Interview With Saru Jayaraman: Masters in Business (Audio)

And this began after nine eleven when a number of family members of workers who were at Windows in the world UH perished in the terrorist attack, and that led her down a path of exploring all sorts of things related to the restaurant industry. She has been working with restaurateurs such as Danny Meyer, helping to create a fairer

workplace for employees UH. And she's really very much influenced the latest movement in dining out, which is the end of tipping, replacing tipping with a flat salary and building UH the cost of service into the meal as opposed to leaving it an option for for diners. And some people say they really like this. There are a lot of folks who don't like the pressure of tipping. Don't like feeling like they're obligated to overtip or to what have you. They want to pay for a service and

and know exactly what it's gonna cost beforehand. She has been one of the thinkers at the forefront of this movement, and a number of restaurants have adopted this idea as a way to just let people know exactly what their meal is going to cost. UH. The conversation range far and wide. I think it's really a fascinating subject, and I think you'll enjoy hearing more so. Without any further ado, my conversation with saru Jaya Raman. This is Master's in

Business with Barry Ridholts on Bloomberg Radio. My special guest today is saru Ja Rahman. She is the co director of the Restaurant Opportunity Center and the director of the Food Labor Research Center at u C. Berkeley. She's also the creator of a delightful app, The Diner's Guide to Ethical Eating. A little background on Saru. She went to undergraduate u C. L A, where she studied policy and

international development. Studies that took her to Harvard and the John F. Kennedy School of Government, where She graduated with a master's in public policy before going to Yale Law School. Her specialty these days is restaurant labor employment. SARU, Welcome to Bloomberg. Great, great to be here. So let's talk a little bit about your backgrounds. Following nine eleven, the

World Trade Center is destroyed. Most of the employees at Windows on the World, which were on the top floor, essentially everybody who made it to work that morning perished in the uh in the terrorist attack. How did that evolve into advocacy for restaurant workers. Yeah, so on that morning, seventy three workers actually died at Windows on the World, and about workers lost their jobs, and about thirteen thousand restaurant workers lost their jobs in the months and weeks

that followed the tragedy. And so I worked with one of the former waiters that Windows on the World, a guy named Fak mom Do, and we started the organization initially as a relief center to help all of these thousands of restaurant workers in New York get back on their feet, especially the Windows workers. But um, because this isn't one of the largest and fastest growing industries, and because actually there is no union in this industry, there's

very little support for these workers. The minute we opened our doors, we started getting cries for help from workers all over the city and then all over the country, and then employers and consumers, and it just kept growing. So I waited my way through college and grad school. I attended barn did shore chefs, and and knowing that that wasn't my career, I kind of shrugged and said laughed at what a horrific industry it is. But really

there are some horror stories in the restaurant industry. Did you you worked as a as a waitress in school? I actually didn't. You know, that's kind of one of the incredible discoveries. Actually doing research for the book, you know, I went back and traced my family's origins in the restaurant industry, and you know, my family actually were owners of a restaurant, worked in restaurant. Grandfather great grandfather in South India owned a restaurant for decades and decades and

decades and employed lots and lots of people. Um, but I never worked in a restaurant until we actually opened our own restaurants through Rock, so learned a lot from the workers. The minute after nine eleven was thrown together with these workers and really tried to do something to change this, and it's a really tough business. The status of all new restaurants closed within two years. So the question is, what can you do to make restaurants given how terrible a tract record, they tend to have a

better place to to work. Well. The truth is that, yes, it is true that lots of new restaurants failed, but the numbers show that actually the number of new restaurants that succeed and stay open um far exceeds that. Because it is still the second largest and absolute fastest growing sector of the U. S economy, in the largest sector of the US economy. That's amazing. It's amazing. It's eleven million workers. One in twelve Americans works in this industry.

One and two of us have worked in this industry in our lifetime. So it's not like it's an industry that's going anywhere or is tiny or small. And there are plenty of restaurants, many of whom I profile in the book, that have shown that you actually can treat your workers well, pay them well, and stay in business for a really long time. Let's talk a little bit though about the app you created the Diners Guide to

Ethical Eating tell us about that. So for years people would say, well, we know that things are so bad, where can we eat? What can we do? How can we support? And so we started actually doing research and doing research on the hundred and fifty most popular chains in America and every year giving them ratings on issues of wages and benefits and promotions, and then also rating restaurants that we're trying to work with us to do better.

