Andy Ricker feels like he has a lot of strikes against him right now. The chef-restaurateur behind the Portland, Oregon-based Pok Pok empire recently expanded to Los Angeles, where he is struggling to survive, let alone turn a profit. This is saying a lot for a chef whose New York flagship, Pok Pok New York, just last year received a Michelin star.
Ricker’s first L.A. eatery, his noodle shop Pok Pok Phat Thai, opened in Chinatown last year. Then in October of this year, he opened his flagship, Pok Pok L.A. The restaurant was highly anticipated, not just for the food, but also for Ricker’s plan to use the new Tock reservation system and an experimental, tipping-service charge system to better equalize pay between his front- and back-of-the-house staffs. (A 5 percent service charge would be added to each check, but tipping would still be expected.) Last week, less than six weeks after opening, Ricker got rid of both systems. We talked to the chef about what went wrong in L.A., the tipping crisis and what he believes the public doesn’t understand about the restaurant industry.
Why did you drop Pok Pok L.A.’s tipping-service charge method?
We dropped the 5 percent service charge because we’re in a new market and I feel like we’re facing a lot of strikes here and I just didn’t want to add any more to us. The problem is that in California, the minimum wage is going up rapidly. I think January 1, we go up a little above $10 [an hour]. And then six months later, in July, we go up even further, closer to $11 [an hour]. And then the following year, we go up again. So there’s going to be a rapid increase in the rate of the minimum wage.
This is a huge conversation amongst the restaurant professionals and it’s been something that’s been really difficult for the public to grasp. But it really is something that is approaching crisis levels for the restaurant industry. We’re a very low-margin, a very thin-margin industry. If you make a 10 percent profit, you’re doing pretty damn well. So when your bottom line, the very least you can pay people goes up—and we’re talking about serving staff who already make the most money in the restaurant from from massive tips—when their minimum wage goes up, it’s very difficult to absorb without raising prices.
The problem is, once you start raising prices past a certain point, you price yourself out of the market. People just won’t go to your restaurant because you’re too expensive. Then we have another problem, which is that when a server is getting $10.50 or $11 an hour, plus they’re pulling down between $150 and $300 a night in tips, it’s pretty hard to look a cook in the eye and say we cant afford to pay you $15 or $16 an hour. But of course if we make wages equitable between front and back of house, we will go out of business in a matter of months or weeks. It’s just…we can’t do it. It’s not possible. So everybody’s looking for a solution.
We tried to get out ahead of this by imposing a 5 percent service charge. We have been using that since we opened to supplement the back of the house’s wages so they get closer to wage parity with the front of the house. They’re never going to get exactly there as long as we keep the tipping system, but it’s an improvement. But the fact of the matter is, like I said, our margins are really thin unless we find a creative way to increase revenue to cover higher wages. We’re not going to be able to keep on going. We were trying to get ahead of the curve. The changes haven’t come yet, but they’re coming very quickly. And we were hoping to get this in place, so out of the gate everyone was comfortable with it, and when the changes come we wouldn’t have to make changes on the spot each time a change in wages came.
The problem is, the public didn’t understand it. The servers, who were used to a certain way, were upset because customers were mistaking the 5 percent service charge for the total tip. Or not tipping as much as they normally would, which is exactly what the fallout of that is supposed to be. We were trying to redistribute some of the wealth. And people were just upset across the board. It was just not working. I decided that we’re not willing to be ahead of the curve on this right now. We just can’t afford it. So we dropped it, for now. But I guarantee that in the next two to three years, we’re going to have to do something.
Are you specifically talking about Los Angeles?
Yes, but if you follow this stuff, you’ll see that in every major market, the shifts are coming down the pike. In New York we’re going to a $7.50 minimum tip credit wage for front of the house. That’s a 50 percent raise in front of the house wages overnight. It’s a huge problem. In Portland we’re already over the top end of the minimum wage. It’s a very liberal place and that’s why I like living there. But it’s very, very likely that our minimum wage is going to go through the roof also with no chance of a tip credit. It’s just inevitable. This is something that is very, very difficult to get to the public in a way that they understand. Because most of the public looks at the restaurant industry as a place were the owners are getting rich on the back of the workers, which is really not true. I guess there are some circumstances of that, but this is all especially difficult for people in my sector.
