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With a minimum wage hike now approved in California, restaurant operators are searching for ways to mitigate rising labor costs and Phillip Frankland Lee believes he may have a solution. The owner of Scratch|Bar & Kitchen in Encino has created a concept that eliminates waiters and waitresses. He employs eight cooks, all of whom greet and serve guests throughout the evening in addition to cooking meals in the kitchen. “We don’t have servers by the traditional or cultural definition. Instead of having front-of-house and back-of-house, we just have staff,” said Lee, 29. “The minimum wage increase definitely played a part (in the business model), and now my guys are already making $15 an hour.” By shifting the responsibilities of servers’ duties to the cooks and charging an 18 percent service fee on every tab, Lee is able to pay his staff better wages in return for their increased workload. Scratch|Bar has maintained a steady influx of new and repeat customers since it opened in Encino four months ago. The establishment relocated to the Valley in December after a two-year stint in Beverly Hills. Lee’s other restaurant, the Gadarene Swine, is also Valley-based. That intimate vegan eatery was founded in 2014 and is located along famed foodie-haven Ventura Boulevard in Studio City. Lee said he is already working to institute a similar business model at the Gadarene and plans to eliminate servers this year. “It wasn’t like the idea just came to me, it was a natural progression,” Lee said. “Growing up, my father was friends with a sushi chef. I was taught at a young age that you ask the chef what he’s preparing for you tonight, you don’t tell him what you want. … Here you’re going to get better service, more honest service and a better culture.” Made from scratch Scratch|Bar offers a mixture of haute cuisine and family-friendly options and is open for dinner Tuesday through Sunday evenings at 5 p.m. The 750-square-foot open kitchen restaurant can accommodate up to 45 people. Guests can sit at a large chef’s counter that seats 16 people overlooking the wood-burning stove, or can opt for a seat at the remaining high tables dispersed throughout the restaurant or on the patio. Upon arrival, cooks greet guests at the door and lead them to their tables to discuss the menu. Visitors can choose from one of two dining experiences – either the traditional menu options or the chefs’ choice. “With option B we put you on autopilot. We take recommendations, ask if you have any allergies and then we just start cooking,” said Scratch|Bar Head Chef Jonathan Portela. “Although it’s a unique experience, it feels right. … We’re taking the aspect of hospitality to heart and people are receptive to what we’re doing.” Scratch|Bar is known for its homemade dishes made from scratch, particularly breads and cheeses. Each guest is typically looking at a $60 to $100 tab for the chef-tailored menu, plus the 18 percent service charge, which Lee distributes evenly among staff – from cooks to dishwashers. Lee currently has eight cooks on staff, an increase from the three servers and four cooks he employed under his former business model. He said the 18 percent service charge allows him to spend more on labor, while simultaneously elevating the standard of service and hospitality at his restaurant. And since he is now required to pay more for labor under the law, why not improve the service? “Now I have an entire crew of people who are prospering across the entire restaurant, and can jump on any task at any moment,” Lee said. “The idea is that we’re not here to serve you, we’re here to share with you what we’re working on and that’s the philosophy that we have. … It’s pushing forward the industry that I’ve fallen in love with.” Though Scratch|Bar’s model sets it apart from the competition, some industry experts question whether the quality of service will suffer from the lack of service-oriented staff. “It strikes me as inefficient. I’d like to have the cooks in the kitchen cooking the dishes, and the servers bringing the dishes out,” said Merrill Shindler, L.A. food critic and editor of the Zagat Los Angeles Restaurant Survey. “Phillip is very much into doing things that no one else is doing. He’s a visionary and like all visionaries, sometimes the vision is not always focused.” Labor costs Though the elimination of wait staff is uncommon, Chuck Spencer, owner of consultancy Restaurant Reveal in Santa Rosa Valley, said he would not be surprised if it becomes a trend now that labor costs are skyrocketing. “As a restaurant operator, you are always looking for ways to improve your efficiencies without sacrificing quality,” Spencer said. “If you can pull off a restaurant without front-of-house help, that accounts for a very large percent of your labor.” Last month Gov. Jerry Brown signed legislation raising California’s minimum wage, now $10 an hour, to $15 over the next six years – the highest in the country, save for New York’s $15 minimum wage boost that was signed into law just hours following California. Small business owners are concerned about the rising labor costs and economists project the increase will result in price increases to customers, job losses and even business consolidations and closures. Retailers and restaurants are particularly hurt by the increase, since so much of their costs are minimum wage employees. “Restaurant margins are typically extremely tight and when you take an increase in labor, you erode margins. The only way to subsidize that is to increase prices or eliminate costs, which leads to an erosion of service,” said Matt Davidson, managing director at finance consulting firm Conway MacKenzie Inc. headquartered in Birmingham, Miss. Fortunately, Lee has found a solution. Under his new model coupled with the 18 percent service charge, Lee said employees are making at least $15 an hour. In addition, many patrons still leave tips on top of the service charge, which amounts to an additional $3 or $4 an hour for staff. “It will no longer negatively affect me,” he said. Service question Scratch|Bar opened in 2013 when Lee made an arrangement with the owner of a cafĂ© in Hollywood to use the space after hours. After a disagreement, Lee relocated the restaurant a few months later to Beverly Hills where it remained until July. During that time Scratch|Bar operated as a traditional restaurant and Lee employed three servers and four cooks. The decision to relocate to the Valley was an easy one after Lee found property at the Encino Place shopping center along Ventura Boulevard. He was able to sign a lease in his name – an opportunity that was not afforded him at the Beverly Hills site – and moved in five months after closing the old shop. “I grew up in the Valley specifically and the demographic over here is incredible,” Lee explained. “The people are very down-to-earth and excited to dine and they’re not cheap by any means but very value-oriented.” Scratch|Bar & Kitchen may be among the first higher end restaurants to function without servers, but operators at the lower end have long tried to alleviate labor costs, such as at fast-casual eateries like Chipotle and PizzaRev. “One way to (cut costs) is to eliminate services you provide to your patrons,” said Conway MacKenzie’s Davidson. “There is a shift in fast-casual dining so it’s less service oriented.” The minimum wage increase is not holding Lee back from pursuing his dream as a serial restaurant operator. At present he is in the process of opening his third restaurant, Oh Man! Ramen, which will function under the same business model as Scratch|Bar and the Gadarene Swine. The ramen concept will open this summer under the supervision of Head Chef Luke Reyes, the former Butcher’s and Barber’s chef in Hollywood, according to Vox Media’s food and beverage digital outlet, Los Angeles Eater. Lee also plans to step up his beverage game by offering full bar service at Scratch|Bar and is waiting for approval from the city for a liquor license. “I don’t hope to be the first (with this concept), but I hope to make the most noise with it and I hope that people will follow suit,” Lee said. “All we can do is keep growing.”

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