Hospitality Included Hospitality Included Why are we doing

Hospitality Included

Hospitality Included

Why are we doing this? • To provide professional and financial growth for all of our people • Hospitality is a team sport, and our current system doesn’t reflect the true nature of the culture you are a part of.

Why are we doing this? • As a profession we want to: • • Improve Culinary Team pay while providing career growth Keep the Service Team neutral or better, while providing career growth Make management a viable step for all Minimize the impact to our guests • We believe USHG can and should be a career, not just a job

So why do we have to eliminate tipping? • For two years we’ve explored every avenue to accomplish our goal • We found that tipping is fundamentally linked to the gap between our kitchen and service teams – the rules and regulations around who can share in tips and when makes it impossible to function as One Team • Every cost we have as a business is baked into our menu prices – except for your hard work. • Every raise we give our kitchen team ultimately leads to a raise for our service team. Yet our service team can receive a raise that is not shared with our kitchen team

So how are we going to do it? • We are going to raise base wages for all hourly staff • • $9. 00/hr for our Service Team $11. 00/hr for our Operations Team (Stewarding and Receiving) $11. 00/hr for our Kitchen Team $14. 00/hr for our Line Cooks • In an addition to hourly rates, we are also looking to offer a variable compensation plan tied to the success of our business.

Art Food BOH Progression Ladder JOB GROUP GOAL BASE WAGE Sous Chef Hourly Rate Position Sous Chef Salary + Benefits Low High Chef de Partie $14. 00 $18. 00 Butcher $14. 00 $22. 00 Pastry Cook $14. 00 $18. 00 Line Cook $14. 00 $18. 00 Garde Manger $11. 00 $13. 50 Prep Cook $11. 00 $13. 00 Receiver $11. 50 $13. 00 Steward $11. 00 $15. 00 Runner $11. 00 $12. 00 Extern $11. 00 - Salary + Benefits Chef de Partie $18 – 22 Pastry Cook Line Cook $14 - 18 Butcher $14 - 18 $14 – 22 Garde Manger $12 - 14 Line Cook Prep Cook $11 – 13 Intern $11 - 12 Porter $11 – 13 Receiver $11 - 13

So how are we going to do this? • The first step is launching a Revenue Sharing program for the Service Team, and our goal is to eventually include our kitchens in the financial wins of the restaurant. • Why wait for BOH? • Steep learning curve and want to be sure to bring guests along with us to ensure long-term success • We opted for consistency of earnings: • Hourly Rates for our Kitchen Team • Variable Pay for our Service Team • Why Revenue Share? • Allows the team to share in the success of the business, with no earnings ceiling • We will be raising our menu prices to reflect the true cost of doing business • No Service Charge, No Admin Fee, No Tip Line

So what is Revenue Share? • Revenue share at The Modern is over the entire week, not dependent on shifts worked or if guests leave a tip or not • Each individual will receive shares based on their position, skill level, and overall contribution to the success of the team • Those shares combine with hours worked to get total shares for that week • If you earn 60 shares and work 40 hours that week, you would have 2, 400 individual weekly shares that week. • All individuals weekly shares combine to form that week’s “Outstanding Shares. ” • If you divide the entire Revenue Share Pool (more on this later) by the outstanding shares, you’ll get that week’s individual share value. • Your shares, multiplied by that share value, equals your Weekly Revenue Share HOW IS REVENUE SHARE CALCULATED? Modern Weekly Revenue Pool Outstanding shares Share Value $. 27 $27, 000 100, 000 shares $. 27 2, 400 $648 Individual Weekly Shares Weekly Revenue Share

Breakdown of Revenue Share Earnings Current Earnings Breakdown Revenue Share Earnings Breakdown 14% 25% Total Base Earnings Tips Revenue Share 75% 86%

So what is Revenue Share? • Each position has three levels: 100, 200, 300 • We value the current team as experienced, and will start at 200 Level or higher • New Employees come in at 100 Level • Share increments will be earned at 100, 200, 300 values at 5 or 10 share increments depending on the position • Increasing share ranges allow for the range of earnings within a role to broaden as you progress through your career and to encourage movement to allow others the opportunity to advance as well. • You do not need to top out in your position to receive a promotion to another position • There’s not a defined path – your career is up to you • We want you to explore other areas of the restaurant

