, especially for a day with reservations into the triple digits: one Tuesday alone fielded 400 calls for dinner.
Currently more than 60% of his clientele are repeat diners, and some of them are traveling from as far as Connecticut. He said people respond to the restaurant’s mission. “Western Mass. is blessed with amazing products and craftsmanship. In terms of our philosophy, the idea is that the food is, whenever possible, organic and sustainable. And priority is given to local farms. That is reflected in the building as well.”
The ceilings and floors are made from salvaged barn boards, all the stone work comes from within a 50-mile radius, and most of the furniture is made in Vermont. “Even our napkins are made in Hadley,” Eduardo added.
These are the details that make a difference, he said, for the customers and the staff — whom he credits for contributing to a memorable experience. “When our team is serving, they’re proud that these foods are local,” he continued. “These are the things that make a difference in the culture of a restaurant. I think that the enthusiasm from the public comes from the enthusiasm of a restaurant’s team.”
At the new Mama Iguana’s, Collins said a similar level of attention to each restaurant’s physical space has always been a key ingredient to the Spoleto Group’s success. “But the tough part about the economy now is that Claudio and I have had to change how we run the businesses,” he said. “It used to be easy to put up a great atmosphere with great food and service, and you’ve got yourself a busy restaurant that’s making money. It’s now more of a scientific business for us.”
The seven restaurants they oversee are Spoleto’s in Northampton and East Longmeadow; Spoleto Express, Pizzeria Paradiso, Paradise City Tavern, and Mama Iguana’s, all in Northampton; and the newest Mama Iguana’s in Springfield. Collins said this new economy has turned the pair into better businesspeople than they were before.
“We’ve been forced by the times and the economy to do that, and what Claudio and I are finding is that it’s the most exciting thing we’ve ever done,” he said. “We have taken an approach during this downturn to make all our concepts as affordable as possible. We’d rather set a stage where guests could come out two, three times a week and have an affordable, great meal, rather than having them come in once for $150 and not see them again for a couple weeks. Because what do people need at this time more than ever? A release — a place to come for a cocktail and some good food.”
After an entire life spent in the restaurant industry, Guerro agreed, adding that “this is a new world we’re living in. A couple years ago, we were asking, ‘how do we survive this storm?’ Now, it’s more like this is the new reality, and how do we make money in that reality?”
“We’ve been working a tremendous amount on the nuts and bolts of our operation, and streamlining the systems,” Collins said. “With these transitions, when the economy comes back, we’re ready for takeoff.”

Your Serve
Over at Samuel’s, Campiti agreed that the industry she has worked in all her life has been altered. “To me, I don’t look at this as a recession any longer,” she explained. “Now, it’s a change in the way of life.”
But, there’s one thing that doesn’t change, she said — a focus on customers, an idea which everyone who spoke with BusinessWest agreed.
“A customer walks through your door prepared to have a good experience, and they are pleasantly surprised to have a great experience,” Campiti said. “That’s what keeps us all here.”

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