SuViche Hospitality Group Transitions to a Commission-Based Compensation Model with TipHaus
SuViche Hospitality Group, owned by brothers Aliosha and Andrei Stern, operates four popular South Florida restaurants, including SuViche, Novecento, and Chi Fa. Committed to great food, hospitality, and attracting top talent, SuViche transitioned from traditional tip pooling to a commission-based compensation model. With TipHaus, they seamlessly implemented this change without disrupting payroll operations and increased employee satisfaction.
Executive Summary
Region:
South Florida
Business Type:
Multi-Concept Restaurant Group
# of Locations:
4
Interviewee:
Andrei Stern, CFO and Co-Owner
Problem:
SuViche Hospitality Group faced rising labor costs due to Florida's increasing minimum wage and tip credit, making their traditional wage model unsustainable. Additionally, the complexity of tracking and distributing tips added administrative burdens, prompting the need for a more efficient and profitable solution.
Solution:
TipHaus helped SuViche transition to a commission-based model by allocating the service charge entirely to employees. This streamlined tip distribution, ensured compliance with labor laws, and reduced administrative costs, improving wages and operational efficiency.
Background
SuViche Hospitality Group is a renowned South Florida restaurant group dedicated to exceptional food, hospitality, and fostering a talented team. Previously relying on a traditional tip pooling model, they transitioned to a commission-based compensation system with TipHaus after thorough research and careful consideration. In an insightful conversation with Andrei Stern, Co-owner of SuViche, we learned this innovative shift enhanced operational efficiency, boosted job satisfaction, and opened growth opportunities for employees. TipHaus made it possible for SuViche to seamlessly implement the system without significant payroll changes, enabling employees to earn livable wages through sufficient hours at one job while also reducing operator training costs and improving shift management efficiency.
My staff uses the TipHaus Employee App all the time, and it’s their favorite perks. They love being able to see in real-time exactly how much they're taking home, who they're distributing tips to, and who’s contributing to them if they’re in a tip pool. You can’t get more transparent than that. It’s not like relying on a worksheet and hoping the numbers are right at the end of the pay period. The team absolutely loves it, and they can catch issues and troubleshoot for us before payroll, helping us avoid mistakes. It's a win-win for everyone.
Andrei Stern
CFO and Co-Owner
Problem
Florida legislation passed an increase in the minimum wage while also raising the tip credit, which caused the tipped minimum wage to continue rising each year. SuViche Hospitality Group initially absorbed these incremental wage increases for a few years, but it became clear that this approach was unsustainable. The rising labor costs, along with the challenges of maintaining service quality and employee compensation, created a need for change. Additionally, the complexity of tracking tips and ensuring fair distribution across their team added administrative burdens. SuViche realized they needed a solution to maintain profitability while ensuring their employees were fairly compensated. To address these issues, they decided to implement a service charge on all dine-in checks and transition to a commission-based compensation model for their employees.
Solution
TipHaus played a key role in helping SuViche successfully implement this new model. The restaurant group introduced an 18% service charge across all dine-in checks (with some locations charging as much as 20%) to ensure both service quality and adequate employee compensation. TipHaus made the transition to a commission-based system seamless, with minimal changes required to the payroll structure. The platform allowed SuViche to allocate 100% of the service charge to their employees, transitioning their compensation model from a tip-only structure to one that combined commissions and tips. This shift led to a 50% increase in hourly wages in the kitchen and a 13% boost in average ticket size.
TipHaus also helped track and manage the distinct earnings codes for service charge commissions and additional tips, ensuring proper distribution. The system ensured that more than 50% of employee wages came from commissions, keeping SuViche in compliance with Florida’s labor laws, specifically the 7(i) overtime exemption under the FLSA, which allows commission-based wages to substitute for overtime pay if at least 50% of an employee's wages come from commissions. This 7(i) exemption enabled SuViche employees to earn livable wages with sufficient hours at a single job, eliminating the need for multiple jobs. TipHaus also reduced administrative burdens, simplified shift management, and lowered operator training costs by streamlining payroll processes.
By switching to a commission-based compensation model, we increased employee compensation from 17.5% of sales under the tip-only model to 22% with the new commission-plus-tips structure. Over 50% of employee wages now come from commissions, keeping SuViche compliant with Florida's 7(i) overtime exemption under the FLSA, allowing employees to earn livable wages with sufficient hours at one job, reducing the need for multiple jobs.
Andrei Stern
CFO and Co-Owner
Results
By implementing TipHaus, SuViche Hospitality Group successfully navigated the challenges posed by rising minimum wage costs and a complex tip distribution system. The transition to a commission-based model not only improved employee compensation and satisfaction but also streamlined operations and ensured compliance with Florida labor laws. The use of TipHaus has empowered SuViche to maintain high-quality service and retain top talent while reducing administrative burdens and operational costs, creating a sustainable solution for the future of their business.
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