Why this hit S.F. restaurant added a controversial fee on top of tips

Profit-sharing, mental health support and more are under way at a refreshed Che Fico in San Francisco. Workers say they hope this is the future of the industry.

When Che Fico opened in San Francisco in 2018, it was an immediate hit. People waited as long as four hours to eat wood-fired pizza and handmade pasta in the gorgeous, second-floor restaurant overlooking Divisadero Street. In less than six months, Bon Appetit named Che Fico one of the 10 best new restaurants in the country.

Inside, though, Che Fico was crumbling, the restaurant’s owners said. The restaurant could barely keep up with the demand, despite everyone working overtime. Owners David Nayfeld and Matt Brewer felt overwhelmed by the pressure, and the restaurant was losing money. Their stress trickled down to an overworked, unhappy and underpaid staff. It came to a head one day in the kitchen, when a sous-chef overcooked $1,000 worth of octopus for the second time. Nayfeld lost it. He started screaming and cursing at the employee.

It was a turning point for the young restaurant, and planted the seeds for deeper change that’s now under way at Che Fico. Like other Bay Area restaurateurs, the owners of Che Fico seized the opportunity of a pandemic-forced closure to reimagine their business model.

The Che Fico of today is a vastly different place. Kitchen staffers are earning 28% more than pre-pandemic — full-time prep cooks earn close to $60,000 a year and line cooks make $72,000 a year in an industry where minimum wage is common. Instead of servers taking home the majority of tips, the kitchen’s nightly tip distribution has increased fourfold. Dining room employees and managers also got substantial pay bumps. The owners sacrificed sales for a more sustainable pace, taking significantly fewer reservations instead of packing the restaurant.

Conversations with staff about finances, growth and self-care became the norm instead of long hours and yelling in the kitchen. Nayfeld talks often and openly about his own self-improvement through therapy, and urges staff to access free mental health support provided through Che Fico’s health plan. It’s a dry restaurant, meaning staff aren’t allowed to drink on the job unless it’s to taste wines, and Che Fico hosts a weekly substance-abuse support group for industry workers in recovery. The restaurant’s chef de cuisine and general manager recently became partners in the business, while the owners started profit sharing for managers and hourly staff who have worked at Che Fico for at least one year. The latter has already resulted in bonus checks. Other benefits Che Fico offers that are rare in the industry include 401(k) matching, paid parental leave and special COVID sick pay — expenses paid for through a 10% dining-in charge.

At a time when many Bay Area restaurants are replacing tips with service charges to sustain more equitable wages, Che Fico took a different approach. At the urging of most employees, they decided to keep tips and distribute them more equitably with kitchen staff, but add the 10% charge. The fee — which diners pay in addition to, not in lieu of, leaving a gratuity — is meant to educate customers about the “true cost” of operating a restaurant in San Francisco in 2022, from paying all employees a living wage to the surging cost of ingredients. The idea was born during the pandemic, when the more casual Che Fico Alimentari located downstairs was open for takeout only, requiring a skeleton crew and far fewer expenses than it takes to staff and pay for a large, busy restaurant.

The goal is to have everyone who’s a part of Che Fico, from bussers to diners to investors, buy into a new way of thinking about restaurants. It’s been life-changing for many employees: A line cook finally made enough money to bring his family to the United States from Honduras. A server in the throes of a mental health crisis says his life was saved by the therapy and rehab he accessed through his work health insurance. A talented but disillusioned cook stayed in the industry after feeling scarred by abusive, toxic kitchens.

It also means that eating at Che Fico is more expensive than ever before. When the restaurant emerged from its pandemic hibernation last fall, it raised prices by 15% to 20%. The restaurant’s popular, Parmesan-dusted sourdough pizzas now go for $30 and entrees range from $44 to $175. The tab for a diner who orders one appetizer, pizza and pasta, with the dine-in charge and a 20% tip, easily breaks $100. (The owners also invested $120,000 in new glassware, chairs, hand-stitched Italian napkins and other upgrades to create a higher-end dining experience.)

Many customers are supportive, staff say, and continue to tip generously in addition to the dine-in charge. But others bristle at the steep prices and added fee, circling it on their receipt and leaving a small tip, according to employees. One diner wrote on Instagram that she got up and left after seeing the “next level gauge” menu prices. Despite explaining the fee on the Che Fico website, reservation system, menu and check presenter, servers often encounter confusion and even aggression.

“You cannot have culture without compensation,” Nayfeld said.