And so now the app includes ratings of the hund fifty most popular restaurants in America, mostly chains, and also a hundred and fifty other restaurants that are doing it right, and we give awards to restaurants that provide good wages and good working conditions. So it uses a geolocator to see where you are and tells you how the restaurants around you are faring on these issues. Now, there aren't enough restaurants in America that are getting awards for you

to only eat in those restaurants. So the app was never meant to tell you eat here, don't eat here. Rather, it's a tool for you to be able to communicate your values wherever you do end up eating out is this significantly downloaded or a lot of people using Yeah. Actually, when we first put it out, Mark Bittman wrote about it in the New York Times, you know, great food writer, and several hundred thousand people downloaded it in the first day when he wrote about it. And it's because people,

i think, really want to know. How is this restaurant treating its workers? Do they offer paid sick days? Which, by the way, these workers don't have a single paid sick day. So most that was the most I'm sorry to interrupt, that was the most We're going to get to that. That was the most horrifying stat in the book. Most of us just close our eyes and don't want to know. But some of these stats, if you want to stay healthy, you have to know. And it's just

it's just terrible. So in the last minute we have in the segment you talk about the other n r A, let's discuss that. So it's not the National Rifle. This is the National Restaurant Association. Yes, what's your relationship with them? And how helpful or how much of an impediment are they too improving labor conditions? Well, they really don't like us.

They've been they represent the Fortune five hundred chains, the Olive gardens, and the Taco Bells and McDonald's, and they've been lobbying to keep wages as low as two dollars and thirteen cents an hour for decades and decades. In fact, that is the current federal minimum wage for tipped workers. And in doing research for this book, find come to find that their power doesn't make date back twenty or

thirty years. It date back a hundred and fifty years to the emancipation of this is tipped at McDonald's or Taco Bell. Nobody's tipped at McDonald's or Taco Bell. But they've managed to keep the wage even for those workers as low as seven dollars and which is the national minimum wage, which is really way behind inflation. If it had gone up with in place, you would be at eighteen dollars. That's amazing. I'm Barry rid Halts. You're listening

to Masters in Business on Bloomberg Radio. My special guests this week is sarru Ja Rahman, and we're talking about the strong industry. Uh And one of the subjects that came up was an op ed that you had written in The New York Times, sort of misleadingly headlined why tipping is wrong. So, so let's jump right into this, what's the problem with tipping. It's actually not the problem with tipping. It's the fact that this industry, the restaurant industry, has used tipping as a way to not pay their

own workers. So turns out tipping didn't originate in the States. That originated in the feudal homes of Europe. And when it came to the States, there was actually a massive anti tipping movement, so strong that six states past bands on tipping. Really, that's fascinating. Now that's kind of changed in Europe seems to be going away. It was gone.

I mean, that was the turn of the nineteenth century, and that movement that started in the States spread to Europe and succeeded in Europe, which is why there's no tipping in Europe or very little here in the States. The restaurant industry actually squashed that movement and demanded the right to hire newly freed slaves this is right around the time of emancipation and not pay the many thing

and let them live on customer tips. And that's actually how the very first minimum wage law in the United States, which was part of the new deal in eight said you can get the minimum wage as a tipped worker either through your wages or through tips, which gave tipped workers the right to a zero dollar minimum wage. And we've gone from a zero dollar minimum wage in ninety eight to a whopping two dollars and thirteen cents an hour, which is the current federal minimum wage for workers who

earned tips. And over that one hundred year period, the Restaurant Association has said, it's okay, we don't need to pay these workers and make a ton of money and tips. We don't have to actually give them a wage. They describe a white guy working at a fancy, fine dining stagehouse, when in fact, so many of these workers are women who work at Eyehop and Applebee's and suffer from three times the poverty rate of the rest of the U S workforce, make very little money and tips, and suffer

from the worst sexual harassment of any industry. You can detail some in the book. So let me push back. Let me take the other side of the argument. Look, we open a restaurant, we don't know how well it's gonna do. We hire a bunch of people, hopefully they're pretty good. If the restaurant takes a while to be discovered, Well, we don't have a huge overhead in labor. We're all

kind of suffering. We're running out of deficit. The first few months, the restaurant picks up an audience, it gets popular, and suddenly everybody's making money. What's wrong with that model? Well, the thing is that that's the traditional model, the old model, And that's why the book is called Forked, because there actually is another way of doing things. California and six other states actually require that this industry pay a full minimum wage to their workers and let tips be on

top of that. And there's a full minimum wage. So you're a waitress at an eye hop in California and you're making seven, well, actually making nine, which is the California state minimum wage plus tips. And California actually has the largest and fastest scoring restaurant industry in the country. L A has a larger restaurant industry than New York City, Believe it or not. They have higher restaurant sales per capita, higher job growth in the restaurant industry, higher job growth

among servers, even higher rates of tip ping. We tip better on the West Coast than in New York or the forty three states with lower wages for tipped workers. So the opposite can actually be said to be true that if you have a standard that's set for a whole state or hopefully the whole country, that requires every restaurant, like every other industry, to pay the full minimum wage, you will follow that business model and make it work.