There’s all kinds of stuff coming down the pike in L.A. that is going to make it very, very difficult to do business here. And it’s very much on the radar of everybody here. Besides the McDonald’s guys, this is the number one conversation in the industry right now. Yes, food prices are going up. Blah, blah, blah. Yes, credit card fees continue to be a problem. Yes, the cost of everything has gone up. Real estate prices have gone through the roof. But the number one conversation here is wage disparity and the antiquated tipping system.
Is this a moral crisis as well? Trying to equalize wages for your staff?
It’s both. You know, Danny Meyer has gone to a no-tipping model in New York City. He’s planning to do it all his restaurants. He’s trying to get out ahead of this. Fortunately for him, the people who go there just don’t care. They just hand their carbon AmEx over and it doesn’t matter. So it’s a good place for it to start.
But yeah, it’s a crisis morally. I started out as a line cook. I was a line cook for two decades on and off. You would make $8, $10, $12 an hour. You’d work 10 hours and you’d make $80, $90, $100. And meanwhile the serving staff would walk away with 200 bucks. They were sniffing cocaine and fucking the waitresses and eating steak. We were drinking Budweiser and smoking dirt weed. And that was just the way it was. In those days, you could rent an apartment and you could live on being a cook almost anywhere you were. Unfortunately, that’s not true anymore.
If you’re in L.A., a studio in a shitty area at the cheapest is like $800 or $900 [a month]. You want to live in a decent place, close to work, and that studio starts at like $1,400 or $1,500 [a month] and go up from there. You can’t be a cook and afford that. And in New York, it’s worse. In San Francisco it’s impossible. In Portland, it’s getting bad. We have reached a place in our economy where you really need to make $17 or $18 an hour to live comfortably in a major market. It’s a problem. And I’m a cook; I sympathize and empathize with the cooks and I want to help them. But the way that the stuff is being implemented is incredibly problematic for me.
I’ve talked to a lot of people, and we’re all in the same boat. We all want to be able to attract professional cooks, and there’s a huge shortage of them right now. In order to do that, you have to pay really well. So we’re trying to figure out how to pay people well and still stay in business.
All you have to do is the math to figure it out. If you’re running at a 10 percent profit margin and you’re running a 30 percent labor cost, and your labor cost goes up by 40 percent overnight, that cuts directly in your profit margin. At the end of the day, we’re a businesses. We’re trying to do this to make a profit. If we can’t make a profit, we can’t maintain the place. We can’t buy new equipment, we can’t afford to give anybody any raises. Expenses are always going up and you can’t just absorb shit as it comes to you. You have to find ways of either increasing revenue or cutting cost.
That’s number one. Number two, how do we even out the wage disparity? How do we keep quality up and still give good service and be in the hospitality industry? It’s a very, very difficult puzzle to figure out. I think most people feel that the ultimate model is just to go with the European model where the customer understands what it costs to eat out. They’re willing to pay it. And then you just pay everybody either a salary or an hourly wage. And that’s it. There’s no tipping. That’s what Danny Meyer is doing; he skipped the whole service charge thing and went straight to the no-tipping model. Because he sees it. He’s a visionary. He sees that really the way forward here is to drop the tipping model entirely.
Danny Meyer had to raise his prices to do that. Do you think people aren’t willing to pay more for fast-casual food like yours?
There are a lot of dynamics here. We’re what people identify as a Thai restaurant, so we automatically get compared to the mom-and-pop Thai restaurants down the street. They look at what those people charge and they make a direct comparison, which is insane. There’s no way to make that comparison. If you go to your corner mom-and-pop Thai shop and order a Pad Thai with chicken, they give you this thing that weighs two pounds and it costs $8. And then you go to Pok Pok and it costs $14 and people are like, well this is half the amount of food. Well, we press our own coconut milk. We make our own curry paste from scratch every day. It involves somebody with a fucking piece of stone in their hand pounding that shit. We pay everybody overtime. We provide medical benefits. We use ethically sourced meats. We use hormone free, organic products. We don’t buy pre-made anything. But you can’t sit there and have an argument with somebody about that online. You just lose.
I donʼt have a beef with mom-and-pop restaurants. I eat at those restaurants and I understand exactly what’s going on and I get it. But Iʼve chosen a different path, you know? So we’re in this weird position where we’re considered Asian—and this goes for Mexican food, Chinese food, Vietnamese food, too—which has been relegated to being this very cheap commodity stuff. It’s become fetishized. So people are used to paying low, low prices for this stuff. So when you try to do it in a responsible way, you’re accused of ripping people off. This is a fight that we’ve been fighting for 10 years now. There’s not much you can do about it. You just have to wait until public perceptions change. You can’t change it yourself. All you can do is hope you can connect with a certain customer base that likes what you do and is willing to pay the extra money for the care that you give to it. That’s all you can kind of hope for.