The Chronicle spoke with five employees about their experiences at Che Fico and their perspectives on change happening within the industry. These interviews have been edited for length and clarity.

Jazmine Fenton

The executive sous-chef has worked at Che Fico since 2018. Previously she worked at San Francisco restaurants including Al’s Place, RN74, Bluestem Brasserie and Pabu.

I’m 32. Between 2008 and 2012, there was a really big influx of young people wanting to cook. I think that had a lot to do with Anthony Bourdain, with things like “Top Chef” really exploding.

I really got distracted and entrenched in the whole partying, rock-star chef lifestyle. I started to lose sight of my goals and aspirations. I bounced around a couple of places, and then I ended up at a great San Francisco restaurant. Great food. Really talented people. But the environment there was incredibly toxic. I was in a fragile place in my life. I decided to quit cooking. I was like, I can’t do this anymore. I don’t find joy in this anymore.

I told Che Fico my whole story and how I had fallen off course. What really attracted me to Che Fico was how they promoted a healthy lifestyle physically and mentally for their employees. It’s a dry restaurant. No one is drinking here. They’re encouraging people to have hobbies and interests outside of work. There are myriad health benefits that you can utilize for anything that you need: mental health, physical health, if you have addiction issues. That was four years ago. I really feel like I have become the best version of myself that I have ever been.

A lot of places, when they promote you to management, they are like, “Go figure it out. Good luck.” I had told Che Fico I feel like I’m not sure what I’m doing. I’m not good at communicating with people. I’m not good at processing my emotions. I’m very reactive to things. They invested ($8,000) in this executive coach for me, who mostly works with people in tech and bioengineering. We’ve been meeting every two weeks and she has been giving me different tools for how to deal with certain situations. It honestly has made such a difference.

A lot of this stems back to how I was treated when I was a young cook. I think that Che Fico is working really, really hard to change generational kitchen trauma because there is a lot of it. A lot of older cooks were mentally and physically abused in the kitchen and talked down to and (were) encouraged to be that way with their teammates as well. Now we have all of these younger cooks who never had to experience that trauma and are only learning healthy ways of working.

I feel very positive that it will spread, but I think it will take time and it will take people really wanting to make the change. But I feel optimistic that within the next decade, kitchens and restaurants as a whole will function in a healthier way for the people that work in them.

Tom Folsom

The lead sommelier and server has worked at Che Fico since 2018. Previously he worked at San Francisco restaurants including Mister Jiu’s, Cotogna, Wayfare Tavern and Farallon.

What we could have done when we came back from quarantine is just up the prices of everything, but the 10% dine-in charge was meant to start a conversation with people and say, “This is part of the true cost of running a restaurant in the city. Our owners care greatly about the entire staff here. This goes to provide a ton of stuff for us. It’s the best restaurant I’ve ever worked in, and I’ve worked in a few in San Francisco.” But there is pushback by the guest, and I think a lot of it has to do with the verbiage. People don’t read the fine print. But then a conversation is meant to take place, and that’s why we put it on the menu. We want people to know why this isn’t just a super-expensive restaurant. Here’s what your money is going toward.

Some diners are like, “We’re behind it 100%.” Other people are like, “We feel like we’ve been swindled or blindsided by this.” And in those cases we offer to remove it. The hardest is when the conversations don’t take place or when people just leave 10% because they’re like, oh, half the gratuity is taken care of already. We’re an entirely pooled house — everybody who works here gets a percentage of the tip pool — so a 10% tip hurts everybody.

I don’t like tipping. In a restaurant like this where we’re food-service professionals, where this is a career path for people, I don’t think that my value should be determined by someone based on some unspoken thing. There’s no really good answer.

Pre-pandemic, servers made a little more than we’re making now. But it’s also very cool to know that you’re working in a place where everybody’s taken care of.

This is the only restaurant that I’ve been able to see myself at long term. Already this is the longest I’ve worked in any one place. I can see a career path forward.

Alexis Moreno

The line cook has worked at Che Fico since 2019. Previously he worked at Bistro Boudin in San Francisco.

(This interview has been translated from Spanish.)

I love working here. In other jobs, I’m Latino, and I would experience a lot of discrimination. In this job, I haven’t seen anything like that. They have respect for employees.

We have a lot of opportunities. There’s support that isn’t offered in other jobs. For example, I started out as a dishwasher, and I asked if I could cook. They told me, “Of course; here’s the opportunity if you want it.” They motivate us to keep learning, to keep advancing. It’s totally different. In other restaurants, we don’t have a lot of opportunities. I started washing plates for three months, then I was a pizza cook for three years. First pizzas, now pastas.

