5Church combats staffing crisis with new profit-sharing program

Dividing the Spoils

Look up at the ceiling of 5Church and one of the quotes from The Art of War says: “To expand your territory, divide your spoils.”

The two-year-old restaurant has started to divide its spoils with a new profit-sharing program it hopes to roll out completely in the next 18 months to all staff who make the tenure cut of three years.

“That quote is sort of one of our rallying cries,” owner Patrick Whalen said recently at the restaurant. “It’s a core value.”

For now, 5Church’s Charleston profit-sharing includes two top employees — General Manager Tom Marino, Executive Chef Adam Hodson. A percentage of the profits from the founding partners’ shares will be divvied up quarterly. A different and undetermined percentage will be divided up equally each quarter as the program evolves to include senior-level and then hourly employees, Patrick says. The program follows the profit-sharing that 5Church does in its Charlotte restaurant.

“We already do this in the Charlotte 5Church,” Whalen says of the restaurant that’s been open for five years. “Ultimately, it’s a core belief of the company that anyone who’s part of the success of the business should be profiting from the business, not just from hourly pay or tips, but as a partner. It doesn’t amount to a ton of money, but it’s a nice extra something each quarter that demonstrates that we care and that they are important to us.”

Whalen points to server Coleen Birney in the Charlotte restaurant as an example of the company’s thinking.

“Coleen has been with us since we opened. She’s one of the best servers, the most genuine. On an average Saturday night, she generates maybe $3,000 or $4,000 in sales, but how much has she generated for our business not just in dollars, but in positive responses from customers?”

He says a server like Birney has a different value from an investor.

“She, on a daily basis, is making a difference in terms of retaining our customers and making the business viable not just for a year or two years, but for perpetuity,” says Whalen. “She should be a partner. And she is a partner.”

Whalen says that his is not the first restaurant group to try profit-sharing, but he’s unaware of any other that doesn’t require a cash buy-in from potential partners.

“You can tell someone to put up $10,000 and you own a percentage of the business, but that’s a problematic approach because many people don’t have $10,000 to buy in,” he says. “Ours is a sweat equity approach because we would like all the staff to have a stake in the business’ success.”

For Hodson and Marino, the new program means they can claim ownership.

“When you share in that percentage, you almost want to work harder than you normally would because otherwise, you’re like, ‘I’m working really hard and making this guy a million dollars, but what am I seeing out of that?’ Of course, this is going to make you work that much harder,” Marino says. “It also helps as far as bringing people on and retaining people, because obviously Charleston is a beast in finding talent.”

Hodson agrees.

“It will definitely help,” he says. “I could see the spark in the cooks’ eyes when they saw me, Tom and Rachel get it a few months back. They were like, ‘Holy crap, this guy worked very hard toward something and now he’s partner in the restaurant and has succeeded and there is more to come.’ As far as the staff that’s been here since the opening, there’s a little spark in their eyes about their opportunities in the future as well.”

Hodson adds that it meant more to him than just money.

“First, it’s a sense of accomplishment. Three or four years ago, we had a conversation outside of 5Church Charlotte,” he says. “I’d had a rough day and you asked me directly what my goals were. I looked up and I was like, ‘I want to own a restaurant with you one day.’ And here I am three or four years later and I’ve achieved that goal, which is very important to me. He’s the one who has helped me obtain that goal. So it’s not only a sense of accomplishment, but I had a great leader to show me how to reach my goals at the same time.”

Whalen says he expects hourly employees to take advantage of the increased access to owners that profit-sharing implies.

“A lot of time there’s so many layers of bureaucracy between you and the people making decisions. In this, an hourly can be going to the owner and giving information, and we take it seriously because it’s a partner,” he says.

As more employees stay on past that three-year mark, the quarterly shares will get divided among more employees and the cash value will diminish, but an employee’s shares get returned to the company to be redivided if someone leaves.

“It’s who I believe we are,” he says. “And it’s certainly who we want to be.”

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