Can a worker-owned restaurant work?(southseattleemerald.com) |
Can a worker-owned restaurant work?(southseattleemerald.com) |
It's a fine business model for at least this use case, it appears.
That's the great thing about capitalism. You get to try out all sorts of models for running your business and whatever works for you is what you can run with.
The answer is "no" unless all staff work for free.
https://en.wikipedia.org/wiki/Betteridge%27s_law_of_headline...
Are they surviving because people inject $1,000 of their money to the business?
”they haven’t made a profit yet”
You can pay workers a million dollars an hour. If you can’t turn a profit then it won’t “work”
So for instance, an employee(s) might sell their shares back to Teamshares or another agency, at which point the worker agency is diminished. Particularly in the former case.
I work for Teamshares, and while not everything about the company is public, what we do is buy small local companies when their owners retire, and transition the companies to an employee-owned model. Everyone gets to keep their jobs, workers get a share of the profits, and local communities benefit from business continuity. It seems to work very well, and there's no catch.
Instead we end up in a system where the employee/employer relationship is inherently antagonistic. If you work at McDonalds, in is 100% in your interest to do the absolute bare minimum possible to not be fired, and in your employers interest to pay you as little as legally possible. This costs more overhead and resources from managers, and dealing with angry customers, and food loss/waste, which could largely be avoided if the employees were invested in the success of the workplace.
If you hate it, go do it yourself. You’ll either a) succeed and solve your problem or b) develop a much more complete understanding of the problems being faced by someone in a different role.
I think every worker would benefit from being more involved in the business operations, or really any other jobs that help their company/project function.
(of course it’s probably not practical to do so)
Exactly right. All large enterprises I have worked give full freedom to devs to develop alternative to any SAAS product they dislike. As simple as that.
To be clear I don’t mean to take your ball and go home the moment people aren’t doing things your way. Everyone has a responsibility to communicate and raise concerns productively. But if one finds themselves constantly thinking everyone else is a clown and they could actually do it better… go do it!
It looks at how Toyota took GM's worst plant and made it one of the best using the same workers. And how GM's management refused to learn lessons from that.
I think the current antagonism is something that started with management many decades ago. But now it has a lot of momentum, such that people on both sides are used to it and will carry it forward. I remember reading a great zine piece from a video game tester who'd had a variety of shitty jobs. He finally found one that was really good: good pay, good working conditions, nice bosses. But he felt compelled to steal office supplies in bulk because that's what he'd done at his shitty jobs. He was sort of mystified by it, but he couldn't stop.
However, there are alternatives. I live near an Arizmendi bakery [1], which is a worker-owned co-op. It's great. The food is really good, it's sanely run, and the people behind the counter seem serene and present. It's inspired by the founder of the Mondragon co-op [2].
Or you could look at companies that shift to employee ownership later. Bob's Red Mill was actually started by a guy named Bob who sold the company to his employees in 2010. [3]
I don't think those are going to be utopias. But I do think they lack some of the structural disincentives against sanity and compassion that you find in the typical corporate structure, where every dollar in a worker's pocket is a dollar less in economic rents for the owners.
[1] http://arizmendi-valencia.squarespace.com/
I think the current antagonism is something that started with management many decades ago.
I think the pattern goes back, well, as far as you want to go back. There have always been individuals who think that they* should be in charge. There's a continual 'tug-of-war'.
For centuries, only a very few people were able to participate directly - when the world largely consisted of monarchies, empires, "hoards", and all of that**. Ancient Athens, and more recent "Enlightenment" ideas about "natural rights" and "mandate of the masses" etc. have generally been unusual in practice until quite recently.***
The data strongly support much more shared power past a certain level of technological and economic development, but, even if aware of the myriad examples, people with power-lust aren't going to stop. It's directly contradictory to that worldview, ambition, etc. - in multiple ways. And, any given person is likely to tack more towards or away from such notions over time, depending on multiple factors.
Right now, it seems there's much more interest, in multiple realms, on consolidating power, again.
Caveat populus.
* Not consciously intentional play on "the royal we"
** Before that, there's a lot more variation, AFAIK, but also a lot less confidence and evidence - though, ancient Egypt and China (three kingdoms etc.) come to mind as particularly early examples with solid enough information regarding ruling over large numbers of people by individuals (and various attempts &/ smaller "kingdoms" etc.)
*** "Radical", some might say "insolent"
I heard about an Arizmendi customer who went to Paris and was really excited to try real French bread. When she got there, all she could find was horrible like you could find in any supermarket. She told her French friend about her disappointment and asked where she could get some real French bread. The friend's reply was, "Berkeley."
There are a lot of great worker co-ops in the Bay Area. Here's a map from Network of Bay Area Co-operatives: https://nobawc.org/map-of-nobawc-coops/
Having worked that gig before, that isn’t how it works. You don’t want to work hardish, you simply don’t get hours. If management doesn’t want to give you more than minimum raises, you leave for something else, and turn over is high. There is still leverage to do good things (both on worker and management side).
A lot of people working there (mainly managers, but some crew) wanted to be owners, McDonald’s had a franchise system in place to do that but you had a better chance of getting one if you actually learned the ropes at another store for awhile.
The startup scenario you mention offers the potential for huge payouts (of course this plays out wildly across a spectrum). A far easier sell to employees, IMO.
For example, if my company has a bad quarter and makes $0 net, does everybody get paid $0? Most people wouldn’t stand for that and would start job hunting pretty quick. The “work for equity at a startup” crowd does it because they can afford to take the risk of $0. Most people can’t or won’t take that risk.
> If you work at McDonalds, in is 100% in your interest to do the absolute bare minimum possible to not be fired
That incentive won't change much under this new system. Joe Average at McDonalds has little to no power to significantly increase the company’s, or even their franchise’s profits. Sure, they could maybe move the needle slightly, but working (say) twice as hard to make 3% more is probably not a rational move.
But part of it also hinges on the organization being small enough that individuals can actually make a difference. Otherwise it's back to just being a prisoner's dilemma / shared commons, where the incentive is to slack off and let everyone else carry you.
In white collar jobs and as you move into management then the bonus programmes become more aligned with business unit and company performance so maybe you can move the needle and get paid for it. Companies also have the carrots of promotions and pay rises.
So if you're a lazy employee for your initial 2-year contract, you don't get any offer when your contract expires. If you're not, you might get a contract extension or an offer to buy in as an owner.
Or:
If it's flipping hamburgers at McDonald's, be the best hamburger flipper in the world
Ice Cube, or Abraham Lincoln, or Dave Ramsey said that. I forgot which one.
Horatio Alger was a pedophile who preyed on young homeless boys and orphans.
It is very easy for the best burger flipper at McDonald's to remain the best burger flipper at McDonald's forever. His job is safe. The harder he's willing to work without getting a raise, the longer he will be working without getting a raise. One day, he will probably become assistant manager, and his promotion will mean a pay cut because now he's on salary, and his responsibilities will become greater because he has to show up when others don't. They know he will, which is why they gave him the job. Meanwhile, he works under a series of managers transferred from other locations, or hired from other companies. Eventually he gets sick, and his awful health insurance runs out almost immediately. He's demoted, then fired because he can't keep up at the job anymore. Then he's homeless, then he's dead.
