City's Restaurant Revitalization Program Aids No-Tipping Movement While Giving Payroll Grants

The no-tipping restaurant movement is getting a boost from the city’s recently-launched Restaurant Revitalization Program, at a time when traditional business models are being obliterated by the economic crisis caused by the COVID-19 pandemic.

Mayor Bill de Blasio and First Lady Chirlane McCray announced the $3 million program in June, intended to award $30,000 in payroll reimbursements to 100 restaurants in “target neighborhoods” as identified by the city’s Racial Inclusion and Equity Task Force.

“This program promotes multiple vital goals: retaining or restarting critical restaurant operation, employment and food production in New York City neighborhoods facing immediate need, supporting advancement of the next phase of the City’s emergency food access and security plan, and advancing equity as part of the city’s economic recovery,” the program application says.

As of mid-July, there were 335 total applications for the program, “of which 238 were eligible and 51 awards have been made by the city to date,” said Laura Feyer, the mayor’s deputy press secretary. Applications for the program are still open, with final awards granted by the first week of August, she added.

As part of the involvement of the One Fair Wage organization’s goal to pay restaurant workers full minimum wage, these $30,000 grants must be spent on payroll expenses, including paying their employees a $20 hourly wage subsidized by the program for now. Then, participating restaurants must commit to paying “full minimum wage, not inclusive of tips, to all workers within 5 years of returning to regular business practices,” according to the program application form.

Other provisions of the program include preference for “restaurants who commit to high road” employer practices that promote livable wages, greater race and gender equity in recruitment, hiring, promotion, training and evaluation practices, and other worker-friendly conditions, and that are able to serve fellow New Yorkers in need.” The program asks participants to make their food “accessible to essential workers and low-income residents in their communities” with either free meals or food deliveries to at-risk residents.

McCray had lunch July 9th at one program participant, the Tsion Cafe in Harlem.

“Last week, I had an opportunity to visit one of these struggling establishments, the Tsion Cafe, and what a neighborhood treasure,” McCray said at a press conference July 14th. “It has a long history of service in the neighborhood. And as I walked through the door and saw the wonderful Ethiopian art and sat in the back garden, I felt totally at home. I had the vegetarian platter and the food was terrific.”

“The Restaurant Revitalization Program is a win-win for all and restarts a virtuous cycle for the community,” McCray added. “Restaurant jobs at higher wages lead to families getting more support, more spending in the neighborhood, and a fast recovery for everyone in the community.”

Beejhy Barhany, chef and owner of the Tsion Cafe, said the Restaurant Revitalization program came at a crucial time after she’d been initially rejected for federal payroll loans. She was able to hire back five of her employees.

“You’ll be able to pay fair wages, which is $20 per hour for your employees, where it's kinda, in a way, very empowering to the employees,” Barhany said in a phone interview. With many of her employees living in the neighborhood, the higher wages will also be spent locally — "it's a win-win situation for everybody, where we are able to hire them and give them better pay." She noted that her staff were feeling “hopeful and excited" about the higher wages.

“We've been fighting for One Fair Wage for many years in New York,” said Saru Jayaraman, president of One Fair Wage and a professor at UC Berkeley, in a phone interview. “This program is just simply a public incentive for employers to go through our program.”

Yet some critics of the program said the pandemic isn’t the right time to push for higher wages.

"Restaurant owners are desperate for financial relief, and the city should not be partnering with controversial groups to dangle short-term money at them during a crisis if they signup for a political agenda that has long term financial consequences for their small businesses. This program is just not appropriate for government to engage in, especially during a crisis,” said Andrew Rigie, executive director of the NYC Hospitality Alliance, in a statement.

Another critic said the program just doesn’t offer enough funding when the restaurant industry is in crisis, with unemployment and small business closures sharply increasing in the city.

Alfredo Angueira, the former head of the Bronx Empowerment Zone and owner of three local restaurants, told Crain’s New York Business that “Underfunding is just as dangerous as not giving them any money,” and added, “It’s honestly putting a Band-Aid on a bullet wound, and it’s just going to be insufficient.”

Angueira also pointed out that the program’s required paperwork — participants have to submit for reimbursement of payroll expenses — and documentation would turn off many restauranteurs who don’t have the required paperwork, English language skills or technical savvy to apply.

“I appreciate that they’re looking at minority-owned businesses especially in these areas,” Angueira told Crain’s. “But I am a minority business owner and a lot of us are very mom-and-pop and hand-to-mouth and don't have the back-office paperwork, financial documentation that is going to be necessary for this.”

Jayaraman of One Fair Wage pointed out that the political will is there, with hundreds of restaurants applying: “There's a lot of willingness to change practices, willingness to go to One Fair Wage and increase equity. So we want to be able to take advantage of that willingness and we are looking to extend the program.”

One restaurant program participant, who Gothamist contacted through One Fair Wage campaign officials, hailed the program as an opportunity to rethink the tipping structure in restaurants.

“It’s something that's been on my mind for many, many years and it was something that I had committed to our employees prior to hearing about the program,” said Claire Sprouse of Prospect Heights restaurant Hunky Dory, who hired back seven of her 14 employees through the program. “And then when that program came about, I was like, ‘Oh, well this is right up our alley, cuz like our values align very much so with the program.’”