Chefs Danny Bowien and Alex Stupak, who also cook what is considered “ethnic” food, have told me the same thing. Do customers not want to pay more for Thai food specifically in Los Angeles or do you think that’s true in all three of the cities that you’re in?
I think it’s more of a problem in L.A. and Portland because there’s so much more of it in those places. In New York people are used to the fact that New York is fucking expensive. It doesn’t mean that people aren’t critical of the prices, but generally speaking, there’s less of that noise in New York.
They’re all receptive to the Pok Pok stuff, but when it comes to our little noodle shop, not so much. That’s kind of the deal. We have our Michelin star, but we’re not packed the way we would be if our prices were 20 percent less than they are. If we were a lot cheaper, I’m sure it’d be a lot busier. We do fine though. We’re busy, making money finally. It took a few years to get there, but we finally got there. It’s a struggle. It’s not just people like me and Danny and Alex; it’s the smaller guys too. I talk to Thai vendors a lot. And they’re like, I can’t charge more than $7 because people won’t pay it. They feel hemmed in and that’s not fair. They are trying to do something better, but the market just says fuck that, we’re not paying for it. We’re all kind of in the same boat.
You said that when you opened Pok Pok L.A. you had multiple strikes against you. What were you referring to?
Number one, we’re a new kid from out of town. In a city that really feels like they know Thai food intimately. So there’s bound to be some eyebrows raised. Like how dare this guy come from another place and try to make Thai food. Number two, we’re in a location—Chinatown, which is part of downtown L.A.—that’s up and coming. We opened a very large restaurant in a neighborhood where there’s virtually no pedestrian traffic after 6 P.M. or 7 P.M. unless it’s Friday or Saturday night. There’s a lot of development happening, a lot of new businesses moving in. But we’re still ahead of the curve, so that’s another strike.
Third strike is that this is a huge location. We have just over 6,000 square feet with another 1,000 square feet of outdoor seating. It’s over 200 seats. And in order to make the rent and cover the cost to build out, which was huge, we have to get a certain amount of business in here in order to even survive, let alone make a profit.
We opened up with the Tock reservation system. On the surface it seemed like a really great idea, but we dropped it because there’s so much confusion surrounding it. People were resistant to the idea of paying in advance for a ticket, even though it gets applied to your bill and it wasn’t a huge amount of money. There was confusion with the staff on how to deal with it. It’s a new technology. One thing that I could never have possibly predicted was that people started thinking that the only way they could come and eat Pok Pok L.A. was to buy a ticket. That couldn’t be further from the truth; we can take as many walk-ins as can come at us. I was tired of fighting this and ditched it. If you’re just making it difficult for people on every turn and they’re not willing to go along with it, you’re just shooting yourself in the foot. And that’s a silly thing to do if you’re trying to survive.
I feel like most of this has been kind of negative. We also do some cool shit!
Oh no! OK, well I hear from chefs all of the time that Pok Pok is one of their favorite restaurants in the country. Why do you think people love it so much?
I think that what I’ve done is been kind of an anti-chef. I doggedly pursued the idea that I’m still a student. I’m still learning. We’re trying to be really consistent and to kind of innovate by introducing stuff that’s been around forever. If you look at that sector of food we’re in, it’s been kind of the same 50 dishes in most markets for the last 30 or 40 years. And when you say look, here’s this food that’s cooked by a small ethnic minority in northern Thailand on the border of Burma, people appreciate that.
Nowadays, I think that people have a bigger fascination with food from other cultures. And it just so happens that I have been pursuing this shit for decades now. I have to give credit to a certain extent to the Internet and the rise of food travel shows, food entertainment. But also to the fact that the demographics of the United States have changed in the last 20 years. We’re not monocultural. A lot of college kids now aren’t like, oh, let’s go to McDonald’s and hang out. It’s like, let’s go to Koreatown and search out this new place that has this crazy soup that I’ve never had before. There’s a sense of adventure.
Alyson Sheppard writes about restaurants and bars for Playboy.com. She is unable to correctly pronounce “Phat Thai.” Find her on Twitter: @amshep