Goofus, however, did the least possible in order to keep from being fired, and went to community college at night. He eventually was able to wrangle a paid internship at a company where there was a career path, and quit McDonald's. Everybody was happy to see him go, because he was a person like them who managed to get a good job, and also because he was terrible to work with because he was always so tired from school and didn't put a ton of effort in. Goofus is now middle-class.
postscript: Goofus later also got sick, his insurance ran out, and he became homeless and died. US healthcare is terrible.
It would probably incentivize you to ensure everyone else's work was up to par. This doesn't seem that different from a small startup with heavy equity comp -- everyone is incentivized to work hard, but there are also plenty of times where people want everyone else to work hard but not themself.
In the extreme case, imagine two co-founders. It is common for each co-founder to try and take distracting side jobs / consulting or not quit their dayjob, while the other puts in the hard work to grow the value of the startup. Generally this is a hard-NO from an angel/vc investment standpoint, but outside an external party clamping down, there is an incentive to cheat.
Restaurant work is easy to get in to without having to submit yourself to academic humiliation and corporate humiliation, and since good workers are always wanted, you'll always have a job if you show good work ethic, whereas in other industries your job mostly depends on politicizing at the workplace.
But honestly, the restaurant sector I wouldn't recommend for anybody. The only way to expect a reasonable return on your efforts is to have your own place - and then you'll be working for your landlords who'll keep increasing the rent if they see you're being successful, or wasting decades paying interest on a mortgage. And since customers don't accept higher prices, you can't offer higher salaries. Then you start resenting your employees because they won't stay with you for a long time, and you're always rotating the roster.
Or maybe you have the money to buy a restaurant property in a good location outright. But then the question is: If you have that money, why not continue doing the thing that made you that money instead of investing in the worst sector?
Covid was the wake-up call. A huge part of remaining restaurant workers got laid off or put on "pause" without a salary. They realized that they were expendable to the employers and to the industry, so got new jobs and new careers. No matter what jobs they got, it was guaranteed better than their former restaurant job. With the added bonus that you can actually advance in your career and pay when you're getting more skilled at the job.
I don't know what the future holds for restaurants and eating. Maybe more mix-in with show business, so that people have more incentive to visit and don't mind paying a higher price? Maybe people start learning better to cook? It's not difficult. Maybe better quality microwave/air fryer food, in refrigerators instead of in freezers at the supermarket?
RIP.
But if you had a large, 1000+ person company, unanimity would obviously never work. You would have to go by majorities or supermajorities instead.
Start to lose that just a little bit, where responsibility gets diffuse, the original intention gets lost, or you start hiring people who don't have the same understanding, and it all falls apart.
Not every worker wants to have an equal share of the grunt work. Not every worker believes that they contribute equally to the success of the restaurant and are willing to split the proceeds in that way. Not every worker wants to have to live the restaurant as if it's their life.
Worker owned coops have as many failure modes as "evil" corporate ones do. And in some senses are all the more disappointing because of it.
If anybody is gunho about a worker owned business, just go and start one. It's a free market and we can let the empirical results show us what is possible.
If a restaurant is owned by an investment fund, the fund will try to get as much money out of it as possible, regardless of the restaurant's long-term fate. But owned by the workers, they have a common interest in having good and secure jobs for a long time to come, and so can set up running parameters to best ensure that.
Now the _leadership_ is a different matter. If everybody tries to be the head chef,.you get a confusion. But that is distinct from ownership and can be arranged in many different ways, some of which work.
If all business were worker-owned, one would be right to ask whether a nom-worker-owned business could work.
It says any decision needs a 100% vote from all owners on a discord server.
Board management models generally only work if it the restaurant was individually owned at one point and then that owner left
Starting a worker owned restaurant from the ground up is a terrible idea because the end customer doesn't really care and your artificially creating additional managerial barriers to entry when you have to move fast early on
If someone has the capability of leading a worker owned restaurant (there is always a leader even in these models - e.g. a board chair), they are also equally capable of running a simpler ran benign dictatorship with less red tape.
The other issue with board management runned operations is if you want to expand operations (e.g. opening up a second restaurant). It will get political very fast and not work because there will be disagreements on how money should be spent and allocated
A worker owned business is just a more complicated business. It can work but it needs very specific conditions and it's prone to political issues
I have seen though however a benign dictatorship take on funds from investors to expand operations, but that only works if there is a well established culture (e.g. usually the restaurant has built a few successful stores on their own). It's not very that far off from startups taking investor funding
There's a reason we call restaurant entrepreneur as restauranteurs
I run my own nonprofit currently (board management) and have done startup consulting for the restaurant space for over a decade. Restaurants and startups operates on similar principles
A board management can elect a leader/ceo/dictator if they wanted (and from the sounds of it probably should).
Just like having a company run directly by shareholders is probably a bad idea.
Having a company that is 100% Owned by the same people that it employs does not make a decision on how it's run, it just aligns workers and shareholder interests completely.
Works on open source stuff, like Linux kernel, GStreamer, etc.
https://twitter.com/JosephPolitano/status/169124217640185446...
And yes, obviously worker-owned (x) can work. There are many examples among the comments.
- If the business grows and starts needing management skills beyond what a cook or a waiter would have, you will have trouble hiring a qualified manager for same wages you pay to waiters - If you need a loan to expand, lender is likely to want some control over how a restaurant is run rather than leaving it up to workers
If you are content to stay at a small scale where these factors do not matter, sure go ahead.
Waiters generally make more than managers in restaurants in the United States at least.
>If you need a loan to expand, lender is likely to want some control over how a restaurant is run rather than leaving it up to workers
Co-ops get loans all the time. You just need a governance structure of some sort and collateral for a loan.
Next, expansion. I expect expansion is a tricky proposition because it means dilution, which is both a hard sell and a risk to the workers.
People save up for years so they can apply to buy in and work at Mondragon.
Ref: Noam Chomsky on Worker Ownership and Markets https://www.youtube.com/watch?v=RafTFDwImrU
I predict they will find out this is very much not true. I have seen 1000 pages fail to do this.
When you hear of a popular, well-reviewed, by all accounts successful place closing after 5+ years with no whiff of professional scandal or business partner discord, this is usually the reason.
No, that is actually pretty much exactly how things work. Successful restaurants get higher rents on lease renewal which is why they're incentivized to sign longer lease terms. The restaurant is usually paying for all the necessary renovations to kit a property out with their equipment, decor, and branding, so the switching costs are very high, and the landlord is heavily incentivized to squeeze them. It's one of the largest, most common, and most existential issues for restaurants as a business, and a major reason why the largest and most successful chains usually operate on a franchise lease-back model where the corporate entity owns the free-standing building, preventing mis-aligned landlords from making the business unsustainable and eating into their profit-margins. Have you ever wondered why an Applebee's or similar is a free-standing building even on a mall property, even though it doesn't need a drive-through? Because Darden Restaurant Group, just like McDonald's, is as much a real-estate investment company as it is a restaurant company, and it understands that both the franchisee/operator and their primary corporate entity benefit from cutting out landlords that are incentivized to be a rent-seeking as possible.