So we've been watching forecasts of Seattle restaurant industry imploading and actually what's happened when Seattle raised their minimum wage, which I think is on the way to fifteen, it's now about eleven um. Their restaurant industry is well, but you know, I think people get it backwards. The region is doing really well so they can support more restaurants. But there's no other way to describe it. The number of new openings and new priman application that's just trending

straight upwards in Seattle. They don't care about eleven that's frankly, it's trending upwards everywhere. This is an industry that's growing astronomically everywhere. We just made world history last year, becoming the first nation on Earth in which we're now spending more money on eating out than we do in the home. Money on eating food in the home. That's the sign of a wealthy nation with a lot of disposable well, not just that, it's a sign of a nation that

even when we're unemployed, we just keep eating out. That's that's amazing. So let's talk about what the system should look like. Ideally, what do you replace the two dollar minimum wage with? What does everybody in what should everybody in a restaurant make? And what should we do about tipping?

So what we're looking at right now are policies that are moving in lots of states around the country and in Congress called one Fair wage, getting rid of this two tiered wage system, having everybody follow California and the seven states that have done this and just let this industry, like every other industry, pay the full minimum wage. Let tips be what they're meant to be, which is a bonus or a gratuity on top of a wage. It's not the way wage itself. Yeah, that makes a lot

of sense. Um, So will this if we were to get rid of tipping or increase the minimum wage for for wait staff, that will that raise the cost of of going out to eat? No? I live in California, and I gotta say I spend way more on eating out here in New York City or in d C, where the wages two dollars and seventy seven cents an hour than when I eat at home in California. In a real estate though, isn't it? You're in a much

higher real estate expense. And I think the cost of labor and restaurants is really a small and the cost of food. It's the real estate and then well the equipment that everything else. Food prices have risen astronomically over the last many years, much faster than wages, way faster than wages. Last decade, milk over six, meat quadruple exactly,

and find meat just keeps going up exactly. It's funny people always ask about cost of food going up with labor, but you don't ask does cost of food go up with food price increases or rental price increases, which, as you're right, are much bigger part of a business than labor. And the labor that that's really interesting. And what about the smaller mom and pop stores, can they support a higher minimum wave? They are actually the ones that are

thriving in California they're thriving. Yeah, and I and even the chains, I mean, across the board, everybody's doing better if you look at job growth in these seven states, in the forty three states. But maybe the best evidence of this is the hundred and seventy five restaurants that have worked with US to form an alternative national restaurant

association called Raise. And they range from chains all the way down to small mom and pop restaurants around the country that actually provide livable, even what they call thrivable wages, benefits, advancement opportunities. And they're doing well, not in spite of treating their workers will and paying them well, but actually because they're treating their workers well. They find less turnover, higher profitability, higher profit productivity. The workers are happy, the

customers are happy, and they've they're thriving as businesses. We watched Walmart fight an increase in minimum wage for many years and then ran into a problem of being unable to find workers, and then read pining them. They did. They did two minimum wage raises a dollar last year, and they're up to ten dollars now, and they're already showing stigns of a reduced turnover and when you employ two million people, turnover is a big deal. It's a

big deal in our industry. To our industry has the highest rates of turnover of any industry the United States, and our research shows you can cut your turnover almost in half by treating your workers well and paying paying them well. I'm Barry rid Helts. You're listening to Masters in Business on Bloomberg Radio. My special guest this week is Saru J. Rahman. She is the co director of the Restaurant Opportunity Center and director of the Food Labor

Research Center at You See Berkeley. She's also the author of Forked, a New Standard for American Dining. And we've been discussing the minimum wage and the impact of that on the restaurant industry. So let's go back to the history of this which you referenced earlier. Why is it that restaurants can get away with pay so little because they originally the original tipped workers in this country were actually former slaves, both restaurant workers and pullman train car borders.