I was in a legal process to bring my siblings and my mother to the United States from Honduras. Thanks to this job, I have a better salary. I was able to finalize and pay for all the paperwork. I have my family here with me. They arrived in January. (The process took eight years.)

One of my dreams is to be chef or sous-chef, here or at another restaurant. I love to cook. I want to learn as much as possible for a better future for my family.

Kyle Quinn

The server has worked at Che Fico since 2019. Previously he worked at San Francisco restaurants Presidio Social Club, Coqueta and Al’s Place.

During the pandemic, I fell into a very deep depression where I felt like my work was my only safe place. I was trying to manage my sobriety, but I just didn’t have the tools. I got really suicidal. I didn’t really see any way out.

Che Fico shut down from the second week of December until after the first week of January. On Dec. 29, 2021, I was alone and drinking. I drank a lot that night and I snorted a lot of ketamine. I just couldn’t imagine doing this for another year. I wrote a suicide note in my phone and I had a plan. I woke up the next day, and I was out of ideas. So I called this behavioral health number on the back of our insurance card, and was connected to an outpatient rehab program and a therapist. Just having that little bit of hope, like, I have an appointment. Jan. 10 was my first day of rehab. (The insurance provided by Che Fico covered 75% of the cost of rehab.)

I emailed Matt and David and Bryn (Barone, general manager), and I was like, “I have been heavily addicted and abusing alcohol and drugs and I’m entering a rehab. I would like to keep on working because it’s an outpatient rehab and I need this kind of structure and support.” Bryn immediately emailed back and was like, “Do you need time off? Do you need financial support? What do you need from us?” My therapist with Carbon Health, who came through Che Fico, is the one that allowed me to center myself and focus on what I needed to do in order to achieve my goals.

Being a server, I’ve managed to make a very stable life for myself and I’ve benefited greatly from the tipping culture that I think is changing. But in some ways, I’ve always felt a certain amount of guilt because I have friends in the back of the house and I know that they’re not compensated in the tipping structure equally.

It sucks because our restaurant is really expensive: $30 pizza, $38 pasta, $19 glasses of wine. It would be really hard for me to eat there without a discount. But at the same time, this is a movement that I can get behind and that I want to be a part of. I wasn’t on board right away with the pay structure changes. I thought, I’m going to see how this goes.

We are definitely making less as servers. Granted, I am also putting into a 401(k) that is being matched. I do not skimp on health insurance. I see my therapist once a week. That’s $400 a month that would be out of pocket. Thinking about it in that cost-benefit analysis makes it way easier to be a part of this model. Some people would rather have a little bit more money in an abusive environment than less money in a much more nourishing environment. I tell everyone that this is the most nourishing work environment that I’ve ever worked in.

Casey Rebecca Nunes

The event manager has worked at Che Fico since April. Previously she was the executive chef at Media Noche in San Francisco, and later worked at Smitten Ice Cream and Wrecking Ball Coffee Roasters in San Francisco.

I left as executive chef at Media Noche three weeks before COVID hit. I’d been there for almost three years and I was like, OK, I think it’s time for me to do something new. As COVID carried on and we saw our industry crumble in places where it was already crumbling, it really gave me pause. Do I want to go back to that? And I was dead set on not doing it.

Maybe a year into it, I was like, I wouldn’t go back to any restaurant. It would have to be a really good restaurant or a restaurant I really believed in.

This is probably the first time maybe in any industry that I’ve worked in, in any job, where I had extensive training. In a lot of jobs, if they catch a whiff that you’re competent, they’re like, “OK, I did my job. I told you what to do and then you can figure it out because you’re smart.” But here, accountability is really woven into the fabric of this company. No one’s perfect. We’re constantly checking on one another to see how we’re doing, first and foremost as people. But also just like, “Hey, I saw that you’re struggling with this. Do you want to talk about it?”

The precedent is set from the top down that everyone is a person and everyone has lives to live outside of the restaurant. It’s something that I’ve seen only in a few restaurants, really.

We have financial education meetings. Being able to share in the wealth of the business and actually feel some sort of ownership of it through profit sharing — very few other places do that. I can only give one other example: Reem’s, which I also worked at. They’re also two businesses that are structured very differently, a co-op versus healthy capitalism, which is great. I’ve seen both examples of leaders who genuinely care about their workers. Reem’s is in a totally different category, but the throughline for me between here and there is definitely about investing in your workers — in time, with money, with care, with kindness.