Following lawsuits accusing it of illegal business practices, Cafe Gratitude will soon close all eight of its Northern California locations.
The founders of the chain — known for its vegan menu and dedication to sustainability — announced Tuesday that the business was forced to close the locations, including one in Berkeley, because the lawsuits would cost too much to defend in court. This closure will result in 230 Northern California employees losing their jobs.
“The bottom line is that they talk about gratitude and abundance, but they are making money for themselves,” said Stephen Sommers, an attorney representing two former cafe employees. “They are stealing money from their employees.”
Sarah Stevens, who worked as a server, bartender and line cook, is one of the employees Sommers represents. Stevens’s lawsuit — filed in August — claims the business used an illegal method of distributing tips.
“To supplement the low wages of the kitchen workers, who they refuse to pay at a market rate, they pull from the tips of servers,” Sommers said.
According to the announcement, the chain has done nothing illegal but cannot afford to go to court against what it calls the “aggressive lawsuits.”
Chandra Krinsky, a shift leader at the Berkeley location on Shattuck Avenue, said the cafe pools all of the tips collected across its eight Northern California locations and sends 20 percent of the tips to the cafe’s central kitchen in San Francisco, where the money is then distributed among the kitchen’s 60 employees.
The remaining 80 percent of the tips are distributed among employees at individual locations based on the number of hours they work, according to Krinsky.
“People would tip (Stevens) $200 in a given day, and she would walk out with $40,” Sommers said.
Ravi Shankar, Sommers’ second client and a former bookkeeper for the cafe, filed a suit in October claiming management avoided paying him overtime by paying him a salary rather than on an hourly basis, an illegal practice in California, according to Sommers.
Sommers said he is skeptical that the lawsuits are the sole reason behind the closure of stores.
“It doesn’t make any sense that they have eight restaurants but can’t pay for a lawsuit that costs less than $200,000,” he said.
Krinsky said she has not had any issues during the four years she has worked at the cafe.
“I have been completely satisfied with the way we share tips and have never been forced to work overtime,” she said. “I am sad to be losing a really great job that I enjoy and am sad that the community of Northern California is losing the great food and community offered here.”
Krinsky said employees were informed of the closures during a meeting Monday and were told that all those affected will get severance packages.
The chain was founded by Matthew and Terces Engelhart in 2004 with the opening of its Mission District location in San Francisco. In the past eight years, the chain has expanded to nine different locations scattered across the state, including locations in Berkeley and Oakland.
Each Northern California location will be closed individually in the coming months after the properties currently occupied by the restaurants are sold to new owners, a process that Krinsky estimated would take three to six months.
The chain’s sole Southern California location — in Los Angeles — will remain open despite the lawsuits, and a new restaurant is scheduled to open in Venice, Calif., this spring.