They were. I actually didn't either until we did research for the book, and um, this industry, the restaurant industry made the argument that they wouldn't be able to survive if they actually had to pay these workers a wage, so they basically hired newly freed slaves demanded the right to pay them nothing. That idea was codified into the very first minium wage lat Past in nineteen thirty eight, which gave tipped workers the right to a zero dollar

minum wage. These were mostly black workers, former slaves, and we've gone from that zero dollar wage to a two dollar and thirteen cents wage today. Let's for a century, right, But stop and think about if you're arguing as a free market person who doesn't want government regulation, how can you say our business model depends on free labor? Exactly,

very very little. I mean honestly, that was the argument of the cotton industry, right, that they their whole business model and the economy dependent on free labor, and form still making the same argument today. It really brings, you know, bears question of is this sustainable business model? So so I mentioned some of the stats were really horrifying in the book. Seven of the ten lowest paying jobs and the two absolute lowest paying jobs in America are in restaurants.

That's right, And when you combine that with knowing this is the largest and fastest growing industry in America. What you end up with is essentially this industry proliferating the lowage economy, the low age floor of the entire economy, and bringing down the floor for the entire nation. UM, and it's going to be these are the jobs that

are going to be available for our children. I teach at UC Berkeley, I would say a good third to a half of my students work in the industry, and many stay in the industry after college now with a UC Berkeley degree, because these are the jobs that are available. That UM is not encouraging if how are you going to pay student loans on It's hard to pay student loans on these wages. But I will say the way

we look at these jobs also is not right. You know, it should be okay for UC Berkeley graduate to go into this industry because these are skilled professions. These are very skilled professions, and in other countries like Europe. In Europe, these are scene Hospitality is a profession. You go to school to be a hospitality professional. It's something seen as very uh you know, skilled. The issue here is not

that these aren't good professions. The issues that they're not valued as professions, both in terms of pay and benefits. In terms of even this whole idea that these workers should rely on the largesse of customers, it detracts from the professionalism of this industry. So on my most recent vacation, I read the non academic version of your book, which is Kitchen Confidential by Anthony Bourdain's and it's hilarious and

ribald and just you know, also rather are rated. But it tells essentially the almost the same exact story you tell from an academic perspective, of how horrific a lot of the quality is of handling food, how high the turnover is in restaurants, how waitresses are constantly sexually harassed both by forget the employees, but by management, and so the question is what makes this industry such a frat house?

That's why is this this? I mean, in our opinion, all of our research shows that the real root of the problem is this two tiered wage system. Because se of tipped workers who live on that lower wage of two dollars and thirteen cents, or here in New York State it's seven dollars, whatever it is in the state, they rely completely on their tips. Those workers are women and their women who work at ihop and Applebee's and

basically pay their families on customer tips. And our research shows that having to rely on tips for your income not only makes you vulnerable to all kinds of gross and appropriate behavior from customers, but we also find that management actually encourages these workers to dress sexy where tighter clothes, which show more cleavage, so that they can make more money and tips. And when you're forced to subject yourself to objectification, that makes you vulnerable to coworker and management.

And we're not talking about restaurant chains like Hooters or restaurants people. We're talking about family restaurants like Denny's and eye hops and everything. I took my two little girls to the Chili's. They're three and five years old. It's a family restaurant, Chilis, And the uniform was all the servers are women, yes, And the uniform was a tight T shirt that said fresh across the breasts, a very

tight T shirt. And you have to ask yourself, what are we selling, because you know it is the chilies on the olive gardens. But on the other hand, there's a whole new segment of this industry called the restaurant, and Hooters is not the only home that's a thing, that's a real segment. That Well, there's two other incredibly fast growing chains in the restaurant segment. It's Hooters, but it's also Tilted Kilt and Twin Peaks, one of the fastest growing chains in America. Yeah, I thought you were

gonna say Wild Wings that does something very similar. So the other two restaurants are Tilted Kilt and Tilted Kilt. Okay, I can't say I heard of that, and Twin Peaks, which you know, you just what are we selling? They're not referring to the television, I got it. That's that's astonishing. My special guest today is Saru J. Rahman, and she is the director at you See Berkeley of the Food Food Labor Research Center and author of Fork to New

Standard for American Dining. And let's jump right into the really disgusting, horrifying parts of your book. This quote just took me back on my heels. The CDC reports that as many as of all neuro virus and that's better known as the stomach flu trace back to sick restaurant workers. Now, that is both horrifying and it raises the obvious question. People are coming into work sick handling food. That's all. Well.

