Jim Gaines

USA TODAY NETWORK - Tennessee

A Knoxville barbecue restaurant finds that paying more makes for better, more loyal employees – and its pay to kitchen staff meets or exceeds the “living wage” calculated for this area.

Eight years, ago, owners Robert Nutt and George Ewart opened Dead End BBQ as a neighborhood restaurant – not just a destination for customers, but for long-term employment, General Manager Neal Kelly said. From the start, Dead End paid higher-than-average kitchen wages, aiming to attract and keep experienced workers, he said.

"There's always been a level of wage pressure if you want to get the best people,” Kelly said.

More than four years ago the Sutherland Avenue restaurant added a monthly bonus for kitchen and prep staff, smoke room and dishroom employees – about 20 people.

It’s available to any hourly worker in those departments after three months, based on a “very simple list of criteria,” Kelly said. Essentially, everyone eligible makes the bonus, which adds an average $5,000 per month to total wage costs, he said.

"We think during busy months, it's the equivalent of an extra week's pay every month,” Kelly said. In slower months, it comes to about 60 percent of an extra week’s pay.

The result has been a more motivated staff and negligible turnover, making it well worthwhile, he said.

"They show up to work and they do a great job. Then they come back and do it again the next day,” Kelly said. "If I had my own consulting business, it's probably the first thing I'd recommend.

"It works for us. It has been a long-term (plan), and it will continue to be, part of our models.”

High pay and bonuses don’t apply to everyone at Dead End. Servers still make $2.13 per hour, the legal minimum. But the restaurant has never required servers to share their tips with other employees, Kelly said. Judging by tips left on credit card slips, servers are averaging more than 18 percent of their sales in tips, he said.

Most “front of house” people – servers, primarily – are part-time employees while most kitchen staff are full-time, Kelly said. Altogether the company has about 60 full- and part-time employees, including catering staff.

Some turnover is eventually inevitable, as people’s lives change, Kelly said. Thus, he’s still seeking one or two more “superstar” people.

To fill those jobs, Dead End is explicitly advertising a living wage for kitchen staff, and no tip-sharing for servers.

Greg Adkins, CEO of the Tennessee Hospitality & Tourism Association, said he hasn’t seen many restaurants advertise specifically that they pay an area’s living wage, but that in urban and suburban markets pay is usually well above minimum already.

New restaurant concepts and the growth of smaller, “boutique” restaurants are adding competition to an industry already under financial pressure, he said.

“We’re seeing a lot of shifts in the restaurant industry,” Adkins said. “Costs and labor are very high for us. Food costs, labor costs, operating costs. Rent is very high for us.”

Campaigns exist nationwide to require at least those employers who receive government funding to pay a higher basic wage – an amount varying with local cost of living, but around $15 per hour as a rule of thumb. The idea has gathered steam in the 21st century as the federal minimum wage – since 2009, $7.25 per hour for non-tipped employees – lagged behind economic growth.

A tightening job market and proliferation of restaurants is driving up pay anyway, without the “artificially inflated” wages mandated in some cities, Adkins said.

“The free market system is working, it’s doing its job,” he said. “The good thing about Tennessee is that we see that work.”

Several methods exist for calculating a local living wage. One designed by urban planning professor Amy Glasmeier at MIT says $9.84 per hour will support one adult in Knox County, or $20.12 for an adult with one child. The federal minimum wage for non-tipped workers is $7.25.

A living-wage annual income here would be $20,477 before taxes for one adult, or $41,849 for one adult and one child. Typical annual pay here for “Food preparation & serving-related” jobs is $18,540, according to Glasmeier.

The Universal Living Wage campaign, an initiative of nonprofit House of the Homeless Inc., uses a different formula to say living wage in metro Knoxville is $12.87, based on a HUD calculation of rent on a one-bedroom apartment and the rule of thumb that rent should consume no more than 30 percent of gross income.

Line shift leader James Mundal started work at Dead End before the bonus program began. The varying monthly amounts made him more attentive to the business’ profitability; it amounts to about 20 percent profit-sharing, he said.

Bonuses that fluctuate with profits make kitchen staff less likely to waste food, or give extra to a coworker, Mundal said.

"It does help the food cost. I've seen that definitely happen,” he said.

Mundal worked in other Knoxville area restaurants for about 20 years, mostly in places more upscale than Dead End Barbecue, he said. From his experience and contacts, he knows of no other area restaurant doing something similar. Mundal suspects Dead End’s owners are willing to be more generous, at least in part, because they have other careers; unlike many restaurateurs, they’re not dependent on restaurant profits for their livelihood, he said.

For the foreseeable future, Mundal said, he plans to stay at Dead End; the pay and bonuses are a big part of that.

“It keeps employees loyal. They stick around. They do that little bit extra to see profits increase,” he said.

Using the MIT calculation, the base pay for Dead End kitchen staff is 20 percent above the living wage for a single person, Kelly said. Bonuses are smaller in slow months, but during the summer they bring pay above the $15 per hour “hot number.”

"My average hourly kitchen wage here is $12 an hour," he said. The MIT-calculated living wage for two working adults with two children is $13.25, easily exceeded by the bonus program.

In 2013 Dead End opened a location in Maryville, offering the same pay plan. But sales there couldn’t support the restaurant, so it closed at the end of 2016, Kelly said.