Caring for your community is just good business

As it was for all restaurateurs, 2020 was a tough year for Ji Hye Kim. She had to shut down her dining room, rework her staff, find new sources of income for her business, and figure out how to keep her workers and customers safe. In many ways, she had to totally rethink the way she ran her business. Luckily, she already had the infrastructure to weather the storm.

Since 2016, Ji Hye has run a Korean restaurant in Ann Arbor, Michigan called Miss Kim. As part of Zingerman’s Community of Businesses, Ji Hye has the monetary, educational, and emotional support to build an ethical and profitable business. Although all the partners have different restaurant management styles, each commits to Zingerman’s Guiding Principles. They not only want to sell quality food, offer great service, and develop healthy profit margins, but they also want to give back to the community and create a great place to work.

Ji Hye is deeply committed to those principles, so she enrolled in the FoodLab Detroit fellowship to learn more. The participants discuss ways to build triple-bottom line businesses, which measure their success in terms of their societal and environmental impact, as well as their financial performance.

To FoodLab’s executive director, Devita Davison, restaurants aren’t just social meeting places; as food providers, restaurants have a direct impact on the physical, emotional, and economic health of their communities. “Do you understand that your zip code is as important, if not more important than, the genetic coding of your DNA?” asked Devita. “Where you live, the environment around you, the schools you go to, if your community is being over-policed or not, the fact that you have access to healthy, fresh food or don’t can dictate your life expectancy.”

Ji Hye does not take this responsibility lightly. Nutrition and sustainability are baked into the very essence of Miss Kim: The restaurant’s mission is to adapt traditional Korean cuisine to the produce grown on Michigan’s farms. Locally sourced produce—which has more complex flavors, offers more nutritional value, and leaves behind a smaller carbon footprint than ingredients that come from the standard supply chain—is sometimes more costly, but Ji Hye said that she gets more bang for her buck. “You can try to buy the most expensive cucumber in the middle of the winter, but it’s still not going to be as tasty as the cheapest local farm cucumber in the summer,” she explained. Because the kitchen regularly rewrites the menu to reflect the changing seasons, Ji Hye never has to worry about overspending on lackluster ingredients. Plus, she often gets deals from her suppliers because she has been working with them for so long.

Although locally sourced produce and sustainable food delivery packaging can be more expensive, environmentally conscious changes to your restaurant are often the more fiscally responsible choices. Whether it is withholding single-use utensils from takeout orders unless customers ask for it, reducing portions, replacing plastic wrap with resealable containers, or turning lemon juiced lemons into citrus stock, removing food and plastic waste from your workflow is a great way to cushion the financial bottom line. One study found that 89% of restaurants that invested in food waste reduction had a net-positive financial return, and the average restaurant saw a 600% return on investment.

A key step in cultivating a vibrant food landscape is making sure that the people who live in it can afford to make healthy choices. Over 46% of waiters and bartenders rely on public benefits such as SNAP, so it’s unlikely that tipped workers can afford to eat at your restaurant. Since she opened her restaurant in 2016, Ji Hye has paid all of her workers the true minimum wage. After multiple customers complained about the no-tip policy, Ji Hye instituted tip pooling, which means that a dishwasher brings home a similar take-home pay to that of a server. “If you haven’t thought about how you bring your team together around pay equity, you’re not preparing for the restaurant business model of the future,” said Devita.

These policies do make it difficult to recruit experienced servers because they are used to a system in which all of their money comes from tips. Although that means Miss Kim has to spend more on training, Ji Hye actually prefers it that way. For one, it’s easier to train someone according to the unique business model of Miss Kim when they aren’t used to the traditional way of doing things. For example, side work typically puts servers at risk of missing a tip, so they are often resistant to doing it. The servers at Miss Kim, on the other hand, are more than willing to do whatever it takes to make each shift run as seamlessly as possible. “If I have a dishwasher call out, and I have a lot of hands in the front, I can ask them to help with the dishes,” said Ji Hye. “The staff has no problem with that because we work as a team and we get paid as a team.”

Hiring newer workers also enables Ji Hye to employ more people of color. She correctly points out, as several studies have, that despite making up a sizable portion of the workforce, people of color are typically relegated to lower-paying, back-of-house positions in fine dining restaurants, if they are hired at all. “If I look for experienced servers, I’d end up keeping the door closed to people of color or young people who have a lot of potential and great character who just never got the chance to put their foot in the door,” Ji Hye explained. In doing this, the restaurant not only fosters a more diverse industry but also makes customers of color feel welcome.

Paying employees a livable wage isn’t the only thing restaurants can do to make sure everyone goes home with a full belly. In the midst of the pandemic, when so many people either lost their jobs or couldn’t keep jobs that would expose them and their families to COVID-19, the industry as a whole stepped up to feed those who were otherwise at risk of going hungry.

