The high cost of haute

Gerard Ferry is perched on a stool at the hostess podium at L’Orangerie, the grande dame of the city’s formal French restaurants. Gold wire frames balanced near the end of his nose, he scans the reservation list. L’Orangerie is going to be busy this Thursday night, he notes, good news for the slow days of early August.

Before he goes home tonight, the 64-year-old Ferry, who owns L’Orangerie with his wife, Virginie, will know precisely how many meals were served and what the average check totaled. He will have counted the empty wine bottles, verifying that guests were charged for each one. In his blunt, unsparing style, Ferry will have let every waiter, busboy, bartender and hostess know something they could have done better.

L’Orangerie is the last of the ooh-la-la French dining rooms in Los Angeles, a holdover from a bygone era when every night was a party and French haute cuisine was served by candlelight to diners dressed in glittering evening clothes.

But an onslaught of legal actions by discontented former employees, along with top-level staff defections -- all amid a financial climate that has been generally difficult for the region’s high-end restaurants -- has made the last two years the most difficult of L’Orangerie’s 27-year history.

In 1977, the Ferrys claimed turf across the street from the toniest French restaurant in town, L’Ermitage, turning an empty lot on La Cienega into an oasis of flowers, ferns and fountains, with a retractable roof like that of La Serre in Paris. Always elegant and formal, L’Orangerie was the last restaurant in town to drop its coat and tie requirement in the late 1990s.

And though food fashions have swung away from L’Orangerie’s once famous “loin of veal with three kinds of mustard,”Ferry has kept pace with contemporary French cuisine, hiring a string of ambitious young French chefs to run his kitchen.

L’Orangerie maintains an annual gross income of at least $2.7 million, says Ferry, who expects it to top $3 million this year. Today, L’Orangerie has the most expensive tasting menu in town. (For the eight-course Menu Royal, Ferry charges $135 per person.)

“Gerard is extremely astute at managing his costs,” says Benoit Gateau-Cumin, a leading international headhunter for high-end restaurants and the man Ferry has relied on in recent years to find chefs for L’Orangerie. But Ferry’s eagle eye and sharp pencil carry a hidden price tag, says Gateau-Cumin. “Gerard is not known for his largess. It’s not hard for him to hire people, but it’s hard for him to keep them.”

That has become a bottom line issue at L’Orangerie. Rather than enjoying the rewards of being one of the longest-running restaurateurs in town, Ferry has spent more time than he’d like with lawyers.

In the last two years, a high-profile former executive chef filed a state labor board action against L’Orangerie, demanding $208,000 in unpaid overtime pay. A former waiter filed a class-action lawsuit claiming the restaurant mismanaged staff gratuities and failed to provide adequate dinner breaks. And a former hostess hired a lawyer and threatened to sue for wrongful termination.

During this same period, there have been enough workers compensation claims -- capped by one filed by a former busboy who says he suffered “emotional distress” after he was fired -- to send the restaurant’s insurance premiums soaring. According to Ferry, those premiums have risen from $45,000 a year in 2002 to $73,000 in 2003 and are expected to exceed $80,000 this year. Ferry is not the only business owner troubled by rising workers comp premiums, but coupled with his legal bills and liabilities, it’s enough to make him feel besieged.

Salary anomalies

Restaurants are notorious economic conundrums.

Non-owner executive chefs typically work 10 to 12 hours a day; at top Los Angeles restaurants, they earn salaries between $70,000 and $100,000 a year without benefiting from overtime pay. L’Orangerie’s executive chefs during the last decade are no exception. At these same restaurants, waiters working six- or seven-hour shifts are paid the minimum hourly wage of $6.75 with tips, and frequently earn $30,000 to $50,000 a year. At restaurants that serve lunch and dinner, waiters often work double shifts, enabling them to earn, sometimes, as much as executive chefs. Maitre d’s can earn even more.

Because of perceived inequalities, feuding among staff within restaurants is common. But at L’Orangerie, with some $600,000 in gratuities flowing through its waiters’ hands each year, such discontent has led to legal action with unusual frequency.

Ludovic Lefebvre, recently installed as the executive chef at Bastide, was 23 when he left France to work at L’Orangerie in 1996. After he left in June 2002, Lefebvre filed a complaint with the California Labor Commissioner charging that Ferry owed him $209,490.88 in unpaid overtime and unreimbursed expenses.

It was the beginning of Ferry’s spate of legal troubles.

The problem, says Lefebvre, is Ferry’s policy of not providing paid days off. The paychecks of salaried executive chefs at L’Orangerie are docked for the hourly equivalent of their pay if they work fewer than six days a week, 52 weeks a year, he says.

Speaking only French when he arrived in Los Angeles and unfamiliar with the norms in American restaurants, Lefebvre says he thought all restaurants had this no-paid-days-off policy.