Your comment is deeply misinformed and it's clear you've never been involved in running a restaurant as a business. Rent is often the #1 factor that can drive a restaurant out of business, because it's the thing you have the least control over. You can often structure your menu to help manage food/ingredient and staffing cost, but you cannot do the same about rent. Restaurants are somewhat unique in that for single-location entities, too /much/ success can actually kill you because of asshole landlords.
Land value tax would solve this. (We have property taxes, but they're not as good, and in California they're capped.)
Once they've covered all their expenses so they can "retire" from their regular job, they put all the extra income into other RE efforts (namely buying other such strip malls). For lease renewals, they'll usually charge just the market rates. They are very unlikely to hyperfocus on one particular business they rent out to - they have better uses of their time, and don't want volatile income. They want something steady and reliable. They know restaurants have thin margins and may fail.
There's an Indian restaurant in one of the top food streets in my city that people love - a lot of folks consider it amongst the best in the city. I once jokingly told the owner "What will it take for you to open in my suburb?" She said that before she opened where she did, she tried to open at a plaza close to my house, but the rent was too high. I was shocked - that plaza is a graveyard of restaurants and businesses, and is not at all a happening location. Yet a top food street in the city charges less?
It's not a crazy story. It happens often.
[1] https://www.investopedia.com/terms/t/triple-net-lease-nnn.as...
I'm not an expert on commercial leasing, but I suspect a landlord who tried to do that would quickly find themselves with no tenants.
I don't get why there isn't some level of Trust Busting going on regarding the rental property pricing management at all.
In all seriousness, businesses can move (easier said than done for a restaurant) and commercial leases are very long, 5-10 years.
Couldn't be a coincidence, just couldn't. /S
The appeal of a worker-owned coop is the fact that the workers in aggregate have complete control. Relinquishing 20% of that by default, and one might surmise 25% due to the installed president, runs contrary to the purpose of a worker-owned cooperative.
And that's where things are unclear. That 25% can mean a lot of things. Is it simple tribute, or rent-seeking, which WOCs seek to dismantle? Does Teamshares vote with that? What sort of contracts exist to subordinate the companies to Teamshares?
How are the shares traded? Does/can the employee sell them back to Teamshares? Can they sell them to Yum! Brands? If so they're selling current and future employees' agency. If they can only be exchanged between the worker and the company - that would be more closely aligned with the idea of WOCs.
I just don't think it's fair to really draw the comparison without being completely transparent about how it works. However, I do like the idea and have an appreciation for what Teamshares is attempting to do, but I think they should seal the deal and completely abdicate if they're going to front like they're facilitating the development of WOCs.
We're talking about employee ownership as a business model at a high level, and you're complaining that the specific terms (which you have no knowledge of) may or may not be generous enough.
I can't disclose non-public information, but what I can say is that if I didn't feel great about working somewhere, I wouldn't work there very long haha.
- the UK, or rather UK trade unions, basically invented the concept of modern cooperatives 150 years ago.
- by now, cooperatives have effectively been out of fashion for decades. Even the flagship Cooperative Bank has recently been de-facto "normalized" into a regular business.
- the cooperative model can, however, still be attractive for small groups of artisans, like software developers. Hence the link from parent poster. This doesn't mean that it's been "adopted" at large scale, or seen a mainstream resurgence - it has not.
But even if you want to wipe away all of that, they aren't exactly facing a resurgence in the UK.
(And he dresses like a 60s BBC presenter.)
And I can't imagine a restaurant could work the same way as Valve. In a restaurant, you have to feed people day in day out. You can't deliver a Michelin-quality meal when the inspiration hits you and nothing when it doesn't.
Valve also seems to have a strangely forgiving customer base. I don't think I've ever seen anyone complain about micro-transactions in their games, whereas other publishers seem to get a lot of hate for it. (Then again, ever since I stopped playing games, I've began to notice that each publisher had their own unique method of fleecing their customer base, so it may be that Valve got the players that tolerate micro-transactions, whereas others would have the ones who tolerate endless DLCs.)
[1]Granted, I'm thinking of European definitions here, because I get really confused when I try to educate myself about American ones. An GmbH is more or less an AG with stakes rather than shares, whereas an American LLCs seem to behave somewhat differently (taxation, for example is pass-trough).
It's not really a union of assets nor people though. The former would be a trust or arguably a non-profit, and the later would be a partnership. And LLCs can elect to be taxed as a C corporation, although I can't fathom why one would. (And most small businesses can elect pass-through taxation!)
I also would not refer to an LLC as a collection of assets for a common purpose; instead I would say it is a popular entity form that limits member or manager liability. However you could take a different view.
Almost all landlords are small time, only own one or two buildings, and can't organize a cartel. Except there's one way they can - by changing the law to favor them by banning new construction.
Posted prices can be misleading because they prefer to give discounts (X months free) rather than lower the sticker price, so it also depends how you count.
Successful restaurants usually get higher rents because the value of the location increases with the success of a restaurant. This generally means higher costs for the property owner. This is also why most successful restaurants have long term leases, meaning 10 years or more, and major chains like McDonalds can have even longer leases; it's not unusual for an Applebee's location to have a 30 or 50-year lease.
So sure, McDonald's might have a 50-year lease w/ the mall property owner, but the actual franchisee/operator likely has a 1-5 year lease w/ McDonald's for the building + land that's tied to their franchise license.
I allude to this very thing in my prior comment, by pointing out that landlord's incentive to rent-seek in turn incentivizes restaurants to look for longer lease terms.
They don't. But when the local newspaper food reviewer gives you a glowing review and there's lines out the door waiting for a table when you have full covers for the night, and they happen to drive by /their/ building and see this, it doesn't take a rocket scientist to figure out you're doing well. The unfortunate reality of restaurant economics means you could have booming business and still making little or no excess profits though, depending on how adept you are at controlling other business costs, but since the landlord can't see your books they use these other indicators to decide to fuck with you instead.
There is neither a legal nor inherent natural requirement that a landlord choose a reasonable or accurate metric to decide to raise your rent. In fact, in most parts of the country (world?) raising your rent is an entirely arbitrary decision in their full discretion. You seem to be under the impression that the just world fallacy is a truth, when in fact it's not only untrue, most landlords are scum who will happily do as much financial harm as possible to you to the very edge of the limit for what it takes for you to go out of business. The landlord doesn't want you to go out of business or move, which is the only incentive tempering their greed at all.
This is not the first decent workers owned restaurant I've known, so I'm going to answer: yes, it can work.
The sibling commenter's example of Zachary's is similarly the product of entrepreneurs who got it started https://zacharys.com/about-us/our-story/
https://jrwiener.com/cooperatives-and-founder-incentives/
The idea is that cooperatives don't have to treat everyone exactly the same. You can have different "classes" of members. You can have ordinary worker members, but also "founder" members. For example, for an agreed number of years "founder" members can get to elect a certain amount of board seats and get a higher share of profits.