Workers in this industry nationally do not have a single paid sick day, and two thirds report cooking, preparing and serving our food when they're ellen. We have heard so many stories over the years, workers working with typhoid fever, working workers working with hepatitis. I talk a lot about Olive Garden. You know, Olive Garden got an award from Michelle Obama for being you know, great for kids, healthy for kids because they had cares with the breadsticks. Uh,

they serve salad. That's right. Because the same time they got the award from Michelle Obama, a worker in a Fayetteville, North Carolina restaurant was forced to work with hepatitis A. Three thousand people had to get tested by the county southed the restaurant, and one class action. That same year, there were two neurovirus outbreaks in alive gardens in Indiana and Illinois. I mean, it is, it's an epidemic. It is, it is a source of epidemics, and it's a public

health disaster. Now, these restaurants really must not be happy with you when you publicize the stuff. But this is all This isn't stuff you're digging in the stacks that yeah, this is front page, Yeah, public information. CDC also reports a good one in ten workers are currently working with extreme diarrhea and vomiting, not as opposed to regulate exactly on the job jectile exactly healthy in a restaurant and

so no paid. And if they're sick and they don't want to come in, they're told they're fired exactly, and even when the managers know they're ill, exactly. And again, this whole system of forcing these workers to live for the most part off their tips not paying them a wage means that the only way to actually get your wages is to go to work and work for tips, even when you've got hepatitis A. That's unbelievable. All right.

So let's talk a bit about promotions, which is another way you measure different restaurants and how well they treat um, how well they treat their employees, what what typically is the standard practice and what do you think is the preferred or or or standard. There's a myth in this industry that you can start as a dishwasher and own your own restaurant. Will Sixty of the six or seven thousand workers we've surveyed nationally have said they've never received

a raise or a promotion. And all the turnover in this industry isn't actually people going through this industry to something else. It's people moving from restaurant to restaurant to restaurant, just looking for better opportunities to feed their families. Because a lot of these eleven million workers actually take a lot of pride in their work. They really enjoy hospitality, but they want to move up, and they're generally no

opportunities to move on. They don't get a promotion internally, So if you go to another restaurant acrost the stry, maybe you can have a shot at you're applying for essentially a better job than what you have exactly, and a lot of unfortunately, the lack of mobility is very very much due to race and gender. We find that people of color are not able to get into the very best jobs in the industry, which our server and bartending positions and very fine eye restaurants. Women are often

blocked from those positions. We did what's called matchpair audit testing studies where we sent in hundreds of white people and people of color, women and men into very fine dining restaurants in four cities and found that people of color had or white people had twice the chance of a person of color, even when the person of colored a better resume at getting the best job, and that women were often blatantly told we don't hire women here if it's a very mind dining restaurant. Yes, even today,

So I'm naive. And here in Manhattan, you go into a restaurant waiters, bartenders, servers, whatever, except for like the hundred year old steakhouses where the guys who have been working there for fifty years and no one serving food is under sixty. Um, it's pretty well integrated here in New York City, Or am I looking at things from a naive perspective. Unfortunately it's really segregated here in New

York City, believe it or not. Maybe as the average customer, you don't know who's in what position, but most servers in very refine dining restaurants in New York City are white men. I mean just statistically, yeah. And the finest dining, the finer it is. The more you're talking about waiters and captains and bartenders and very fine dining. The more likely it's going to be white men. Women are not allowed to work the very best shifts in these fine

dining restaurants. People of color have a very hard time getting into these jobs just statistically. In fact, there's a medium wage differential of four dollars an hour between white workers and workers of color. So you'll see people of colored on the dining floor, but they'll be bussers and runners. They won't be the server who interacts with you. Now that I think about it, Um, you're probably right, although I'll not mention that some of the funk of your

bars and and pubs and stuff. It's pretty of yes, funk your bars, you tend to make less money and tips then you would at a really fine dining good steakhouses. The people pulling in five right, and those are largely white guys. Um, I will say, there are some who do it really well. So Tom Clickio here in New York what restaurants he owns all the craft the craft restaurants, so Craft Steak, you know, Witchcraft, all these different craft restaurants.

As you might know, he's also the star of top Chef um and he's actually known in this industry for really having people of color in all levels management, servers, bartenders. UM. Another really fabulous example is Andy Shalal who owns bus Boys and Poets and Eatonville, all of this chain of restaurants in Washington, d C. Really great restaurants, casual, fine dining, people of color, women in all positions. So there are some really stand out examples that I provide in the

book UM in terms of racial diversity. Danny Meyer also actually really does it well. He has a lot of people of color on the dining floor. So for those people who are outside of Manhattan, if you don't know Gramercy Tavern or Union Square Cafe, the moderns, shake Shock is now taking over the world and UM in New York. You go to Brian Park, their lines around the block and they seem to be opening up restaurant at a

fast and furious space. Even his fast food chains. Does he maintain that same Oh yeah, shake Shock UM actually pays higher than almost any other There are only a few chains in and out. Burger on the West coast and in Texas is the highest paying chain in the country. Really, uh, and then shake Shock. So let's break this down by restaurants because I have down a couple of really interesting broad restaurant um types, fine dining, Mexican burgers and coffee.

