The topic of tipping and its impact on server wages is hardly a new one, but the coronavirus presented full-service restaurants and the industry at large with an opportunity to dismantle—or at least change—the default model.
Greg Ryan, co-owner of Bell’s Restaurant in Los Alamos, California, accelerated his decision to phase out tipping after the pandemic left too much uncertainty for employees. Prior to COVID-19, Ryan anticipated moving to a no-tipping model in early 2021, when minimum wage in Santa Barbara County was set to increase. But the pandemic turned his initial economic decision into a moral one when he felt the well-being of his staff was on the line.
“As we got closer to understanding that we could reopen for dining service—which happened June 12—we weren’t really sure what we were going to be looking at,” Ryan says. “I did know that I wanted to try to understand how to maintain and keep all of our staff employed.”
As a result, Ryan’s restaurant has implemented a service-included model that adds an automatic 20 percent service fee for meals. The restaurant has also removed the option to tip more, which may seem odd at a time when customers may be inclined to tip more generously. But Ryan says tipping, even if in addition to the service fee–included bill, still questions employee value.
“The reason that we don’t allow any other tipping is that I feel like it dissuades the point of what we’re trying to do, which is to give value to both the experience and the operation of the restaurant, as well as equally show value to the employee who works with us here at Bell’s,” Ryan says. “Once you allow outside gratuity or tipping, I feel like you’re back to the same place.”
One source that Ryan has consulted throughout Bell’s business model transition is Saru Jayaraman, president of national nonprofit One Fair Wage. The organization focuses its efforts on increased minimum wages rather than a complete removal of the tipping practice. It also advocates for non-discriminatory tips, which take the form of tip sharing between front and back-of-house employees.
By putting the onus on restaurant operators to supply employees with their wages rather than the customers, Jayaraman says other workplace issues, such as sexual harassment, decrease. This issue is especially important in an industry where 70 percent of waitstaff in the U.S. are women.
“[Servers] are largely women who work in casual restaurants, IHOP, Denny’s, Applebee’s, dive bars across America. They struggle with the highest rates of economic instability and sexual harassment of any industry in the U.S.” Jayaraman says. “And now they’re being asked to go back to work for a subminimum wage when tips are down 50–75 percent across the country.”
Seven states require employers to pay tipped employees full state minimum wage before tips: California, Oregon, Washington, Nevada, Minnesota, Montana, and Alaska. But Jayaraman says the pandemic has brought a new openness toward changing the status quo across the country—and that this new attitude is here to stay.
Thattu co-owners Margaret Pak and Vinod Kalathil changed their attitudes toward tipping when they started doing pop-ups after closing their food stall in Chicago’s Politan Row in May. Pak says fellow Chicago restaurant Superkhana International’s service fee–inclusive model inspired them to adopt a similar model moving forward.
But, Pak adds, service charges are only a short-term solution to tipping. Long-term viability would require industry-wide price increases. Kalathil says the change would need to be throughout the community because customers often compare restaurants when assessing the value of a product.
Asking restaurants to collectively raise prices is something of a prisoner’s dilemma that relies on all parties acting in a way that may not immediately serve their own self-interest. But while keeping low price points may attract customers, Kalathil says the razor-thin profits margins keep restaurants and employees undervalued in the long run.
“In the restaurant industry, the profitability is so bad,” Kalathil says. “I think a lot of that is because people are really suppressing how expensive labor is.”
Kalathil says the approach to a successful no-tip reality requires effort from the bottom and top of the industry. To him, an approach that includes guidance from organizations such as the National Restaurant Association (nra) would facilitate a cohesive industry shift.
However, it’s unlikely the movement will receive support from the NRA. The association has frequently lobbied against legislation that raises federal minimum wage, such as the Raise the Wage Act. In a press release against the bill, the association wrote that large rises in labor costs could force restaurant owners and operators to raise menu prices and cut back on current employees’ hours, among other problems.
While a restaurant ecosystem sans tipping seems more of a possibility than in years past, the timeline of implementing new practices remains unclear when tipping has been such an integral part of the American dining landscape for decades.
“The restaurant industry as a whole is so antiquated in regard to tipping,” Pak says. “We feel like we’re passing the buck by asking customers to pay tips so that could be used to help supplement a livable wage.”