Sure, it moves away from "one-person one-vote" democracy and full equality, but only for a temporary period, and it still gives ordinary workers a much greater say in their workplace than they get in standard companies.
implying what? that "workers" can't start something? Even if we imagine there's a category of people that are suited to be "starters" or "entrepreneurs" that category is still plenty numerous, easily 10-35% of the population, if not more.
I believe I read that Nick's, up north, is also heading worker-owned.
And of course worker-owned doesn't just mean pizza in Oakland.
* Somehow finances have to work, which is usually a harsh reality for some. Ex: Hey we can't pay workers $250/hr without raises prices to above what customers are willing to pay
* Consumers despite "Least common denominator" which is often the result of "design by committee". Usually consumers are after something niche, unique, artistic, and creative, which is the inspiration or vision of an individual.
> As for making business decisions, it’s done democratically. The entirety of the member-owner group votes on major decisions, and the bylaws outline scenarios where employees are authorized to act independently of a vote
I don't see this working in the long term unfortunately unless a majority of the workers have a lot experience with business, especially something as cashflow-sensitive as a restaurant (which typically operate on razor-thin margins). But I do wish them luck in their experiment.
https://www.start.coop/accelerator
Also in NYC is "The Drivers Cooperative" which is Uber but owned by drivers and they're doing pretty well so far (based on the last annual report).
and what about sweat equity - how do founders get compensated for starting the thing and working for free?
Video about the co-op
Next door is an Indian restaurant that makes very good wraps, and they're friendly. Easy decision.
My favorite pizza shop is a co-op too, Cheeseboard. Supposedly $2.50 for a slice or $20 for a pizza, idk if that's accurate but I remember it being reasonable either way, especially given the quality. Making exactly one kind of pizza all day is more efficient, so it makes sense.
I would love a retrospective on the role of Slack and Discord as tools of revolutionary politics in the last decade or so. Seems like no matter where you fall ideologically, there's a Slack channel or Discord server for you and it's doing the emoji vote thing.
https://www.plutobooks.com/9780745340463/disaster-anarchy/
https://academic.oup.com/policy-press-scholarship-online/boo...
Honestly, I won't recommend. The quality is sub par.
What about the one person who actually can't afford to do that because they'd already budgeted assuming that money was coming in?
What about if you need to reduce headcount? Do you just all vote on who should be fired in effectively a popularity contest that will cause build up of resentment later on? Draw the shortest straw? In this case, an "owner" is probably best because they can all collectively "hate" the owner and bond together as staff.
What about if someone is secretly planning to leave in the next few months and wants their money now as salary rather than investing in long term projects for the company, etc... They might destabilise the long-term success of the company if they vote not to invest, but be unmotivated and work poorly if they know some of "their money" was invested and they're never going to see it.
There seem to be so many edge cases where the traditional hierarchy structure seems like the best viable solution. There are some examples of co-operatives in the UK, the most famous is John Lewis. I think they work around it by just running mostly like a normal business, paying fairly normal salaries for different roles, but then bonuses for profit sharing.
Of course hierarchy is unnecessary, but there are a lot of people with resources and vested interest in it appearing otherwise.
The group in the article take the approach of consensus-based decision making. For high velocity work like in a software company, I am more interested in the consent-based decision making processes pioneered by the Quakers and formalized in frameworks like Sociocracy.
Restaurants are often started as a family business with a “boss” who simply continues to be a boss even as more employees come on board.
https://techcrunch.com/2023/08/24/this-venture-backed-startu...
Also, if you're interested in the intersection between economics and employee-owned co-ops, there is https://www.democracyatwork.info
Do you know any worker-owned food businesses? Share in the comments!
In Preston, UK, we have The Larder. Not sure about the ownership model but it is a social enterprise working on food justice: https://larder.org.uk/
What happens when they don't want to do the actual work anymore? Do they still keep their partial ownership of the restaurant and hire wagies? What if they can't work anymore? It's not easy to step and fetch for 10 hours a day at age 50. What if they just need to reduce their schedule to 10 hours a week (and not pull their weight)?
What if most people willing to do grunt work also aren't very good at managing a restaurant? At menus, at book keeping? What if people prefer to be served by the cute young things that you tend to see at many chains (even if they're dressed more modestly than those at Hooters)? You know, the same sort of people who are just unlikely to want to become invested in such a place, where they'll be tied down to it?
https://www.brewbound.com/news/left-hand-brewing-now-majorit... (2015)
Not sure how you can be employee owned and have a parent company. I think the Wikipedia page needs some edits.
They say they have ten employees, and the buy-in for ownership is a thousand dollars. But there's no way the start up capital for a quality restaurant in Seattle was only $10k, so either the original founders absorbed those costs or some later employees paid in extra to cover them - either way with no expectation of increased control or return. That's more charity than alternative economic organization.
They also mention that the business has been around for ten years, but isn't profitable - and it's implied probably never has been on any consistent basis, or they would certainly have called that out. Somebody is covering that shortfall, and they're not getting anything in exchange for doing so - very noble, but again that's a reliance on charity for the business to continue existing.
Can a worker-owned restaurant work? Sure, I think there are plenty of examples that prove it. Does this one work? Not as a business, by any reasonable standard.
Why would worker ownership be a charity and why would owners not be sharing the profits regardless of whether they also work there?
> Somehow finances have to work, which is usually a harsh reality for some
At most places I've been involved in the workers are more careful with money because they are standing together and want the business to succeed. They have transparency into the finances, so they know what's possible and try to make sure not to go overboard.
> Consumers despite "Least common denominator" which is often the result of "design by committee". Usually consumers are after something niche, unique, artistic, and creative, which is the inspiration or vision of an individual.
All of the worker owned places I've been have been exactly this: creative, interesting, and individual. These aren't giant chains designed in a megacorp boardroom.
> I don't see this working in the long term unfortunately unless a majority of the workers have a lot experience with business, especially something as cashflow-sensitive as a restaurant (which typically operate on razor-thin margins). But I do wish them luck in their experiment.
There are many of these and though I don't know the success rate compared to hierarchical businesses in the food industry in particular, co-ops have a higher success rate than hierarchical businesses in general and there's been a lot of research into it, though I don't know if an exact "why" has ever been established. I suspect it's that there's no handful of individuals who can get greedy and ruin things by trying to maximize profit. Even for-profit co-ops generally have a better sense of balance since the workers don't want their business to dry up and if one person gets greedy there are lots of other people to keep them in check.
This doesn't contradict anything GP said. Worker owners are careful with company money because they have to be, due to being invested into it. That's a responsibility that not everyone wants, especially when an organization approaches the scale of tragedy of the commons. How many regular voters bother to read the raw, uneditorialized finances that the government provides?
> co-ops have a higher success rate than hierarchical businesses
This is only true when you're defining success as a binary "does this company still exist." Worker-owned companies are significantly less likely to expand because they would be creating risk but would have to share the additional profits with the new hires. This would especially be the case for a restaurant which doesn't benefit from economies of scale (see Publix supermaket as an example of a worker-owned corporation that does).
Even if Jude's can sustainably pay $30/hour, it would take hundreds of similar restaurants to match the success of a single "nice" privately owned restaurant chain like In-and-Out, which also pays above-market wages to thousands of employees, albeit not as above market as Jude's.