Since we started with burgers, let's talk about burgers. So you mentioned In and Out Burger, right, California staple Um and Shake Shock. To me, these are all fast food burgers, but these are the two amongst the best quality food burgers. You're telling me everything else they do is also that's right. I mean In and Out has provided livable wages. I'm talking fifteen and all really since the beginning. They provide

paid sick days, they provide benefits, opportunities for advancement. They've just done it differently, and they're growing and they're really successful. And come on, nobody could deny that Shake Shack is doing really well fantastic paying workers a livable wage. Um. Five Guys was the other one that I thought was

a good burger. I don't know how they're they're staffing, yeah, I mean, I think it varies in different regions, but we have found several five Guys restaurants that actually want to do the right thing, pay a livable wage, provide paid sick days. They're a little more varied across the country. Now, when we look at the rest of the burger sector, everything from McDonald's to Burger King, to Wendy's to all the other small ones, really not good uh employers. Well,

it's not just that they're not good employers. They're actually the leaders of the National Restaurant Association. So what's important to note about these folks is they don't just follow the minimum wage and pay it. They actually set the minimum wage. They're in Congress lobbying to keep the wage

at seven dollars. That's unbelievable. And if you look at the structure of you go around different stays and you look at who is the highest recipient of medicare medically and aid to depend on children exactly depending on the state, it's either Walmart, although that's changed, or McDonald's. McDonald's workers as a group are a huge subsidized entity to the local franchise. It's actually not just McDonald's, this entire industry.

So we spend seven billion dollars in taxpayer money on fast food chain workers public assistance usage and nine point five billion dollars on full service restaurant workers public assistance usage. I'm talking about Apple, Applebee's and olive garden, and I hoped those workers get we're doubly subsidizing those full service restaurants because they're multibillion dollar companies. On the one hand, we pay their workers wages through our tips because they're

paying two dollars. On the other hand, we're paying for their workers survival through public assistance. So we are doubly subsidizing the eye hops and the Applebe's and olive gardens of the world, and they're turning over incredible profits. I'm always a ended when a profitable public company is subsidized by taxpayers. That really gets gets my goat. Let's talk about a different group of restaurants. Mexican food, except for Chippotle,

pretty much terrible across the board in terms of chains. Yeah, I mean, there are really fabulous independent Mexican restaurants around the country that do it right. Lappa LAPAs one here in the city in the village, fantastic Mexican restaurant, provides paid sick days. Has been an advocate for higher wages for a long time. Um. But among the chains, Chipotle does stand out. I mean, all the other chains are

pretty terrible. UM, and I know Chippotle has been a lot in the news for other things lately, but I will say that they have been really good about asking what can we do better in terms of our workers and then actually doing it. So when people want to find your sort of research and writing, where's the best place for them to look? Go to Forked, the book dot com and on that you can actually see a website where you can see all the restaurants ratings, how

people faring on issues of wages, benefits and promotions. You can also get the book and see the trailers. That's the best place. Thank you, Su for being so generous with your time. We've been speaking with Saru Jairamin. She is the director of Research Opportunity Center at You See Berkeley and author of the book Forked. If you enjoy this conversation, be sure and hang around and listen to our podcast extras where we keep the tape rolling and

continue chatting. Be sure and check out my daily column on Bloomberg View dot com or follow me on Twitter at Ridlts. I'm Barry Rihults. You've been listening to Masters in Business on Bloomberg Radio. Welcome to the podcast, Saru. Thank you so much for doing this. This has really been quite fascinating. Um Before, during the broadcast segment we had talked about burgers and Mexican food. One of the

things I had to ask you. In the book, you break down the restaurant industry by segment by segment, I was really surprised to see under the coffee segment. Look, I expect Duncan Donuts and Tim Horton and Panera to be mediocre, but Starbucks has a reputation. They offer healthcare, they do four oh one case. I assumed they were pretty good. You tell me not so much. Now. They've done a really amazing job at promoting the idea that

they provide all of these things. But they have been under so much fire over the last many years from workers and journalists have uncovered this as well, that they just managed to consistently under provide just two little hours for workers to actually get those benefits, and so they employ lots of workers at very low wages with very

little hours less than so far less. Most workers in Starbucks get less than twenty hours really, so they're having to piece together multiple shifts, multiple jobs, and it's incredibly difficult to survive. And and I do recall reading that that the shift changes happen really last many That's right. If you have to take care of a kid commitments,

it becomes really challenged, really challenging. And when you're earning that little, you know, childcare is like half of your income and you can't even get back in time because you're asked to stay longer to clean up or whatever, and you end up paying more. My perspective is so skewed. You go into any Manhattan Starbucks, there are lines out the door. You see the same people working all week. I see the same faces all the time. But that's not how it is in the rest of that's not