Says headhunter Gateau-Cumin, “I always thought that in the United States you had to give paid vacations. I learned from Gerard that that is not true.” Ferry is the sole restaurateur, as far as Gateau-Cumin knows, with this policy.

Although Lefebvre started with a stated salary of $75,000 and had raises that took him to $82,000 by 2002, he says his gross pay never exceeded $72,000 a year. “Mr. Ferry takes a lot of advantage of French people. I was a kid; he could do whatever he wanted,” says Lefebvre. By law, employers are not required to provide vacations. The Labor Commissioner summarily rejected Lefebvre’s claim, including the allegation of unreimbursed expenses.

“For many years we not only provided paid vacations for all employees, but also offered a pension plan and health insurance,” says Ferry. “We were forced to make changes about 10 years ago when the business climate changed after the riots and during the recession.”

He adds, “The main reason why our executive chef doesn’t receive paid time off is that I think it is discriminatory to offer a benefit to one employee but not to the rest of the entire staff.”

L’Orangerie’s next executive chef, Christophe Eme, didn’t last as long. Eme says he was paid $100,000 a year, but he left Ferry’s employ after 15 months without a paid vacation.

It’s been just as hard for Ferry to keep a wine steward. Frederic Hemon was sommelier at L’Orangerie for one year until, according to his account, he was fired in July, one of several sommeliers who have come and gone quickly. “He treated us like we were nothing,” Hemon says.

Six sommeliers have left or been fired from L’Orangerie in the last two years, according to Ferry. Two were terminated as a result of customer complaints, one returned to France for family reasons, one was unwilling to work without an assistant and another didn’t want to carry wine cases into the cellar, he says. Hemon is one of several former L’Orangerie servers and cooks joining the staff at the restaurant Eme plans to open in West Hollywood in October.

Unlike Lefebvre’s quickly-dismissed complaint, the class-action lawsuit brought by former waiter Darren Lutz had traction in the courts. The main thrust of the suit involved L’Orangerie’s tip pool. A total of 19 employees responsible for service in the restaurant’s dining room pool their gratuities.

At the majority of fine-dining restaurants, gratuities are pooled and divided among the wait staff according to a “points” formula that weights certain positions more heavily than others. At L’Orangerie, according to Ferry, waiters, sommeliers and bartenders get 10 points from each pool. Back waiters and the maitre d’ get seven. Busboys get five; the hostess gets three (see chart).

Within each category there are slight variations on tip points, depending on who performs certain extra duties. The total number of points varies each night with the size of the staff. On Saturday nights the staff might represent 150 points, while on a Tuesday night, a smaller staff might represent only 60 points.

All tips are put into the nightly pool. A designated waiter takes a tally and calculates the value of each person’s share. That rotating job earns the waiter an extra point in the pool.

Lutz claimed in a deposition, which was backed up by declarations from two waiters, Jay Bergers and Michael Medico, that the maitre d’ at L’Orangerie is a member of the management team and was illegally included in the tip pool. Lutz also claimed that L’Orangerie routinely docked the tip pool for servers’ billing mistakes and that therefore L’Orangerie illegally interfered with the management of the servers’ tip pool.

Citing as an example the week beginning July 19, 2002, during which he earned $663.30 in tips, Lutz argued that the $779.72 that maitre d’ Stephane Clasquin earned that week should have been divided among the rest of the staff.

After two years of legal wrangling, with the case set for trial, last month L’Orangerie and Lutz agreed to settle for $50,000. That works out to roughly $14 per month, according to the attorneys, for each of the 111 L’Orangerie employees who were tip pool participants between Aug. 28, 1998, and Sept. 30, 2002. Even if he had won, says Ferry, the cost of continuing to fight the suit would have been greater.

Neither Lutz nor his attorney, Daniel Chaleff, the same attorney who represented Lefebvre before the Labor Commissioner, would comment on the case.

Jot Condie, president and chief executive of the California Restaurant Assn., says that Lutz is correct in saying that restaurant management is not allowed to participate in the servers’ tip pool. But the definition of management is open to interpretation, and therefore litigation, he says, and many high-end restaurants include the maitre d’ in the tip pool. “The way the law is crafted, someone has to be engaged over 51% of the time in managerial duties to be considered a manager,” says Condie. “But you can be a production worker in a kitchen [a chef] but managing with your head,” he says. “There aren’t clear lines.”

Also, Condie adds, it is a state requirement that the service staff set up the rules for the tip pool independently of management and that the staff directly controls the pool.

Ferry acknowledges that he has docked a waiter’s pay if, for instance, he forgot to charge a customer for a bottle of wine. “There have been, at the most, a handful of cases over the past five years in which the restaurant has docked an employee’s pay after they have made repeated grossly negligent mistakes,” says Ferry. “I have nothing to do with the tips,” says Ferry, insisting that the money comes out of the employee’s minimum wage salary.

