Unique Ownership Model Reflective of Delta Diner Culture

I am very often asked about the many unique aspect of the Delta Diner.  Why Delta?  Really, you restored an East Coast Diner and shipped it here?  Where do you come up with the unique flavor combinations?  How do you find the staff you have?  And, often first timers will ask about our ownership.  Are we a chain or independent?  What type of ownership is it?

Well, up until five years ago the ownership question had a simple answer.  My wife Nina and I owned nearly all interest in Delta Diner with a few important family members and friends also involved.  This remained true for the first eight years of our venture.  And, both fortunately and unfortunately, we had a significant challenge.  The growth opportunities in front of us were greater than our ability to fund them traditionally.  We needed an alternative way to find funding that matched the core values and passion of our business model.

I spent much of 2009 researching our options.  Discussion with respected business people, customers, economic development professionals, anyone who might share a nugget of creative thinking.  The collaborative result was “Customer 40” which opened the door for 22 new Members to join our LLC in 2010/11.

The impact on our business has been substantial in many ways.  First, we were able to expand our capacity to serve customers without having to compromise our core principles just to service the associated debt.  We were able to pay with cash and even though the original ownership owned less, we gained significant financial upside.  But more importantly, the Diner gained 22 additional equity holders with a passion for being part of building something special and sustainable.  And, these new equity holder came from the ranks of our customer base.

In short, 40% of Delta Diner’s equity interests are owned by the good folks that we share our booth and counter space with on a daily basis.  It is kind of poetic that in the context of a culture where we strive for uniqueness and creativity every day, our most unique and creative attribute is the structure of our ownership.  This in turn allows us to continue to grow without compromise in a sustainable way.

And, rest assured, we do appreciate just how cool this is every day!

Be Good!

Todd

Customer 24

HEY HEY!! Delta Diner is now OPEN 7 days a week YEAR-ROUND!!

We have been working toward a 7 day per week year-round schedule for some time.  We are happy to announce that as of next week 5/23/16 it is a reality.  Our hours will be Tuesday-Sunday from 8am – 4pm for Breakfast, Blue Plates and Specialty Sandwiches and Monday, Burger Monday from 11am – 7pm or when we sell out, which ever comes first.  Please check deltadiner.com for our Burger Counter Pop Up to see what our supply is after 5pm.  Thanks to all our customers for supporting us, and allowing us to expand our service hours!!  We appreciate your company and your business.

Burger Monday Explained

Here is how Burger Monday works.  First, we only serve burgers on Monday.  We open at 11am.  We make everything fresh that day, and serve burgers until we sell out.  Our goal is to make it until 7pm.  We will post supply updates on our Facebook Fan page and website throughout the day.  Sides, deserts, drinks, malts and shakes are all available also.  Everything we do for Mondays is meant to provide our customers a superior Burger Experience.  Please prepare for busy periods especially during the months June-October.  The rock star of our Burger is the patty.  It is surrounded by a freshly baked hard-roll and topped with freshly prepared toppings made just for your burger.  While keeping it simple, we try to make it great!!  Hope to see you on Mondays.  🙂

FAQ Answers Regarding “No-Tip” Policy

Delta Diner has recently (6-1-15) made the move to eliminate tips from its business model.  Given this is a topic most everybody has some sort of personal experience with, it is a topic of vast commentary.  I think the dialog on this issue is good as long as the discussion is about what is real and not perceived.

First off, thank you to our customers for their words of encouragement and support.  We make this decision with strong conviction that those who know us best will respond positively to this policy.