That's not how it is. And even those workers I think, you know, Starbucks, for how much they're charging us for coffee, could be paying these workers a lot better. But they're not well paid and they're just not given enough hours to survive. So is it an overstatement to say Starbucks is the new McDonald's. Um, it's a new kind of McDonald's because McDonald's doesn't make any pretension to being a good employer. Starbucks does. But unfortunately still work in any

fast food restaurants. No, Um, I did a lot of No I didn't. I worked in in high school, I worked in McDonald's. I started on a Saturday and Sunday I gave them the hat night Brendon, I said, you keep the paycheck. I'm never coming back here and I'm never eating McDonald's again. And that was pretty much I think I might have on the road had a burger once, but that's pretty much it. Because you didn't like the

way you were treated. Um. No, you start out with a bag of dehydrated onions the size of your fifths, and you put it into a pan that's three ft by one foot and fill it with water. In the next morning there reconstituted onions. And it makes you wonder what is the rest of this food like stuff that you're eating. And and look, I'm a foodie. I like

really good restaurants, and I could eat fast food. I enjoy you know, shake shock, and you know, of of all the fast food before the New Rounds, it was Wendy's was much superior to McDonald's and Burger King because it was fresh and it felt like food. Yeah. Um, but really, anything that's mass produced like that and is consistent across the country is really just a food like substitute and not actual nutrition and that was the problem

with that. Yeah, I mean, I think there are folks that are managing to get this, get quality to scale and good conditions to scale, and so in the coffee world, one example is Blue Bottle Coffee. They are but that's not a big chain. Is now they're growing really fast. Well, there's there in California, They're in New York, they're in Tokyo. They're growing really rapidly. Yeah. One, um, I think it's just off Broadway and nine. Yeah. Good. It's extremely high

quality coffee and they pay a livable wage. I'm talking closer to fifteen dollars an hour. Really, yeah, that's interesting. The the other place we were talking about earlier Chippotle. One of the things so we alluded to the problems they've had. They had an e coal I break out, which, now, by the way, I forgot someone just came out and

declared it's over. I don't know if we or somebody else, but the issue they ran into is specifically because they're not sourcing everything to one farm that they could closely monitor. It's all local, and that that's was much more challenging to how do you stay on top of how people are washing their hands in the field at ten thousand

local farms. Yeah, but it's still it's still the right way to actually have locally sourced, sustainable organic food, you know, non GMO, right, and it's possible, and they've done They've done really well. The the joke I tweeted the other day the day of the Powerball lottery was I'm feeling lucky, so I'm gonna buy a Powerball lottery ticket and go to chippotl and I only I one of them worked out and the other one. So it was that what

what about fine dining? So I was a little bummed to see Del Frisco is on your list of bad fine dining establishments. That's a great stay cost. But now that I think about it, I've never had anyone. I've had some women servers, but everybody has been a white person. The bart one of the bartenders there is of color, but it's a pretty you know, white bread sort of.

I mean, most of the chain fine dining steakhouses are actually leaders in the National Restaurant Association, most of them, so they all follow that same what we call low road standard. I always forget there a chain because that they've they started out as like all the chain started as a single steakhouse. And unless you see them pop like you see Ruth, Chris and Mortens, they pop up everywhere. There's only a handful of Del Frisco. So I don't

really think of it. What about the other steakhouses like, um, I'm just trying to think of what's not a chain. Smith and Lanski has always been a Peter Lugers is another one. I don't think anyone who's working in Peter Lugers is less than a hundred years old. So they they were hired before emancipation, right, it's am I right, it's a bunch of old white They are professionals, and