I mean, I feel like a quick survey of the american restaurant landscape implies that consumers are mostly after something reliable for their time and money.
but also the idea that front of house having a say in the business would mean the menu is anymore design by comittee than any other restaurant is weird, especially because menus aren't generally decided by the owner of the restaurant anyway.
But as soon as a working class business tries that, it apparently doesn't work in the long term.
Be careful about extrapolating this out to the rule of countries though, dictatorships can make things go south worse than any other system. At least with FOSS projects, people can fork without fleeing their homes.
Besides, comments here tend to complain about middle management being useless, not leadership.
Ergo, people bitch more about bosses than colleagues, even though there are bad examples of both.
Man may never know.
Dollars to donuts you wrote that bullet point without having read the article:
* the extant worker-owned restaurant discussed in the article is the epitome of "something niche, unique, artistic, and creative," which was "the inspiration or vision of" the owner making a pitch to the staff to become worker-owned. It even mentions getting employees because of the unique approach. I can't imagine they haven't drawn non-trivial consumers to their restaurant for the same reason
* pictures of the food exist in the article
In short: I know "design by committee" food. I've worked with "design by committee" food. That fried chicken sandwich, sir, is no "design by committee" food.
But idk, this just sounds like a worse version of a regular corporation. New employees' stakes will pay out in a way that's competitive with local wages. More profits than usual will have to be paid out rather than reinvested in the business (think high dividend yield, low P/E), otherwise new employees just needing to pay bills won't trust it. If they want to offer some wage and less stake, it's the same.
Works the same as shareholders.
If it was worker owned wouldn't you just pay everyone some reasonable wage that the business can afford and then also split profits evenly?
You seem to be suggesting that workers are cartoonishly naive and have ridiculous demands that cannot simply be met. When in reality they usually just want a living wage, a bit more input on shift planning, things like this. People aren't generally stupid, and if they can get it together enough to form a worker-owned co-op they're not likely to immediately run it into the ground doing stupid stuff like giving themselves a 1000% wage increase.
Personally if it’s owner-run I would assume you would be better picking a lower base wage, then sharing profits (with the profits making up that shortfall).
That way there is also an incentive to be an owner, and the business is more stable - sounds like if they have picked high wages and low/no profit though they are running it hot and risky from a cash flow perspective.
But there aren’t profits for owners to share at the moment - possibly partially because they are overpaying on labour.
The committee that you spoke of have a vested interest in the outcome of the decisions and, in certain cases, the decision must have full support of the board. While this will have problems, it is unlikely to suffer from the symptoms that most people think of when they think of something being designed by committee.
The other thing to consider here is that this is a relatively small business. As such, it is possible to recruit a board that is more likely to share a common vision and train them in operating a business. We are not talking about a fast food chain with tens of thousand of employees and little interest in training beyond the skills to fit a singular role.
I don't know if operating a restaurant as a cooperative is viable in the long run, but I am not going to argue against it from a prejudiced position.
The only successful worker-owned models I’ve seen involve a tight-knit partnership, like a husband as the chef and wife as the bartender. And that is their “part time” job: the majority of their time goes into tough logistical tasks—dealing with suppliers, managing food costs, managing lease, fixing, schedule, and so on.
Unless those workers were looking to make half a million per year I think that's okay.
Somehow finances have to work, which is usually a harsh reality for some owners. Ex: Hey we can't have collective payout to investors totaling $10M this year without raises prices to above what customers are wiling to pay.
This is one of the most interesting parts of business to me. How do a bunch of people below the "head honcho/top dog" collectively agree "you're right, I don't selfishly look out for myself and think I'm worth $99999999/hr, that person does more than me and their skillset is worth more than mine, I will bow out and not contend to ask for more than them an hour"
From there, you get hierarchy
You'll have one person paid the most at the top, and it trickles down
In worker owned, the people at the bottom... why are they ok with being paid "relatively" the least? Why don't they feel like their work is entitled to as much as those making more than them? How are they ok with not looking out for their own self interest at all times?
Some workers just want a stable, sane work environment and are willing to compromise on pay for other benefits. These same people are typically willing to let others do more work for more pay because it makes their own lives easier.
One possible approach: you could do an exercise where everyone gets $N imaginary dollars and they can bid to not do certain tasks. The bid against each task is then the compensation for that task.
Same supplies in technology: you pay your project manager less despite he is the boss of the developers which earn a lot more.
I am literally in a position where I earn like half of what people two levels down of me earn and deserve, nevertheless I lead them and fire them in doubt. I am in a different country of a multi national.
One year I made $260k, more than anyone that actually worked above me at the automall including the CPA comptroller and GM (the other brands at the 'automall' had a bad year while mine had a breakout year due to new models).
I started a year before cash for clunkers came out. I basically was making $200k a year after learning the ropes for 6 months. The owner that year lost over a million dollars.
Not all compensation is based on hierarchy. Commission sales and performance based pay has its advantages.
That may be the wrong way to think about it. Vanishingly few people have enough experience in all aspects of any business to make good decisions without others inputs. So in many cases we are reliant on someone's domain expertise, not to make the decisions, but to get the the right decision point. Once the pros and cons are laid out properly, anyone with a real stake can contribute to the decision.
The bigger the decision, the more people with a stake need to be involved. In the typical business world this shows up all the time: "that's a board-level decision", "we need all the execs to agree on this one", etc.
We don't know the actual implementation, but it's possibly it's just a reasonable reflection of that practice into collective ownership...
That said the two main problems that come up over and over again in our setup are.
1. People don’t understand what being a coop member means legally and financially. They are on the hook for losses for example. 2. It’s hard getting people to volunteer to do needed day to day work. 3. To much drama, every little thing is blown out of proposition and sometime we are forced to use executive privilege to get something done. 4. Coop can distract from delivering the actual services (school).
Consumers want that in theory, but much of the time choose lifestyles that favor the opposite. Basically every suburb is the most generic horrible place possible with a tiny amount of commercial activity relegated to a strip mall in a parking lot wasteland filled with the same few shitty restaurants; where culture goes to die.
The committee can decide to delegate tasks and decisions to individuals and set roles and responsibilities for individuals as well.
There are restaurants that charge north of 800$ per person which are always fully booked half a year in advance with glowing reviews even from the worst critics hellbent on being negative.
You certainly can pay workers $250 an hour without raising prices above what customers are willing to pay depending on the product. Of cause that's not the case at those restaurants, the workers make closer to $30 bucks an hour and the money goes to the owner/investors. Imagining a restaurant with that kind of success where the owners and investors are the workers is a nice thought.
I know of one of these restaurants that always top the list of best restaurant in the world basically gave their main dish washing guy a small owning stake because the owner/chefs like him, and he's now making way more than just $250 an hour washing the dishes. But that is of cause just a case of the rich throwing leftover bones to the dogs eating scraps at the table for shits and giggles, not a case where workers owning a restaurant leads to a fair distribution of the profits for all of them.
99.9% of restaurants cannot charge super high prices, you're just being pedantic.
There’s expensive plates, bowls, silver wear, custom presentation items. High end materials every where. You’re hiring more staff so that you can pay attention to every detail. The wine cellar might have several million dollars worth of wine in it.