In addition to preparing meals for nonprofits in exchange for discounted prices, Miss Kim also received grants from the government to set up an in-house community meal system under which dishes are sold on a sliding scale. “If you’re newly food-insecure, and you feel really weird about going to food banks, then you can order from our website and pick it up,” said Ji Hye. Customers could either get the meal for free, or they could pay a smaller percentage of the cost, which Miss Kim would use to pay for more meals and stretch the funding a bit further. It kept her staff busy (which meant that they didn’t have to deal with irregular schedules) and allowed those in the neighborhood who were struggling to enjoy a quality, dignified meal.

Devita doesn’t just think that these choices are about doing the right thing; she believes that grooming restaurateurs to source their ingredients from Detroit’s farms and gardens, bridge inequities between FOH and BOH workers, sell healthy meals that cater to the community, hire a diverse staff, and give back to the community will help them build restaurants that will weather the changing expectations of consumers. “There is going to be a high demand in the future for business models that create impact,” said Devita. “If you aren’t thinking about a business model that is more than the extraction of money from people for the sake of profit and not giving back to the community, you’re not preparing yourself for the restaurant of tomorrow.”

At this point, the idea that social responsibility and profit aren’t mutually exclusive but inextricably linked isn’t all that unorthodox. Two years ago, 181 CEOs from massive companies such as The Coca-Cola Company and Chipotle signed an open letter that said that companies are beholden to not just their shareholders but all of their stakeholders, including their customers, suppliers, employees, and the communities in which they operate. “I am so glad that Coca-Cola and Major League Baseball are pulling out of Georgia because of the ridiculous border suppression laws,” said Ji Hye. “But I can also take a wild guess that somebody in those corporations did a quick calculation and decided that it’s better for the business to stand up for these causes.”

Of course, it’s not as easy for independent restaurants to take risks and experiment with their business models. “When we try to do these things, it’s such an anomaly within our industry that the odds are stacked against us,” said Ji Hye. “We’re not really playing on an even playing field.” Entrepreneurial restaurateurs are doing it, often to great success, but the money has to come from somewhere. Omar Anani of Saffron De Twah eliminated tip wages and provides his staff with health insurance, PTO, and quarterly bonuses. Owning the building from which his restaurant operates offsets those costs. On the other hand, Erin Wade of Homeroom chose to build a menu with low food costs so that she could offer benefits and high wages to her staff.

Legislation, Ji Hye argues, is the only way to make these choices manageable for the industry. “I think it’s a huge burden to put on a small, independent restaurant,” she said. “What we really need to do is to get help from the government in passing these laws and that would make everything much more doable and feasible for smaller restaurants.” Contrary to arguments that say that putting these changes into law would crush small businesses, restaurants that operate in the seven states that eliminated subminimum wages are actually doing better than they were before One Fair Wage came to town. According to a report by Restaurant Opportunities Center United, restaurant sales increased, employment rates improved, sexual harassment decreased, and restaurant establishment growth as a whole held steady.

Ji Hye believes that once states sign laws that increase labor costs, restaurants are forced to increase their prices to reflect the true value of their food. “When the food is undervalued, then you’re cutting corners somewhere,” said Kim. “I don’t think that’s ultimately sustainable for the industry.” She laments the fact that while many of her customers love her restaurant’s food, service, and business practices, they still think her food is too expensive. Large fast-food franchises that artificially suppress their prices, she argues, make it difficult for us to see the true cost of a meal.

At $24.99, the Korean Fried Chicken at Miss Kim seems outlandishly expensive to some customers when they can get a meal at KFC for over half the price, even if it is made with better-quality chicken (Miss Kim now orders from local, Halal-certified sources so as to ensure that quality) and served by people who are being paid a living wage. “I think the appreciation for good food and the value of the food is skewed in the United States,” said Ji Hye. When restaurateurs are forced to meet the low bar that fast food corporations set, customers learn to undervalue the food they eat.

You don’t have to radicalize your business model in one fell swoop in order to raise the bar. If you don’t have the funds to institute such large pay increases, you can start small by allowing people who stay with you over a year to accumulate paid time off. If you want to help feed the families in your neighborhood who are struggling to put dinner on the table, donate leftover food that would otherwise go to the landfill. Ji Hye believes that the best thing that independent restaurateurs can do for their business and their community is to consider more facets than just the financial bottom line when making business decisions. “Oftentimes, small business owners are very generous and are making that kind of decision,” said Ji Hye. “They’re just doing it on the fly and not making it into a system.”

More often than not, change happens from the bottom up. You are not powerless to the influences of your industry. When you show consumers what a restaurant can achieve by just giving a server a few extra bucks an hour, they will take notice. When consumers choose independent restaurants with great ethics over the major players with questionable ones, those players will take notice. When those major players change their ways, policymakers take notice. Both Ji Hye and Devita noted how much the industry has evolved since 2020. “Chefs from all over the country came together in a united front with one voice to do one thing, and that’s to save the industry,” said Devita. “If we can do that, imagine what we can do together.”

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