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How much do you trust your coworkers? That’s a question servers, bartenders, and cooks must ask themselves before joining a tanda. These informal savings clubs, known in financial circles as rotating savings and credit associations (ROSCAs), are part of the work culture at a number of restaurants across the city.
Tony & Joe’s on the Georgetown waterfront has two tandas running simultaneously. Server Joey Tipan organizes a small one with 11 colleagues. Participants contribute $100 per week, and each week a different person takes home the $1,000 pot ($1,100 minus the $100 they put in). This goes on for 11 weeks until everyone has had a turn raking in the cash.
It’s critical that everyone in the circle be reliable because staff turnover can disrupt the tanda. If someone skips out before the completion of a cycle, the person who started the tanda is typically responsible for covering the money for the deserter.
In some tandas, weekly winners are determined by random draw. Other organizers deliver the pot in a set order, and assign new players to the end of the rotation to make sure that they stick with it until their week for a payout comes up. “Most people that play have been here for a while,” Tipan says. “You know they’re not going to run away with the money … Most people have been here over 10 years.”
Server Alan Ramos’ tanda runs concurrently with Tipan’s at Tony & Joe’s. Twenty-seven players put down $300 per week, making the take home $7,800. Both tandas run during the slow season from April through September and include a mix of cooks, servers, bartenders, bussers, and bar backs.
Participants get back exactly what they put in. If your turn is toward the beginning of the tanda, the jackpot mimics a zero-interest loan. Land a slot later on, and the tanda acts as a savings account. The unique employment culture in restaurants makes tandas attractive. Some workers earn minimum wage and live paycheck-to-paycheck, making it challenging to make a big purchase. Others take home cash tips and are tempted to spend right away. Still others may not have bank accounts.
ROSCAs are nothing new. At least 70 countries have a word for it. Tanda is the term in Mexico, but Ethiopians call it ekub, Filipinos call it paluwagan, Trinidadians call it sou sou, and Pakistanis call it committee. The savings circles play an important role globally by providing financial inclusion for the unbanked.
The ROSCAs range from rudimentary agreements between friends to more formal systems assisted by NGOs. The World Bank’s “Global Findex Database 2017” report, which measures financial inclusion and financial technology advancement, says 11 percent of adults in developing economies save semi-formally through ROSCAs or something similar.
Much of the D.C. restaurant industry is staffed by immigrants, and many of them bring ROSCA traditions with them from their home countries. “Our Thai and Hispanic staff participate together,” says Tom Healy, a managing partner of Baan Thai. “As soon as the Thais started doing it, the Latin Americans were like, ‘We do this too, can we get in on it?’”
They call it “luck pot” at the 14th Street NW restaurant, and kick things up a notch by introducing a bidding component in place of randomly drawing numbers to determine who gets the money in what order. Ten participants contribute $300 every two weeks. When it comes time to disburse the money, those who haven’t won yet write down how much they’re willing to pay to take the pot home that day. Healy says bids typically range from $5 to $15. On subsequent weeks, the winner has to pay $300, plus whatever they bid, until the cycle is over.
This tweaked tanda aims to solve one of the chief drawbacks of ROSCAs—players don’t always take home the large sum of money when they need it the most. Healy says staff at Baan Thai have used their “luck pot” earnings to buy plane tickets, pay off bills, and put security deposits down on apartments.
“It’s a way to get away from payday loans,” he says. “If you need to take you and your child back to your home country for a family emergency, you’re shelling out $3,000 in tickets … It’s a great emergency buffer.”
According to the Consumer Financial Protection Bureau, a typical two-week payday loan with a $15 fee per $100 is equivalent to an annual percentage rate (APR) of 400 percent. Many consider payday loans to be predatory.
Healy also says a number of his employees play “luck pot” because they don’t have access to a bank account. “A high percentage of our checks that we issue to employees are cashed, not deposited,” he says. “There are a couple of non-banked employees. Some come from countries where they don’t trust the banks.”
According to Federal Deposit Insurance Company (FDIC) data,10.8 percent of households in the District were unbanked in 2015, and another 25.4 percent of households were underbanked. FDIC conducted a new survey in 2017, but hasn’t yet released the data. Employment status, income, and race are the three biggest factors in predicting whether someone has a bank account, but immigration status also plays a role.
Employees from Lauriol Plaza, El Tamarindo, Alero Restaurant, El Sol, and Mezcalero also report having participated in tandas at their restaurants at some point. A Lauriol Plaza employee from Bolivia points out that back in her home country, where it’s called “pasanaku,” they play with rice and beans instead of cash.
There’s also a tanda underway at Profish, a seafood supplier based in Ivy City. Mayi Castillo Palafox manages The Tavern at Ivy City Smokehouse across the street. She has been participating in tandas for at least 12 years, and since there isn’t one yet at Ivy City, she in on the one at Profish.
“Tandas are for servers and bartenders, people like that,” she says. The front-of-house staff she’s referring to typically get paid in cash. “They get money every day and don’t tend to save it. When they get it, they spend it.” The tanda, she says, “is like putting $2,000 in the bank.”
John Wood, the executive chef at Barrel and Crow in Bethesda, echoes Palafox, saying that some restaurant workers struggle to save money. He is one of 15 people who participate in the tanda at his restaurant, where employees pay $100 for a take-home of $1,400.
“For some of these guys, $1,400 is a lot of money,” Wood says. “One of the guys bought a [used] car. They’re not going to have a mutual fund or anything like that. They’re not in the stock market. This is their version of a bank account.”
Wood, who admits that he has trouble saving, used his tanda lump sum to finish yard work. He believes tandas also contribute to staff bonding, which is why he would recommend other restaurants start one.
“But it depends on the staff and the culture,” he hedges. “We have a very tight-knit crew. Most of them live in the same apartment building. They’re from the same place in Honduras. They were neighbors there, and now they’re neighbors here. They’re so close, there’s not much fear.”
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This story has been updated to reflect that the data about unbanked residents came directly from the FDIC instead of the DC Fiscal Policy Institute.