I will say I mean even like a bowtload of money. Yeah, and we wish they were more diverse, but they are professionals who have a craft and do it really well. And that's we want. We want everybody to be valued the way they're valued. Right, you know that's the right I think that's the real right way to say it. So I know we only have you for a limited amount of time. You you you have a couple of places to run to. Let me go through some of my favorite questions that I asked all my guests, and I'll

do the short version. So, so, who are your early mentors who helped you, you know, public policy and yell law school. How do you become a restaurant advocate, restaurant worker advocate? Oh gosh, um, any professor stand down, anybody stand out? Is steering you into this or was it

just serendipity post nine eleven? I mean, honestly, it was my family, who are immigrants from India, and you know immigrants are My parents, like most immigrants, are just incredibly resilient, persistent, very politically astute, very aware of what was going on in angry and for me, it was about turning that anger into positive action. And that's what this has been about. So you were you were born in Rochester. Did you parents migrates to go? Yeah? My parents actually I was

the first baby born in the United States. They came from India, had me in Rochester, and then we moved to California, nicer weather, better opportunities. Um. So that's the thing is that they've always sought better and better and better for their children, and that is the story of the immigrants, and for us, that's actually the story of this book. Too. It's the high road. It's continuously seeking

to do better. Someone would some people would say that's the story of America is that's immigrants, people constantly looking for a better opportunity, that's right for their kids, that's right. In the next generation we get lazy and sloppy. We don't know how bad it was over there. I'm sure, like I heard, I'm sure you've heard stories. Yeah growing up. Um, what are some of your favorite books? I don't care if it's fiction non fiction. What influenced your thought process

about this? I mentioned Kitchen Confidential Anthony boor Dane, which is both ribald and hilarious. Yeah, I'm Nickel and dimed by Barbara Aaron right was really it was the Walmart employer. She worked in Walmart, you worked undercover as a waitress, actually as a domestic work as a house cleaner. And I can't remember what the third low age job she did, but um, you know she lived in her car, living

on these wages. So that was really eye opening. Um. Fiction, I love arn that they roy you know a lot of books, international books, so real mix of things and um, so what do you what do you see changing in the restaurant industry, what changes are taking place, and what might change going forward. Yeah. So I'm sure everybody's heard a lot in the news about Danny Meyer and this

whole move to limon tipping. And you know, we Danny Mar's company had actually been a part of our Association of High Road Restaurants for over a decade um, but he and I actually hadn't sat down, and when we finally did, we told him everything I've talked to you about today in terms of this whole history of tipping being you know, rooted in slavery, in the tipmenimum wage, and impact on women in sexual harassment. And he said, you know, I've been thinking about these issues for twenty years.

Let's think about moving in a different direction. And so we worked with them over a series of months and they actually, you know, they did it right. They moved to eliminate tipping in a way that actually makes their workers whole. So they're ensuring that workers are now getting everything that they would have gotten in tips now through revenue share, now through wages. What's the transition been like for the restaurants have have? What do customers say? How

was it worked out for everybody? I mean everybody seems to be really happy. We interviewed workers, we interviewed customers. They've done it really well that they had town hall meetings with workers and customers and management, and they just really had a very inclusive and transparent ass and that's how we would want it done. You know, our fight is not actually to eliminate tipping. We don't actually advocate for that. We're advocating for one fair wage with tips

on top, as they have in California. But it's really to raise the floor exactly and ensure that the employers actually paying a full wage and let tips be on top of that. But if employers want to go further and eliminate tips altogether, we are supportive if they do it the way Danny Meyer did, which is inclusive and transparent, and ensure that their workers are making everything they would

have made in tips now through wages. So you work with a lot of students, you're you're over you see Berkeley. What sort of advice would you give to either a millennial or college grad who says, I really want to get into the restaurant industry. I would say, um, well, definitely, I think, uh stick with it. You know, view it as a profession. Um, give it your all and be join us and be a part with us of making it a better industry for everybody. So definitely focus on

your career, you know, go all the way. Definitely do your thing, but also join us and making it better, because only by working with us to professionalize this industry will your work in this industry be valued and our our final question, what is it that you know about the restaurant industry that you wish you knew twenty years ago? That question always gives pause. Yeah, you know when I when I remember as a law student and right after law school being a card carring foodie. I mean I

lived here in New York City. I ate three times out, you know, three times a day out, and I ate everything and I was totally oblivious. I cannot remember a single worker from all those years of eating out. And so now as a diner when I eat out, I noticed things. I noticed the racial makeup of the end of the restaurant. I noticed how women are being treated. I noticed I think about things like paid sick days and wages, and I just I think all of us.

I would I had known this twenty years ago to be a different kind of diner, and I would encourage all of us to be a different kind of diner, to know what's happening in this industry, and to really encourage this industry to take the high road. So Ruth, thank you so much for being so generous with your time. I would be remiss if I did not thank my head of research, Mike Batnick, and my recording engineer, Charlie Vohmer.

If you enjoyed this conversation, be sure and look up or down an Inch on iTunes and you could see the other eighty eight or so such chats we've had. Be sure and check out saw Ru's other writings on forked the book dot com. You've been listening to Masters in Business on Bloomberg Radio.