Rather than answer each legitimately stated concern about our policy across social media, I have decided it would be better to cover it on our website since there tends to be a theme to those people who register concerns.  While I certainly do not expect that all individuals will agree with our policy, I do expect that the vast majority will respect our decision provided you are basing your decision on factual information, the Delta Diner’s culture culture, and our track record for employee based decision making.  Here are some thoughts regarding what I have been reading:

  • Although a very good report, a recent Duluth news TV station stated that our policy was a “mandatory gratuity”.  This is false.  We have eliminated gratuities or tips completely from our business model.  A gratuity by definition is voluntary.  We have increased our prices 20% on all food and beverage.  Rather than bury that increase in prices, we have intentionally put it front and center for all to see because  100% of this increase directly goes to fund staff wages in an equitable fashion.  No hidden agenda, smoke and mirrors, or tricks.
  • The ownership and staff of the Delta Diner assure a great Diner experience for our like minded customers through a dedication to our business model, systems and teamwork.  The service our customers experience is a result of precise execution of this model by hand picked professional staff.  The tipped model limits our ability to reward our entire staff for their dedicated work in a way reflective of their professionalism.  We have developed a model that works better for our staff, customers, and in the long term the sustained success of our business model.  Because it is right for us doesn’t mean it applies elsewhere.
  • Every person who reads about this issue will have a personal opinion based on personal experience as a restaurant customer, employee, or owner.  Please remember your personal experience frames your opinion and it may not translate to our operation.  It would be unfortunate to base opinions on assumptions rather than fact.
  • Every current employee, including floor staff,  at the Delta Diner moves forward financially because of our policy change and they have been involved in the decision making from the beginning.  All future employees will benefit from the fact that all adult employees at our operation will earn a minimum of $15/hour and student employees will make a minimum of $10/hour.  Plain and simple.
  • This policy is about the Delta Diner, its dedicated staff, and ultimately the satisfaction of our customer base.  You still have the ultimate say with regard to our service level and can vote by deciding if you will patronize our business.  Suggesting that tips at the Delta Diner determines service level and that this level will decrease without the power of the tip are uninformed.  But, as they say, time will ultimately tell the story.
  • The constructive dialogue with those concerned about our policy is a good thing and allows us elaborate and clarify when appropriate.  We will not engage individuals who merely wish to attack with no reasonable basis for their statements.  Although those who know us best are doing a pretty good job!

Thanks for keeping the dialogue civil,

Todd Bucher – Delta Diner

Delta Diner Embraces “No Tip” Policy as of June 1st

 

 

 

Contact: Todd Bucher

Delta Diner, LLC

eat@deltadiner.com

 

Delta Diner, a Destination Restaurant, Kicks Off Tourist Season with “No-Tip” Policy

New, high starting wage for all employees and staffing charge is based on European business model

 

DELTA, Wis. (June 1, 2015)—The Delta Diner, featured on Food Network’s “Diners, Drive-Ins and Dives,” has embraced an “employee first” philosophy since opening in 2003. During peak summer months, customers are willing to wait up to two hours to eat at the now-famous Northwoods diner known for its excellent customer service and food. To meet this demand, Todd Bucher, founder and managing member of Delta Diner’s operations, focuses on delivering a top-notch diner experience every day. That’s why he decided to implement a new compensation model for all employees.

Bucher has been following the grassroots movement toward a “no-tip” compensation model for a while because he thought the concept would benefit his diner staff. However, it has yet to gain national momentum because tipping is ingrained in the U.S. culture. Industry proponents site examples from Europe, where restaurants in many countries include a service charge and don’t require a tip. Bucher feels the tip model promotes inequity in staff compensation, and he sees that as a threat to the culture of unselfish teamwork established at the Delta Diner.  Implementing their own “no-tip” model will help move the Delta Diner’s mission forward and ensure a sustainable end product for its customer base.

As the busy tourism season approaches, the Delta Diner will implement a 20 percent increase on food and beverage prices and eliminate tips. The entire charge will flow directly back to base compensation enabling all adult staff to earn a minimum of $15 per hour with key positions earning more. In addition, the Delta Diner is establishing an aggressive bonus program that will allow key position to further benefit from the continued growth of its business model.

Bucher expects the customer will continue to be the ultimate beneficiary of an unselfish, team-first approach. “We have built an exceptional core staff and I expect the “no-tip” compensation model to help us recruit and retain highly skilled, motivated and happy employees who will continue to provide a great customer experience,” said Bucher.

