Illustration: Lalalimola

On the second day of business at their New Mexican spot, Santa Fe BK in Williamsburg, Melissa Klein and John Watterberg take a seat in the dining room to discuss one of the guiding principles of their new restaurant. The married couple describe a recurring experience from their 20-some years in the city’s hospitality industry. At the end of a typically chaotic night of dinner service somewhere, Klein, who has worked as a server and hostess, and Watterberg, a bartender, would each prepare to head out, count their stacks of tips with glee, then wave good-bye to the cooks and dishwashers with a slightly guilty “Thank you!”

“While they’re mopping, going, ‘Uh-huh. Yeah, great. Let me mop for my $15’ ” — or their $12 or $8 — “ ‘an hour,’ ” says Klein. “It’s rough. There’s definitely a divide there, and what we’re going for is to try to erase that divide.”

At Santa Fe, which began serving green-chile breakfast burritos and cheeseburgers in early October, they hope they have come up with a solution. Front-of-house staff will make $12 plus tips; cashiers for the daytime takeout program, who are also tipped, will make $15; and back-of-house workers will earn $18 plus what they call a surge bonus, a percentage of the restaurant’s sales during their shift (they’re planning on 8 percent and seeing how it goes). That way, “the busier you are, the more money you make,” as Klein puts it, whether you’re interacting directly with customers or not.

That last detail is important because, according to New York law, tips may be pooled only among restaurant employees who provide personal service to customers, leaving out those who don’t find themselves beside a table or behind a bar reciting specials or refilling drinks. In an effort to level the playing field, certain outfits — like the vegetable restaurant Dirt Candy and Crown Heights’s Hunky Dory — eliminated tips and raised salaries. But the movement to forgo tipping has mostly fizzled out in New York, at least for now, stymied by skeptical customers and, sometimes, unhappy servers who earn less money with set wages.

More recently, some restaurants in the city, like the much-talked-about seafood place Dame, have instituted staffing innovations such as training cooks as servers, entitling them to a share of the tip pool when they wait tables. And when Union Square Hospitality Group’s Danny Meyer announced the end of his restaurants’ no-tipping scheme last year, he alluded to plans for a revenue-sharing model akin to the one at Santa Fe and a scattering of other restaurants around the country.

For Klein and Watterberg, Santa Fe’s profit-sharing strategy was an unexpected outgrowth of the pandemic. In late January 2020, Watterberg, 43, left his job at Botanica Bar after 12 years to take care of their two kids; Klein, 41, after stints at DuMont and the Red Cat and as a stay-at-home parent, started working full time at Motel Morris. Weeks later, restaurants were shut down by COVID. “We had a long time to talk,” says Klein. “We spent a year planning how to open a restaurant equitably, and we didn’t even know if restaurants were going to open back up. It was kind of a speculative exercise.”

That hypothetical conversation extended to wage transparency and what they call “horizontal hiring,” meaning they are committed to training anyone on any station. Because the payroll structure should ensure that everyone earns about the same, roughly $200 per shift on a regular night, they hope people will gravitate toward their ideal position. “Everybody wants to be a bartender,” says Klein. “Everybody knows that’s where you make the most money — but that’s not necessarily true here. And some days, I would rather bus tables than bartend.” One thing they decided early on was that the money they add to back-of-house paychecks won’t translate to higher menu prices. “It means we gotta cut our pay,” says Watterberg. “At every point where we were like ‘How are we going to pay people this much money?’ Melissa looked at me and said, ‘We take another pay cut.’ And that’s acceptable as long as we can pay our bills, as long as our children have a childhood.”

The rent for the restaurant is not outrageously cheap, but they’re paying less than the previous tenants; the landlord “seems happy to have the space filled,” Watterberg says. And they kept their food costs low, they say, with the understanding that their payroll would be high. The one true extravagance is the Hatch green chiles, which are shipped in from New Mexico, where Watterberg spent much of his childhood. The chile is key, present in the breakfast burritos constructed from housemade flour tortillas and in the cheeseburgers (both $9 apiece, or $50 for a bag of six) and, when dinner service begins, in dishes like enchiladas and macaroni and cheese. At the moment, they have 3,400 pounds stockpiled, some of it just arrived from New Mexico. They estimate they will use three or four tons of the stuff a year.

That symbol of the Southwest, seldom seen out of its home state, lured a number of New Mexicans to the restaurant on its first day — one of whom even came back the next morning. As for the couple’s salary plan, the response has been almost as enthusiastic. As Klein and Watterberg put it, they never expected they would need to be selective, but they’ve had no trouble staffing up. “With the persistent hiring deserts and labor shortages, the constant question is, is it lazy, entitled workers, or is it abusive management practices?” Watterberg asks. “And we’ve got plenty of people on hand and more in the wings.”

Want more stories like this one? Subscribe now to support our journalism and get unlimited access to our coverage. If you prefer to read in print, you can also find this article in the October 25, 2021, issue of New York Magazine.