Another Step in the March Toward a No-Tipping America
A couple of years back, if you had posited that restaurant tipping in America might one day disappear, people would have laughed at you. Tipping is such an integral part of our dining culture that the idea of a world without it seems antithetical to the American way.
But recent changes to minimum-wage laws in major cities, as well as the increasingly dire deficit in decent kitchen staff, have made owners and managers think hard about their current economic model. Many have come to the conclusion that if restaurants are going to remain viable, a new model is unavoidable.
In Los Angeles, for the most part, restaurateurs that have moved away from traditional tipping are now using a service charge, adding 18 to 20 percent to checks. This allows the restaurant to decide how that charge is split among its employees and avoids laws that prohibit back-of-house workers sharing in tips. (This is quite complex, legally, and the courts are still hashing out who can receive what type of tip.) It's understandable that owners wouldn't want to enact policies that may well be illegal now or sometime in the future depending on what the courts decide.
With the service-charge model, customers generally are given the option to leave an extra tip as well, which allows us to retain the sense of generosity that comes with tipping but also poses new uncertainties: Are we supposed to tip extra? Will we be seen as miserly if we don't? Many places have added a 3 percent charge for health care, some on top of the service charge and some alongside a traditional tipping model. One chef has added a line for tips dedicated specifically to the kitchen staff. Are we supposed to take these charges into consideration when figuring out a total tip percentage, or are they seen as extra? While I applaud these owners' attempts to take care of their employees and understand that the problem is complex, the range of differing charges and tipping options does tend to make the end of a meal confusing and a little stressful — and can rip you from the warm embrace of hospitality that the restaurant has spent so many hours cultivating.
In New York, however, the trend seems to be shifting toward no tipping at all and no service charge, either. This move has been most visible and significant with the restaurants of Danny Meyer, one of the country's most prominent restaurateurs: Meyer has eliminated tipping and raised menu prices significantly to cover the costs of paying more to all of his employees. Eater New York's Ryan Sutton covered Meyer's policy and motivations extensively, and he does a great job of explaining all the reasons the change is so significant.
And now in Los Angeles, Barcito downtown is following Meyer's lead. Barcito joins just a handful of restaurants in L.A. that are abolishing tipping altogether, including Bel Air Bar and Grill, which announced a few months back that it would be transitioning to a hospitality-included model. Andrea Borgen, Barcito's owner and general manager, is an alum of Danny Meyer’s Union Square Hospitality Group, and she feels strongly that the "hospitality included" model is the future of dining.
Borgen tells me that the service charge and health care charge and kitchen tipping option all made her uncomfortable, and she worries that those policies will make customers feel nickel-and-dimed. "In an industry driven by hospitality, at the end of the meal all of these confusing extra charges really take away from that feeling," she says.
But she understands why people have opted for a service charge rather than a service-included model. "There's a part of that service-charge model that's really appealing. One of the biggest risks we're going to run into is sticker shock." Borgen is planning to raise prices across the board about 22 percent, which will cover a profit-sharing model with her front-of-house staff, higher hourly wages for back-of-house staff and health care for all employees. Borgen admits that as a more casual, lower-cost restaurant, Barcito is better positioned to do something like this, given that menu items won't seem insanely expensive even with the higher cost.
There will be no additional tipping expected, and in fact Borgen hopes to discourage the practice. "When we run someone's card there will be no tip line, and no one will be asked to tip more," she says. "In fact, we'd really prefer it if people don't tip. We want them to understand the value of the experience — we've added all the cost of doing business into the pricing structure, and we don't want people to feel as though they need to pay more on top of pricing that will already be more expensive."
When I ask Borgen if she thinks "hospitality included" is the future of American restaurants, she says, "Absolutely." She cites rising minimum wages, health care costs that soon will become mandatory for many businesses (though it should be noted that a small business such as Barcito would not be required to provide health care under Obamacare) and the increasing wage disparity between front and back of house. This disparity is especially stark in cities and states where the tipped minimum wage is not different from the regular minimum wage, and there's little doubt that the low wages for kitchen workers and high tips for servers (on top of an increasing minimum wage) is adding to the lack of skilled cooks to staff restaurants.
Borgen also feels that this model will improve the legitimacy of the restaurant business as a whole. "This shift will inevitably shed light on those businesses — and there are a lot — with thousands of dollars in underreported income. Tips servers are taking home in cash are often undeclared and untaxed. One of the most exciting aspects of this new, improved model is that it will legitimize the way we do business. Employees' incomes will be put back in the hands of the employers, creating a meritocracy that has never before existed in this industry."
Borgen hopes to have the new pricing, no-tipping structure in place by mid-April. It will be interesting to see how many other businesses follow suit.
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