For more information on Delta Diner’s “No-Tip” approach, please see:

Link:  http://www.deltadiner.com/why-no-tip-policy-at-delta-diner/

Why “No Tip” Policy At Delta Diner

As I explained our intention of eliminating tips from the compensation structure for our staff at the Delta Diner, my good friend and confidant responded: “This is a pretty dramatic change after 13 years when things seem to be going so well”. To a degree, he was right.  Why rock the boat?  But then we have always embraced the philosophy of “if you are not growing, moving forward with your model based on your best judgement … you are actually regressing”.  Yet his question was a good one and was the catalyst to take one more critical look at this intended decision.  The result was a “Q&A” between me, myself and I that went something like this:

Question:

What is it about TIPS that you don’t like?

Answer:

There is much I do not like about the tipped system.  But the highlights are:

1.  The Delta Diner is defined by selfless effort, with everyone on staff that day working together to execute our business model in world class fashion.  We serve the model and the model serves our customer base.  While floor staff take the lead with customer interaction, all staff contribute to the successful execution of our model, even if the floor staff are front and center.  Success leads to a great customer experience.  By law, tips can only flow to floor staff and cannot be shared with food production staff.  This potentially can lead to inequity in compensation across job functions due to how it is regulated.  It is also the only process in our culture that could emphasize selfish individual decision making over that of the team, or model.

2.  Working under the TIP model we have no control over the fair and equitable distribution of a significant portion of the income flow that funds staff compensation.  Make no mistake about it, in the restaurant industry, tips are a significant part of the monetary flow that funds staff compensation.  Overall compensation is funded by a percentage income from goods sold and by tips.  In most other industries a company just charges for its products what is necessary to fund costs, including payroll, while having some profit left at the end of the day.  Somehow the restaurant industry is differentiated by going to market with deflated pricing relative to real costs combined with an arbitrary and ambiguous supplemental source of funding called tips or gratuities.  Add to this the fact that governmental regulation restricts how this supplemental source can be distributed and managing your business model can become challenging if we are truly an employee first business.

3.  The Delta Diner product is the experience we provide our customers.  It encompasses the destination, the greeting, the ambiance of the setting and building, the people we fill the room with, our food concepting, development and execution, our service systems, attitude and execution, …. and so much more.  The point is we take a very complicated product to market in a very systematic way every day we are open.  And it is done in a real and authentic way.  This requires that we hire staff who buy into a demanding culture and are capable of executing highly involved systems of operation with precision.  We are not only competing for the best hospitality staff available, but are competing with other industries for staffing needs of this level.  It is essential that we offer a compensation model that reflects this reality and the tip model doesn’t cut it.

Question:

Won’t the lack of “tip incentive” reduce the level of service our customer can expect to receive?

Answer:

The Staff and Ownership of the Delta Diner work each day to execute our business model in world class fashion.  Currently, great tips are a result of this execution.  The execution results in the success.  The daily motivation to execute at a world class level will not change and the financial compensation rewarded will come in a more fair, equitable, and predictable fashion for all staff.

Question:

Will this change hurt any of our staff financially?

Answer:

Because of the way we are structuring the model, all staff actually move forward from the “tipped” model.  Also, complementary adult seasonal staff will make a minimum of $15/hour with students making a minimum of $10/hour.

Question:

How will the 20%  price increase be received by customers?

Answer:

I cannot say for sure.  But my strong sense is that the vast majority of our growing customer base will see the benefits this move provides our staff, the sustainability of our business model, and ultimately their own enjoyment of the Delta Diner experience.  At the register, most of our customers will find that the overall amount they are paying, including the price increase, is less than they were generously paying with tip included.

So, June 1st begins a new “No Tip” era for our little Diner.  The bottom line seems to be that making this change is in the best interest of all involved; staff, Delta Diner, and most importantly our customer base.  This change defines our culture and I feel strongly reflects the values of not only the ownership of Delta Diner, LLC, but also it’s like minded patrons.   Feel free to contact me on email via this website with questions.  I have attached a link to our press release covering this move.

Thank you!

Todd

Link:  http://www.deltadiner.com/delta-diner-embraces-no-tip-policy-as-of-june-1st/