Has Mr. Holmes Bakehouse Unlocked the Key to the Restaurant Industry’s Labor Crisis?

California added a dollar to its minimum wage law on January 1, bringing the state’s required pay rate up to at least $13 an hour. While the increase is much needed, some small and independent restaurant owners may now worry over what will happen to their already thin margins. But Aaron Caddel, the 28-year-old CEO and founder of Mr. Holmes Bakehouse, says he’s found a way to increase profitability as well as, crucially, the money employees take home.

“We’ve solved a national problem,” says Caddel, a 2018 30 Under 30 food and drink listmaker. “It’s a meaningful story as well. We’ve rolled the dice in a way that could have tanked the business, but it has made our company the most profitable it has ever been.” 

Here’s how the new model works: Mr. Holmes Bakehouse quantified performance and then tied it to a wage scale. Caddel and his team spent two years breaking down every position in the kitchens into three core procedures that each person tests on to determine their wage and title. High performers are paid more than $20 an hour.

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