Masa Sushi charges $1000/ person and hourly worker pay is $20.
There maybe a rare one but I don't know of a restaurants that charges $1K / person can pay worker $250.
All of them will have a star chef/brand who'll have to leave lot of money on the table. i.e. only way everyone will make $250 is if someone is giving it for free.
I always enjoy these kinds of articles - "Could this radical new way of doing things ever succeed?" where the "radical new way" has a history going back to before the Reagan revolution. We're a really kind of unimaginative people when it comes to talking about how one arranges things in society.
> We're a really kind of unimaginative people when it comes to talking about how one arranges things in society
by asking "how did we get that way?"
https://www.hellskitcheninc.com/#about-us-employee-owned-sec...
I guess this is mentioned on the page to signal that menu price is the final, no need to tip? US' tipping culture is so strange. Normally you don't need to mention anything, people would pay the menu price and you'd include whatever you'd need for paying the staff. That's how it is in the rest of the world.
Edit: I encourage downvoters to actually try to read the linked page before downvoting me. It’s incredibly unreadable.
It's readable. It's not great. I've seen a lot worse (slightly dark grey on lighter grey, faded tan on medium blue, cyan on bright green...)
The new one doesn't tell me an obvious address -- the only one appears to be the handwritten pixelated background image, which is partially blocked on every single page by a foreground photo.
I dig retro and minimalistic pages. This is just bad design.
> the Erreka Group averted layoffs by temporarily trimming wages by 5 percent. It continued to pay workers stuck at home in exchange for the promise that they would make up some of their hours when better days returned.
https://web.archive.org/web/20210103102831/https://www.nytim...
"Insiders claim that some years’ borrowings were ramped up in order to avoid having to think the unthinkable and cut the hallowed John Lewis staff bonus, as profits failed to keep up with the pace of store openings."
It only takes a few years of mismanagement for a partner owned company like Waitrose to borrow too much and step on the landmine of unserviceable debt. The company is then has to be sold and metastasises into a normal company. Obviously the most unjust thing in that story is that upper management probably not only get paid too much while causing the situation but likely negotiate a personally beneficial settlement for themselves as the ship burns and sinks.
0 - https://www.telegraph.co.uk/business/2023/07/12/john-lewis-r... 1 - https://www.telegraph.co.uk/business/2023/05/11/can-dame-sha...
(Apologies for linking to that website)
I think the biggest obstacle for worker owned businesses is the funding, not the absence of a hierarchy.
Seems net income per employee is only ~$120,000, though. The way you put it might leave people thinking they have $2.4 million to give to each employee, when in reality they have bills to pay.
Isn't that _after_ they paid the employees though?
One dealbreaker for me and far-left thinking is the required authoritarianism of implementing their ideas in society.
If your ideas are so good, go start something yourself, and see if it catches on. If people still want to work for Apple, there must be a reason, despite the lopsided revenue distribution.
The current authoritarianism of the capitalist class is what keeps workers from having capital, by not paying workers the full value their labour produces. They enforce this with laws, courts police and armies.
Workers did in fact also start things themselves and got attacked for it. From monopoly practices to starve co-ops to coups, sanctions and wars against countries that collectivise.
“Democracy fails when the people and their leaders fail to realise that the thing they want above all is peace and general prosperity, and that neither of those is a naturally occurring phenomenon.”
Because the peaceful transfer of power as well as respect for the truth, and equality before the law is the absolute foundation that any prosperous democracy needs.
It is true though that an employee will be much more personally invested in that kind of voting than a typical investor given that’s they essentially can’t diversify like an investor can, without being so rich that they make more from investments than working anyway. And that they may choose to give themselves the option of direct democracy to varying degrees instead of representative democracy. In a standard white collar corporate environment that could kick up workplace politics to insane levels.
Back on topic: there's also the Cheese Board in Berkeley, CA, and Arizmendi Bakery but not sure if the salaries are as great. There used to be a great bakery in South Berkeley that was worker owned and fairly well known, but the name is escaping me (edit: it was Nabolom Bakery). In any case, that one struggled more with the business side and employee salaries were close to minimum wage.
Another aside: it's interesting to me how lots of tech workers in the Bay Area live in an entirely different Bay Area than me or most people I knew out there -- these two worlds seem to scarcely talk to each other in any meaningful ways.
I'd say up until early/mid-2022 or so you could get by on a surprisingly small amount of money in San Francisco. Watching prices skyrocket over the past 18 months or so has been a wild ride.
Another aside: it's interesting to me how lots of tech workers in the Bay
Area live in an entirely different Bay Area than me or most people I knew
out there -- these two worlds seem to scarcely talk to each other in any
meaningful ways.
Btw the definition varies a good bit around the world but generally a social enterprise is more about the goal of the organization and a coop (or worker-owned) is about who has power the make decisions in the org.
In Ithaca, NY and its surrounds, Gimme! Coffee recently became a worker-owned enterprise: https://ithacavoice.org/2022/07/a-labor-of-love-gimme-coffee...
We ended up structuring our coop to have equity split from voting rights to allow employees to have ESOPs and investors to invest as they do in traditional corporation minus their control of the board. In theory we would be able to IPO down the line, and perhaps become the first coop to do so without demutualizing or a separate investment vehicle on the side.
But in a customer co-op that doesn't include the workers and in a worker co-op that doesn't include you.
You can even have co-op without workers (there was one in Stain, northwest of Paris when I lived there) with really good food at really good price, but you had to work there like 4-8 hours a month to be customer.
But most of these are primarily consumer coops not worker coops.
Democracy is a fine way to run a nation, but not a ship, plane or platoon of soldiers. Context is everything. If you think there is any one single system of leadership that is ideal in any conceivable situation, then I fear you must be a clueless ideologue. Lacking an appreciation for nuance is the mark of shallow thinker.
There are studies about coops that show that workers are more engaged in the business and will decide to suffer temporary wage cuts in hard times (opposed to layoffs) in order to maintain the business long term.
Two friends of mine actually have worked in the same restaurant coop at different times. The pay was fair, the conditions were good, the people were great and they had a high degree of agency. As you can imagine, they had high standards in terms of where they buy, what they produce and so on. Preferably local, fair etc. It's also a restaurant that exists since a long time.
The negatives that both reported were:
- Long meetings each month, there was no hierarchical structure. When the better argument wins (and not from who it is) then you need time to discuss things.
- Criticizing or firing people is emotionally taxing.
There was _never_ a complaint of shared responsibility in financial terms. That's a given. That's what you sign up for.
What are you talking about? This was never the case, and when Rene had to pay market prices on labour he shut the place down.
People who dine at these places are all too self-infatuated to ever realize but you are litterly working for slave wages in those kitchens, the saying goes that 'you were paid in knowledge' in order to start your own concept if you survived (as very few would decide to stay as a Sous) those barren years of your career. Never would they offer $50/hr when most heavy season days are easily 12+ hours long.
Just the amount of money they paid to stages racked up 40k GBP/month [1].
