The Restaurant Tipping System Is (Very) Slowly Dying
More restaurants are experimenting with not tipping.
The anti-tipping movement got a little more steam this week as an article in The Washington Post outlined the efforts of restaurateurs to abandon customer tips as a way to compensate restaurant staff. The recent coverage is significant in that the restaurants in question are moderately priced ones. Most of the restaurants that have gotten attention for compensating their wait staff directly instead of asking customers to step in have been high-end.
The service charges employed by the French Laundry in California, Sushi Yasuda in New York City and other restaurants have gotten attention in recent years as examples of alternative compensations models, and owners say they're working. Eliminating tipping increases productivity, reduces a burden placed on customers and forces restaurants to internalize all their labor costs. But just because it works in restaurants where the average tab is measured in the thousands of dollars doesn't mean it will work in the restaurants where the rest of us eat.
Enter New York's Dirt Candy, where entrees hover around $22 and servers make an hourly wage of $15. The restaurant charges customers a 20 percent administrative fee to cover the costs of employment, and according to the owner, it's working there, too. A yet-to-open restaurant named Public Option is slated to open in Washington, D.C. later this spring. Its owner will also start servers at $15 an hour. The owner of this restaurant says he will simply charge more for menu items instead of tacking on an additional fee.
At the same time, the Restaurant Opportunities Centers United, an organization aimed at improving working conditions and wages for restaurant workers, released a report claiming taxpayers subsidize restaurants that pay employees below the minimum wage. Focusing on corporate restaurants like Olive Garden and Cracker Barrel, the report claims that nearly half of the families of full-service restaurant workers are receiving government assistance of some sort. The report goes on to say taxpayers are subsidizing restaurant profits in an industry that continues to thrive while externalizing its labor costs.
Here in Dallas, the only restaurant that seems to embrace a progressive employee compensation model is Chad Houser's Café Momentum. His employees are paid $10 an hour no matter where they work in the restaurant and any tips left by customers are considered donations to Café Momentum's non-profit cause. If $10 seems low, note it's still above the minimum wage, and employees get significant training and other benefits while working at the restaurant.
While the Café Momentum model may not be the best comparison for the restaurant industry at large, it does demonstrate that restaurants here in Dallas can pay tipped employees more than the federally required minimum of $2.13 an hour, without going under. Traditional restaurants in Dallas should be able to pull of similar compensation models while also maintaining profits. Someone just has to try.
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