So what is Revenue Share? • Each level has a skill set requirement that will be completely transparent • It’s not only in your manager’s control, but your control • Ex. Barback will need to successfully complete: “Enlightened Hospitality 101”, “The Knowledge”, “Hi 101”, Bar Theory 101”, “Bar Practical 101”, “Modern Wine 101”, Manager Performance Review • If not an Event Server, but scheduled in the PDR, you will receive the share value associated with your primary job • If you are asked to work in a role that differs from your scheduled role, you will earn the share value associate with your scheduled role

So what is Revenue Share? SHARE VALUES BY POSITION Position 100 Level 200 Level 300 Level Reservationist 35 40 45 Server Assistant 55 60 65 Barback 55 60 65 Barista 55 60 65 Server 90 100 110 Maitre D‘ 80 100 120 Sommelier 100 120 130 Bartender 110 120 130 Captain 110 120 130

Current Tip Pool Distribution $0. 00 $0. 81 • Kitchen Staff • Captain $0. 00 • Reservations $0. 81 $0. 00 • Sommelier • Barista $0. 77 $0. 00 • Bartender • Maitre D’ $20 $0. 67 $0. 00 • Server • Expeditor $0. 51 $0. 20 • Support • Host $0. 51 • Barback $0. 40 $0. 44 • Server Assistant • Food Runner

So what is Revenue Share? • How did we determine the Revenue Share percentage? • We knew we needed to keep the team whole • Starting with revenue, we worked backwards to determine a percentage that would both: • Keep the team whole week-over-week • Not drive menu prices so high as to discourage guests • Our final percentage, combined with shares and an increased hourly wage, kept the team neutral or better

So what is Revenue Share? • The Modern will begin with a total Revenue Sharing Pool of 13. 5% • This is a smaller piece of a much a larger pie – Revenue includes increased menu prices in PDR, Bar Room, and Dining Room • This percentage is what it will take to keep the team even, and even better • There are things we can do as a team that can increase the Revenue Share Pool percentage • Overtime • If we achieve minimal impact to our guests and there’s room to increase prices, we could also increase the pool – either way a benefit to you

What will this mean for our guests? • Our prices will increase across the board, but not evenly • The goal is to keep the change in total cost to our guests – given their current average gratuity – as minimal as possible • Price increases are item by item, with wine and beverage also priced differently and separately • In order to meet our short-term forecasts, we need to achieve revenue increase of at least 25%

Additional Gratuity • There will be no tip line our checks • If guests write any amount above the total, we will add it separately as additional gratuity. This will require a manager’s swipe • Tips left by chance will be paid out to all legally eligible positions, prorated by hour based on the assumption that lunch ends at 5 pm daily, and starting with earliest call time

Keeping our FOH “whole” • We have a established a ground floor rate for each position based off of the average rate for your position on a monthly basis, using historical data that includes OT and all tips • Ground floor rates are different for December, January, and February • PTO was excluded to benefit you • We are guaranteeing you that hourly rate for each hour worked in each of those three months • At the end of the 12 weeks, if you did not achieve your ground floor over that period we will pay you the difference • We’ll be monitoring paychecks weekly, and meeting with you monthly

Keeping our FOH “whole” • Why are we doing this? • We believe that our model works in real life as well as it does in model-form, but we don’t think that risk should be borne by you • If necessary during these 12 weeks we will be fine-tuning the model in real-time to assure that we are keeping you whole as a team • Model is based on current conditions and the guest component and staffing levels might lead us to incremental improvements • By month three, we should be where we want to be and month four should be a smooth transition • We intend for you to make more than this rate. This is a floor based on an average, rather than the lowest rate, to show our commitment to you • Anything above this floor is yours. We hope and intend and deeply believe that our Revenue Sharing program will be a win for our team.

HI Check-ins • We will sit down with each individual and share: • Where you are in the range • What your pay will look like • And we will learn: • How you want to grow • What’s your ideal schedule • What you prioritize most

Questions? • Open forum here • We will all stick around if there additional questions that you didn’t get answered • Engage your Management Teams in a dialogue • Executive Committee “coffee talks” at each business • Continue submitting questions on inside. ushg • You can email us directly! (likely will put question and answer on inside. ushg so others will learn from your question!) • Other ideas for how to keep the dialogue alive?

Hospitality Included