Going slower and investing time, effort, and money in staff makes running restaurants more sustainable.
By David Nayfeld as told to Chris Mohney
Zagat Stories presents Restaurants 21/22, a collection of interviews with leading voices in dining, hospitality, food, tech, politics and more. Each story takes the turning of the calendar as an inflection point to consider what happened in 2021, or what’s likely to happen in 2022, in the world of restaurants and food. See all stories here. And feel free to check out last year’s collection as well.
David Nayfeld is chef and co-owner at Che Fico and Che Fico Alimentari in San Francisco. Previously, he worked at Nobu, Cru, and Eleven Madison Park in New York, Joël Robuchon in Las Vegas, and Aqua in San Francisco.
Finding staffing for restaurants in San Francisco has always been a challenge. Over the past six years, it’s become this place where it was very challenging for people in the restaurant industry—especially cooks—to work. Restaurants were opening at a clip that was unsustainable in terms of the labor market.
Now that’s been massively exacerbated by the fact that a lot of people have either left the industry altogether, left San Francisco altogether, left the Bay Area altogether, or left California altogether. Not to mention that you had people who were genuinely just afraid and who did not want to go back to serving people right now. And some people went back to school, some took other careers. And the gig economy obviously is something that we’ve always competed with.
I believe there are two main philosophies when it comes to hiring for restaurants. The first is to hire warm bodies and get your business open as soon as possible. The second is don’t open until you have the right people.
When we first opened Che Fico in 2018, we were young restaurateurs, and it was imperative for us to get open within a certain amount of time to save money, to do right by our investors, to meet the market demand. That clouded our judgment at the time. It probably took us 16 to 18 months to identify all of the members of our team that were not good culture fits and cycle those people through. That meant trying to train them to be good fits, or to take corrective action, in which case either they would leave or have to be terminated if they continued to prove that they weren’t good fits.
So by the time the pandemic arrived, we would look around, and there wouldn’t be a single person that we felt did not match our ethos of what we were trying to provide for our guests, what we were trying to provide for ourselves, and what we were trying to provide for the community. Everybody had bought in. The energy was great. The mood was great. People’s vibes were great. There wasn’t a negative aura around.
The restaurant was humming. It was financially very successful. But there were still some elements within our structure that we felt didn’t match up with our ethos. A lot of that had to do with compensation models. It’s something that once the train is moving at a thousand miles an hour, it’s hard to stop and fix.
Then the pandemic happened. We decided to use that time as wisely as possible and restructure some of the factors of our business model that we felt did not line up with our ethos. There was compensation, and also how we treated ourselves in this equation of guest, investor, purveyor, and community. You often leave yourself and your team out of that equation when you think about the hierarchy of needs.
We came up with a compensation model that we felt was much more equitable to everyone in the building, whether you’re a dishwasher, a prep cook, a host, a server, or a bartender, and then ultimately the managers and owners. This came through a lot of very careful consideration and recognizing that, in a lot of ways, the consumer needed to share in some of this responsibility. Labor costs were skyrocketing, occupancy costs were skyrocketing, and food costs were skyrocketing. It is untenable to believe that this cost can be offset by either the owner taking a haircut, or the staff working for less money.
Here in San Francisco and the Greater Bay Area, the average office worker makes $177,000 a year. The average retail worker makes $42,000 a year. So when I talk about passing on more cost to the consumer, I’m not talking about doing business in Oklahoma City or Clark County, Nevada. What I’m talking about is the largest separation of wealth between entry level into tech, versus entry level into retail. When I say that the consumer can afford more, I’m saying that from a place of statistical data. Those consumers have moved here, and they’ve inflated the cost of living. Housing has been scarce, and the people who grew up here or who work in retail can’t afford to live here to service those other people.
In the long run, this is a partnership. This is not about blaming these people. It’s not that at all. But if we can’t afford to exist here, then we can’t service them. And I think the same thing can be argued for a number of other places throughout the country, whether it’s LA, Seattle, or New York.
We’ve created a profit-sharing model for staff. Anything past a target profit margin, we’re going to split 50/50 with our staff in a quarterly distribution for anyone that’s been with us for longer than a year. A number of our staff pay zero out-of-pocket costs for almost 90 percent of their everyday medical needs, including mental health care, dental visits, chiropractic, and physical therapy. We’ve had employees who have suffered from substance abuse issues, and we’ve helped them get them back on the right track and kept them as a part of our team. We’re providing financial literacy courses where we have our bankers come in and speak to our team. All of our team is a part of P&L meetings, so they understand the business.
We’ve also made sure that the team—including management—is not working unsustainable hours. It used to be that hourly workers did whatever hours plus some overtime, and then management got killed with 80 hours a week. We’re just not doing that anymore. Our management is working more sustainable hours, and have paid time off, and two days off in a row. Also, the base pay for all the managers has gone up significantly.
We all agreed that the consumer has to play their role here, and that means we need to provide something of very high value that they derive a great amount of pleasure from. But more than anything, that relationship needs to be a little bit more stable. In a lot of ways, frankly, it has been an abusive relationship between the consumer and the restaurant.
We’ve been in a situation where we’re constantly trying to appease anything they want, any whim they have. That puts us in a toxic environment—not actually thriving in our own right. And that leads to a lot of people either leaving the industry altogether, or burning out, or employing abusive tactics to survive—because, you know, it’s cyclical—or substance abuse, or mental health issues.
