Tevlin: Punch giving its employees a bigger slice of the pizza

  • Article by: JON TEVLIN , Star Tribune
  • Updated: December 9, 2013 - 8:30 PM

Last Thursday thousands of low-paid workers took to the streets in cities across the country to argue for greater income equity and a raise in the minimum wage.

The same day, a Minnesota company, Punch Pizza, announced it would unilaterally raise its own minimum wage to $10 for new employees. In fact, the company also raised the wages of more than 80 percent of its 300 employees, including pizza chefs and managers.

When I heard the news I contacted Kris Jacobs of Jobs Now Coalition, a nonprofit that conducts employment studies and advocates for a living wage for working families.

Jacobs has been around the block, and the State Capitol, and has learned to be wary of corporate largesse that sometimes turns out to be a ploy for some bill that will actually harm workers — a diversionary tactic in advance of a tip credit push, for example.

So she made some phone calls, and then she went out for pizza.

When she entered the Punch on Grand Avenue in St. Paul, Jacobs was met by a friendly, upbeat crew.

“After I gave her my order I loudly told her why I was there — because their wages were going up,” said Jacobs. “People around me, waiting for or eating their pizzas, gave me a thumbs up. I asked her if it was a good place to work and she said, ‘Yeah, it’s like a family, really!’ ”

Jacobs came away believing Punch is raising wages because it believes doing so will help keep good employees, and because diners will reward the company for it.

“This is great news,” said Jacobs. “It would be so wonderful if this kind of high-road action actually inspired something. I’ve always wondered, what if we could know who the high-roaders are. That staff seemed genuinely proud of their work and their workplace. Very unusual, I must say.”

John Puckett, co-owner of Punch, said initial response has been good. But will it help his bottom line?

“Ask me in a year,” Puckett said. “It did make us gulp a little bit when we saw the financial impact [about $3 million]. We wouldn’t do it if we didn’t think it would pay off.”

Besides starting workers at $10 an hour, Punch raised wages for pizza chefs to $13, with top pizza makers earning around $30,000 per year. New manager salary and bonus packages will rise to $50,000, and an experienced general manager can make $100,000 at any of the eight Punch locations.

Puckett said he had studied other companies known for treating employees well, such as Costco and In-N-Out Burger, in California. He read the burger chain’s history and talked to the third-generation owners about investing in long-term success.

“In California, people love that company,” Puckett said. “The restaurants are always clean and the workers are happy and polite. In our business, you are as good as your last pizza and last service.”

Puckett said he didn’t expect to raise prices to cover the new wages.

The company will also invest in training, “Punch University,” and greater quality control via a “pizza cam” inside restaurants.

While public companies have to please investors every quarter, private companies like Punch can think long term. “We don’t have to answer to a board of directors at the end of each quarter,” Puckett said.

Dave Hopkins, managing director of the Brands Enterprise at the Carlson School of Management, said Punch’s move is probably primarily aimed at differentiating itself from the industry to hire and retain better workers, which pays off in the long run.

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