Ferry says he has no plans to change the way in which L’Orangerie’s tip pool is managed. Lutz’s other claim against L’Orangerie is that Ferry failed to provide state-mandated work breaks during waiters’ seven-hour work shifts.

This is a common complaint, says Charles Frank, a San Bruno-based restaurant consultant. “Most restaurants now realize it’s mandatory to provide breaks. Usually, they will provide employee meals before or after shifts because it’s not practical to have breaks in the middle of the dinner rush.”

L’Orangerie provides dinner, at no cost, for its employees, says Ferry.

Condie says there has been a notable increase in these lawsuits since January 2001. That was when Gov. Gray Davis authorized new penalties -- an hour’s pay for every day that a restaurant cannot prove that it provided a break.

The former hostess has dropped her lawsuit. The busboy’s workers compensation case is pending, being handled by L’Orangerie’s workers compensation insurance company.

But in the midst of these troubles, last February, a few months after Eme quit, while his former sous chef, Jean-Claude Mons, was trying to find his equilibrium as his successor, a Los Angeles County Department of Health Services inspection turned up seven health code violations. L’Orangerie earned a devastating “C” rating. It only took one day to correct most of the problems, and the restaurant’s “A” rating was restored.

“We corrected the problems immediately,” Ferry says. “But for me it was still a reminder that mistakes can happen quickly and that they can happen to all of us. You can obviously never be diligent enough.”

With the settlement of the Lutz case, Ferry says he is finally able to catch his breath.

The costs to the restaurant, however, have been high: L’Orangerie’s legal bills during the last two years exceeded $120,000, not including the $50,000 Ferry has agreed to pay to settle the former waiter’s class-action suit. Ferry says he has had to cut the restaurant staff from 45 to 40 and cut costs by switching carriers for his employees’ health insurance, a change he says will likely result in less comprehensive benefits.

“You have to make up for those [legal] costs,” Ferry says. “I’m being hammered.”

In his opinion, corrupt lawyers are taking advantage of bad laws to enable unscrupulous workers to cheat the system. California politicians, for their part, lack the will to do anything to stop them, he says. “Unfortunately, we are living now in a world of fraud,” he says.

“You are afraid to tell your employees what to do any more,” says Ferry. “To defend yourself is extremely expensive.” Ferry is strident in his insistence that he has done nothing wrong.

He’s right, says Jean Francois Meteigner, chef-owner of La Cachette in West Los Angeles. Meteigner was executive chef at L’Orangerie during its glory days in the 1980s, and he remains close to his old boss.

“Gerard is not the type to pay for nothing, so he fights,” says Meteigner. “He is there, at L’Orangerie, all the time, very demanding of his staff. They say he is difficult. Well, so am I.”

Unlike today, when 120 guests is a big night at L’Orangerie, every Saturday night in the ‘80s at least 200 guests would pack the room, he says. Friday nights were nearly as busy.

“It was all French restaurants here when Gerard started,” says Michael McCarty, who pioneered California cuisine when he opened Michael’s in 1979. “Gerard took it over the top with his decor. It was New Year’s Eve there every night.”

Meteigner recalls parties with $20,000 florist bills, cages filled with exotic birds, a night when the front entrance was wreathed in flames. The biggest and best soirees, he says, were at L’Orangerie.

Those free-spending days were winding down by the time Meteigner left to start his own restaurant. To maintain the level of the cuisine, Ferry hired Jean-Claude Parachini, who had been a chef at the Michelin three-star L’Ambroisie in Paris. When he left after only a few years, Ferry brought in Gilles Epie, former chef-owner of the Michelin one-star restaurant Miravile.

“You have to credit him with bringing so many young chefs over here from France,” says McCarty. “The stuff that was happening in Paris, he’d bring here.”

Ferry hasn’t stopped. Bustling around L’Orangerie, he is a study in constant motion. He spends the evening jumping from a private dinner party of his own to touch base with the bartender, the sommelier, waiters, the maitre d’ and check on the tiniest details.

Whatever the difficulties have been, Ferry still has a restaurant to run. “I hope it is all behind us now,” he says.

*

(BEGIN TEXT OF INFOBOX)

L’Orangerie tip pool

Tips point system

Each point is one share of each day’s tip pool.

*--* Points Waiter 10 Sommelier 10 Bartender 10 Maitre d’ 7 Back waiter 7 Busboy 5 Hostess 3

*--*

One night’s split

On May 8, 2004, a typical Saturday, the tip pool was split among 19 employees.

*--* Amount received by each employee Waiters (6) $196.75* Sommelier (1) $209.44 Bartender (1) $190.40 Maitre d’ (1) $133.28 Back waiters (3) $145.97* Busboys (6) $101.55* Hostess (1) $57.12

*--*

* Averaged. Some received more or less.

Source: L’Orangerie