Could tipping reach a tipping point? Some restaurants try new model.
Some US restaurants are forgoing tips. The trend is small, but proponents suggest that ditching tipping could lead to more equitable wages for wait staff.
A mini-revolution is gently simmering in American restaurants. It's about attitudes, about personal service and stinginess; it's about livable wages and gender equity. It's about tipping.
A growing number of restaurants around the country are ditching the tip model entirely in favor of higher wages and benefits, including health insurance.
Tipping hasn't quite reached a tipping point but the model seems downright revolutionary in an industry where employees typically depend on customer tips to pad paltry wages. The federal minimum wage for tipped workers is just $2.13 per hour, and benefits are practically unheard of.
However, in the past couple of years, about two dozen restaurants and one major chain across the country have done away with discretionary tipping.
The model has the potential to address what advocates see as an inequitable system, in which the livelihoods of wait staff hinge on the whims of patrons. However, the restaurant industry has concerns that a push for higher flat wages could drive up menu prices beyond the range that customers are able to afford.
In Los Angeles, restaurateur Gabriel Frem opted to replace discretionary tips with a flat 15 percent service charge to help fund higher wages for his staff at the upscale Brand 158 Restaurant in Glendale. To his view, what's good for the server is good for the business.
“We think that if we stabilize the lives of our employees, they can then focus on the customer,” Mr. Frem says. “If people came to work and didn’t know what they were going to make for the week, that tension would eventually translate to the customer.”
One server, Tiara Gazarian, says the model not only has made for a better work environment for employees, but has also led to more efficient service for customers.
“This is a fantastic company model because it makes everyone a team,” she says. “There is no competition for the big table and no unwillingness to get a drink for another table because they’re not in your station.”
Manager Steve Ghermezian has worked in restaurants his whole adult life and thinks the idea is “beautiful.” He says the food prices are not inflated to pay the extra wages, but rather that huge savings occur because there is less training, less turnover, and a smaller staff doing more work.
“It cuts the politics and gives them full-time jobs that are stable and allow for all of them to act as owners. They don’t have to come in every day and have to guess how much money they are going to go home with.”
Casa Nueva in Athens, Ohio, decided to forgo tips to help bridge the pay gap between workers who wait on customers and those who run the back of the house. Casa Nueva employees used to pool their tips and divide them up evenly between all workers, including cooks and dishwashers, until the Department of Labor stepped in and said that pooled tips could not be divvied up to traditionally untipped employees such as dishwashers, chefs, and janitors.
In Newport, Ky., Packhouse Meats pays meatball-slinging servers $10 per hour, or 20 percent of their total food sales, whichever is higher. Owner Bob Conway told The Cincinnati Inquirer that he wanted to remove the “whim of the customers” from the equation.
“I’ve heard the horror stories – $3 left on a $100 tab,” he said. Under that model, “how much a server makes has nothing to do with how hard they work. Servers had to quit because they couldn’t make ends meet.”
Congress hasn’t raised the federal tipped wage in nearly 25 years. The National Restaurant Association (NRA) has argued that requiring higher wages would force owners to lay off servers, cut workers’ hours, or raise prices.
“Along with flexible work schedules, tipping is what makes [being] a restaurant server an attractive profession, and makes the restaurant industry an industry of choice for millions of Americans,” says NRA spokeswoman Christin Fernandez.
That’s especially true for servers working in high-end establishments, who may actually earn more in tips than they would with a fixed salary. However, nearly half of restaurant workers live near poverty, according to the Restaurant Opportunities Center United, the closest thing to a union for food-service employees. Seventy percent of servers are women, 90 percent of whom report enduring sexual harassment to not spoil their chances of receiving a good tip.
At the same time, however, this kind of model could be harder to implement at lower-priced restaurants, says Gagan Ghosh, assistant professor of economics at the University of Iowa. One chain, however, Noodles & Co. has implemented a no-tip policy across 380 locations in 29 states.
“Since raising wages of wait staff will raise prices, one suspects that this increase in prices will have a larger effect on restaurants like delis, cafes, or diners, since their forte is selling cheap food,” Professor Ghosh says. “The average person who goes to these places has a lower income than people who go to high-end restaurants. Therefore, I would guess that this change would be harder to implement in restaurants that serve reasonably inexpensive foods.”