Personally speaking, Noma had the cache because of Rene's affiliation to Feran Adria cohort and then Bourdain (who initially dismissed Adria's work as needless snobbery) to most outside of the culinary World, but after El Bulli closed I felt that an era had ended (culinary avant garde) that would never be truly replicated again as it existed mainly during the bubble era before 2008.
Noma tried to re-ignite it with it's creative work-shopping and focus on local-foraging twist but it had all the pitfalls El Bulli had with none of the ground-breaking innovation (I think David Muñoz did a better job of that with XO concepts and he never worked for Feran), including not paying it's workers.
0: https://www.telegraph.co.uk/world-news/2023/01/09/worlds-bes...
1: https://www.reddit.com/r/KitchenConfidential/comments/108856...
actually there are lots of examples, so it can't be that simple.
I also really enjoyed “Against the Grain” and “Seeing Like a State” by James C Scott - both really dig into social narratives and the ways we talk about history and society.
which restaurant workers is this true of? tipped FOH workers make a little to a lot more than minimum wage depending on the shift. BOH workers are indeed getting minimum wage or a little more, but wage theft to the tune of 50% of a paycheck is incredibly rare.
I have a reliable source on this: Suits
Also, restaurant owners are not much different from middle managers in terms of scale of responsibility.
No matter how it's done, someone somewhere has to be extra generous.
That depends entirely on what sort of business it is. Far from all businesses require up front investment. E.g. starting a service company like a cleaning business or computer contracting firm or whatever with a group of friends wouldn't require much up front investment.
That's livable almost anywhere, and it's a reasonable salary for a mid-level dev in the Phillipines, but more experienced folk are going to find it hard to give up the option of earning 2-4 times as much.
Their product is flaky as hell and it's driving customers away in spite of their unique positioning.
Spot on! Unfortunately this is also why "everyone is equal" rarely works
At the end of the day, most people want to get paid, and to get paid, at least in the long term, you need a viable business. So workers tend to make choices that ensure the business is able to survive, because that is more valuable in the long run than lining their own pockets right now and not having a job to go to tomorrow.
A lot of US business practices are all about scamming people with deception, and restaurants are the epitome of this.
Not true; tipping is everywhere, however it's more that it's appreciated instead of expected elsewhere, see https://www.johnlewisfinance.com/currency/tipping-culture-ti...
The biggest difference between NA and Europe is that in NA a lot of people work for tips, as in, they're going to try to service you to get them. This is not the way it works in Europe, waiters do appreciate tips especially in places that have lower purchasing power, they will take your order, bring your food, bring your bill, and be on disposal if you want to call them anytime, but they're not going to try to look outgoing and approachable and hassle you with "is everything ok" questions for better tip.
And fair enough. It’s still a lot of work to even participate without lengthy travel. It is completely understandable why most are content to be under dictatorial control. They don’t need brainwashing to get there.
I mean, even regular businesses in practice end up this way - nominally with lots of shareholders, practically run by (and for) a few powerful individuals. That's why we have a concept of "activist shareholder" - in theory all of them should be "active" but in practice almost no one is, so the few who do are labelled (and often "bought" one way or another).
Good co-ops that last have the decisions made by those working there.
And it's a lot of work.
I acknowledge that you have seen something similar not work out, first hand, but in this case it is apparently different.
Another commenter commented on a burger-joint giving a share to "climate" causes. What a share entails in this case, whether it comes from profit, or whether they pass the cost of this cause to the customer is unknown.
Additionally I live in a place where there are reparations discussions and where unions agreed that teachers of a certain ethnicity would be eliminated first in the name of equity if it came down to staff cuts.
How does this play into the scenario if these types of events happen more often, even discussing these things is difficult and people could veer away from. I heard that Amazon inserted "woke" discussions into union talks in Georgia in an effort to de-rail them, not to engender unity.
I've listened to almost all the How I Built This episodes, and paying your employees more than you are paying yourself is fairly common. You need to pay everyone market rates to retain them, and there often isn't enough left over to pay yourself well (if at all).
How does one pay below market wages? Someone's market wage is established by observing what they are being paid. They will always be equal, unless you mean an employer is illegally withholding funds owed to the worker?
> I cannot buy produce from a farmer for less than it costs them to grow it
Haha. As a farmer, I have lost money selling my produce more times than I wish to count. The customer couldn't care less about how much it costs you to produce a product. They are only going to pay what it is worth to them and not a penny more. The secret to a sustainable farm business is understanding how to weather those times when it costs more to grow the food than what the customer will pay.
Stop forcing me at gunpoint to give up a large portion of the value I create. And stop supporting your country forcing others at gunpoint to be like it.
> Zachary’s was founded in 1983 by Zach Zachowski and Barbara Gabel. Our employee ownership program began in 2003 via an ESOP (Employee Stock Ownership Plan). Through the vision of our founders, Zachary’s is now a 100% employee owned company.
https://zacharys.com/about-us/our-people/
Also, the specifics of the relationship between Cheeseboard and Arizmendi are interesting: https://www.sfweekly.com/dining/arizmendi-bakery-s-bread-bas...
$43.20 ($40+8%) is quite reasonable for an 18" multiple topping pizza.
Bibo's NY Pizza in San Jose has $23 for a 20" (XL) with no toppings.
Maybe there's more to the prices than the co-op structure?
http://www.arizmendi.coop/about-arizmendi-association.html
IMO, the reason you don't see more is that us financing is quite conservative and unwilling to risk "unusual" business models.
(Similarly, finding a mortgage for shared housing requires a lot of extra work, because the mortgage brokers only like nuclear families... Even when you show up with four incomes and no kids, it's still considered risky because unusual.)
Which is to say... The smallish number of worker coops in the US has nothing to do with the rarity of magical founder people... I'll say that the folks I've known in housing and worker coops have a much higher rates creativity, grit, and organizational chops than anyone I've met from a business school. And, indeed, many of them are now run their own businesses in a wide range of endeavours.
We could turn the government into a giant VC. I'm not bullish on the results.
Of course, the government could subsidize co-ops to the degree that financial incentives of starting a co-op outweigh the financial incentives from starting a traditional business, and maybe they should do that, but it's not how our curent market is structured.
If there are distinct phases, and certain people or topologies are good at just one of those phases, then it follows that people starting restaurants must be bad at running them once they've established.
(You have to be insane to whip something up and get it moving. Some thrive doing just that, but suffer under steady state stagnation.)
Technically if there's no company yet there is nowhere to work and thus no workers. You need "founders" to get the company started for there even to be workers. Now those people have to decide if they want to never hire anybody new, 'give away' a a piece of 'their' company each time they hire, or give up on the worker-owned idea all together.
Of course most "founders" used to be "workers" and often become "workers" again after the company is founded, but the act of founding a company is fundamentally different from the act of working at a company
There is of course different work to be done at every stage of development of a company and this means that founding a company may require skills running it may not or vice versa but there is no reason someone who is good at founding companies should continue to call the shots or pocket most of the revenue once the company is fully operational. That's an expectation tied to the return on investment primarily and our system being set up in such a way that founders are owners and workers coming in later are not.
And why should I not want NATO to stop attacking Venezuela?