We decided it was not worth getting back into that cycle just to get Che Fico open without living sustainable lives.
We do business right now in San Francisco and the Bay Area. This is the center of progressive lifestyles and progressive values. For example, we are constantly talking about sourcing. A lot of times we forget our biggest resource, which is our human capital. In restaurants, it’s all about the humans. If we can’t figure out how to treat ourselves, as well as our teammates, with a level of sustainability and care, then everything we’re doing is bullshit.
During this process, we were incredibly selective in the team members that we would hire. We had a great core that stuck with us through the entire pandemic or came back post-pandemic. We really hire for human skills first—emotional intelligence, self-awareness, empathy, the ability to understand your surroundings.
I’ve even hired two or three people who have never worked in a kitchen in their lives because I liked their personality and self-awareness and soft skills—more than someone that came to us with a resume of three years of experience, but did not have those same soft skills. I can teach anyone how to cut. I can teach anyone how to sharpen their knives. I can teach anyone how to cook. What I can’t teach you is how to be emotionally intelligent and know that you work within a team that’s more than just the sum of its parts.
So we’re getting open slower. I’m not going to lie—the labor market is fucking abysmal. And the supply chain is also its own huge challenge. That’s why I spend every day fighting for the federal government to refill the Restaurant Revitalization Fund. Every morning I’m on the phone with senators and congressmen trying to get that refilled for restaurants all over the country. But you need to separate that from the fact that we’ve decided that we don’t want to partake in the same culture that precipitated this exodus from our industry.
There’s a show that I’m addicted to right now called Yellowstone. There’s this musician who I really love named Ryan Bingham. He’s a country-folk music singer. He plays a cowboy on the show, and he’s got to work with this other guy who is doing everything to break his spirit. And there’s one line he says in the show that was like, “You’ve loved something all your life, and all it takes is one person to ruin it for you.”
That’s how simple it is to ruin a passion for someone. They work for one chef who treats them like shit, and all of a sudden this thing that they thought they loved, they fucking hate. That relationship goes upwards, too. When you’re managing someone who is just intent on being an asshole every day, that ruins your desire to coach, to teach, to come in, to do the whole thing.
But now when I walk in, I don’t feel a shred of anxiety. And I would say that my team also doesn’t feel that anxiety because they know they’re not going to get screamed at. They’re going to get coached. And yes, there’s going to be constant gentle pressure in the sense that things will not fall by the wayside. We will start over from square one. We will redo dishes before they go out to the dining room. We will go through all of those things. But what we won’t do is compromise our own integrity in the process of coaching someone else to get them to where they need to be.
Ultimately it’s a more expensive, more time-consuming way of doing this. But I enjoy myself in that restaurant space more now than I ever have in my life. I enjoy the people I work with immensely. They enjoy their jobs. We have less turnover and less churn, which in the long run leads to more profitability. And I think that is the key element that we all need to be aware of.
If you have someone that sticks with you for a long time, that matriculates to management, and potentially matriculates to partnership … We have multiple line-level employees who are now managers running our restaurants. We’ve turned our chef de cuisine and general manager into partners in the past year.
The one thing that I say to everyone that works with me, including dishwashers and porters, is that if you stick with me, there is no reason why you can’t become a partner in a restaurant one day. I don’t care what your position is. I don’t care if you don’t speak English. I don’t care if you’re newly naturalized. I don’t care about your gender. I don’t care about your ethnicity or your background. I think that is the real business plan, because there are only so many projects that I truly can manage. There are only so many projects that I have the desire to put my creative life force into, but I do want to create opportunities for other people that I work with.
I also want—and this is something that most people don’t admit—I want to create wealth for myself. My parents came here as refugees with nothing in their pockets. They built small businesses and gave me and my brother the opportunity to do things that we love, rather than things that we had to do just out of practicality. We have that immigrant mentality that we want to create wealth for our families. We want to send our kids to college without debt. We want to be able to help them with a down payment on a house. We want to have money for our own retirement.
All of those things happen from longevity and the ability to build and scale your business. I think the only way to do that is to take seeds, sprout them, water them, nurture them, give them sun, protect them from predators, and grow them into plants that bear fruit. That happens over time. If you try to squeeze every ounce of life out of someone within the first year they work for you, the chances of you churning them out and burning them out is going to be way higher.
I was raised in restaurants—three-Michelin-star restaurants, restaurants that were named best restaurants in the world. I worked with chefs that were named the best chefs on every list in America. I watched intently how they managed me, and I watched how they managed people around them. And they were fucking brutal. They were brutal because that’s how they were taught. They weren’t brutal because they woke up as shithead little kids who were putting magnifying glasses on animals in the sun. They weren’t fucking psychotic murderers. They were brutal because they were taught a method on how to train people, and that method was brutality.
That’s the way I was taught, and that was something I needed to unlearn. When a challenge or a mistake or a problem gets presented to you, rather than getting upset, or flying off the handle, or responding with sarcasm, or just being a shitty person, you’re responding with patience, with leadership, with creative problem-solving ideas. I think a lot of that had to do with changes in my own life, which meant therapy that I’m in every week, being healthy physically, working out constantly, and doing Brazilian jiu-jitsu, which is one of my biggest hobbies. It’s not feeling like I need to be at the restaurant 24/7. It’s letting people do their jobs.