For example there's a British study that shows that 76% of worker cooperatives tend to survive the first five years, compared to 42% of all companies overall, making them particularly stable businesses.
You've also got typically higher job satisfaction from the employees (so less likely to have the ex-employees to create competitors out of), and more productive employees overall.
Honestly that sounds like a pretty good model for businesses overall to me.
You see the same thing with a lot of non-profits - they mean well, but they send so much of their funding right back out the door - and the first unexpected expense ruins them.
Why would that be a criteria of “success”, though? A worker owned business capable of supporting all its employees and maintaining itself long term is definitionally a success.
why should this new employee automatically dilute the pie before their "worth" is made real (by virtue of working and contributing to the bottom line)?
if adding this new employee creates more value, the existing owners shouldn't have a problem with adding. Of course, unless the employee start owning their share before being first able to be vetted.
To me this sounds very annecdotal and intuitive based on what you think you know.
I'd like to know if it has been studied and what those studies found.
Maybe if you have a vesting period of something. But even then it is one employee, one vote or is voting dependent on something else like number of shares?
How many non-owner workers can you have before you stop being worker-owned? If four workers own 25% of the shares each, and the company employs 400 (or 4000) people are they still "worker-owned" in any meaningful sense?
Where can I get this data? Does the US provide CSVs or JSON or something?
As their plucky little public outreach page [1] points out:
“A regular Statement and Account of the Receipts and Expenditures of all public Money shall be published from time to time.” U.S. Constitution, Article 1, Section 9
An under market rate would only be significant to outside interests. If I am paying someone $20 per hour and you want to pay the same person $10 per hour, then the $10 per hour offer would be under market rate. However, if for some reason the employee jumped ship and accepted your $10 per hour offer, you would not be paying an under market rate. $10 per hour would become the new market rate.
You're ignoring the time element.
You hire the $10hr guy when the market rate is $10... and then give him just enough crumbs not to quit. So in a few years when the market rate is $15, he's making maybe $12. See how that works? Obviously many will jump ship, but many won't or can't (e.g. can't afford a gap in pay/insurance coverage).
There is no market rate until the market has made a trade. If I traded an hour of my time for $10 with you five years ago, and I again traded an hour of my time with you for $10 today, $10 is still the market rate.
> You're ignoring the time element.
It is not ignored. It is in there.
> So in a few years when the market rate is $15, he's making maybe $12.
The market rate for the given person in this scenario is $12. Maybe someone else will pay $15, but they have to prove that for the market rate to adjust. Some drunk guy at the bar saying "Oh yeah, I'd totally pay $15 per hour for that guy" does not establish this person's market rate as actually being $15. Talk is cheap, as they say. An actual trade has to take place to prove it.
Perhaps what you are trying to suggest is that people are fungible? If Joe is paid $15, and his identical in every single way twin is paid $15, then Sue – no relation – must also be worth $15, and paying her only $12 is below what actual sales have shown what the market is paying for a person of her kind? We do often talk about commodities that way.
But my experience with people in general, as a coworker, and as an employer, says people are most absolutely not fungible. Even for the same job, no two people are going to fit in equally. I think we can agree that some workers are better than others. In fact, we agonize over resumes and interviews to try and find the best of the bunch. If people were fungible, you wouldn't need to care. Just pick one at random. They're all as good as each other.
Since people are not fungible, the market value of an individual rests entirely on the trades an individual makes. It cannot be observed any other way. Their pay cannot go below their market rate. Any time their pay drops, their market rate comes along for the ride.
Speaking from personal experience, as a founder who does not come from wealth the biggest reasons not to pivot to a co-op are that you're giving up control over something you created, you have a lot of money caught up in it that could have instead gone towards your personal life and that someone you hired as an employee is not necessarily interested in becoming a co-owner (e.g. if your country has workers rights they might be losing access to certain guarantees and benefits by doing so).
Your wording is also needlessly abrasive. The government subsidies a large part of the economy like agriculture and fossil fuels (this is true in Germany and also seems to be the case in the US). Calling subsidies "free government money" suggests this is unheard of and unrealistic. If we want to go full utopia, the government could not simply subsidize co-ops, it could mandate them, e.g. by enacting a law that requires non-publicly traded businesses above a certain size to be worker-owned (with all liabilities to the founders being converted to standard loans) and prohibiting natural persons from holding more than a given percentage of any publicly traded company to shut down the potential loophole of just going public. It's the government. It's what allows corporations to exist so it could also restrict them.
Corporations act somewhat rationally in aggregate only because the people in charge of them are bound to do so by law. And even this breaks down when the corporation is directly run by one person who also owns it.
"Market participants" is not what we're talking about. "Market participants" includes corporations and other forms of organizations that impose strict controls on their own behavior. We're talking about humans. And humans are very irrational. They're just also very good at rationalizing their irrational behavior and prefer doing things they can rationalize.
I think part of it is that workers typically have very good insights into the immediate needs of a business. You bring up technical debt as an example of the dangers that businesses face, but technical debt is famously a problem that is noticed initially by the workers, and only later by the business as a whole (as velocity falls and new features start becoming painfully slow to implement). The companies that handle technical debt the best are typically the ones where developers are given the freedom and flexibility to make decisions regarding paying off that debt.
Similarly, you might expect that when the small problems in a restaurant show up, it's the workers who will notice them first. And the point of a coop is that those workers then have both the motivation (it's their business) and the power (it's their business) to fix those problems immediately, rather than being forced into handling less relevant tasks by a management that doesn't have full visibility of the problem.
Fwiw, I'm a fan of the idea of worker coops, but I don't think it's the only setup that works, nor necessarily the best setup in ever case. But worker democracy as a whole - the idea that workers in a company must have a right to contribute to the decisions of that company - seems both moral, and also practically very useful. If you want a good overview on this topic, I recommend the YouTuber Unlearning Economics, who has a whole video on worker democracy and what different forms of it look like (and what the costs and benefits of those forms are):
Non-chain restaurants are kind of weird businesses, really. Owner owned or worker owned they’re rarely big money spinners and often owe a lot to the community around them to keep them viable.
Also, Mondragon exists. Coops can expand.
Anyway, I'm not saying co-ops can never expand while still maintaining collective ownership, only that it's harder. Also harder to start, or to exist in general.
In the Netherlands a coop is an acutal legal structure that businesses may adopt. It will surprise you to hear that we even a big bank which is: A co-op.
The core characteristic of a co-op isn't that the workers all have shares. It's that they have members and that the members instead of the shareholders may receive payouts based on the company income.
I realize this is different than the American case of a worker co-op. Your reaction though speaks to me that you don't consider this a serious form a company might take. Whereby you ignore that some very big and wealthy companies are in fact co-ops. I assert that this is merely because the US legal systems don't facilitate co-ops, and I wonder whether that isn't a missed opportunity?
There are lots of those types of co-op banks in the US, as well as other large businesses run as the type of co-op you're talking about. That is however a competently different thing than what is being discussed here.
EDIT: the France study is particularly interesting because they specifically talk about this as a potential reason for the surprising longevity, but then point out that "the overwhelming majority of cooperatives are created from scratch, and hence this explanation remains incomplete".