Why some Twin Cities restaurants are abandoning tips

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Instead of tips, many restaurants have introduced a service charge model. But what exactly are the service charges for and what does the future of the local restaurant industry look like?

Many restaurateurs say the tip model is archaic, and studies, including one by One Fair Wage and the University of California-Berkeley, have shown that there are large disparities in tips between white men and women. colored, the first earning $ 2 more per hour. than the latter, on average. Racial and gender issues aside, tips prevent restaurant workers from earning a living wage and create a work-for-themselves environment in restaurants.

“I think most restaurateurs know there is a feeling that the back and front of the house don’t necessarily make one dream team because of how the pay gap always disappears,” said Gina Mangiameli, co-owner of Chip’s Clubhouse. When the restaurant opened in the Mac-Groveland neighborhood in February, it had implemented a service charge model.

Under the traditional tip model, front desk workers – waitresses, bartenders and their support staff (waiters and couriers) – receive tips or receive a tip, leaving the people who prepare the food or wash the dishes with different salaries.

“It’s never close to what servers make at home in terms of hourly wages,” Mangiameli said.

In the service charge model, 18-21% is added to the tab, and it goes to all staff, both front and back of the house.

Throughout their careers in the restaurant industry, the co-owners, Mangiameli and Tara Coleman, have worked for large and small restaurant groups in and out of state. For large restaurant groups, Mangiameli said, it was easier to provide fair wages to their employees with a tip model in place.

“But when you’re having a hard time or when you’re a small business, it’s really tough with the way the margins are set so you can pay people fairly for the really hard work that cooking food and cleaning involves,” Mangiameli said. .

The base price of a menu item includes anything that allows arancini or rigatoni to be prepared before a customer arrives, explained Peter Sebastian, CEO and partner of Estelle. But the service charge is all the effort it takes to cook these rigatoni and put them on your plate and at your table the night you visit.

When the pandemic struck, Sebastian sensed a change in morale in the team.

“We knew people were exhausted,” Sebastian said. “And so besides trying to find a better way to plan people and a better way to balance our team, we started talking about how we balance the income a little better.”

Estelle came up with a service charge model that is also commission-based, allowing staff to earn higher salaries when the restaurant is busier while continuously distributing salaries among staff members.

“This tip isn’t just the service from the waiter, it’s the whole experience. Were the food and drinks good? Did they get out quickly? And I think that’s the part that’s missing. It takes a team to create a great experience, not just one person, ”he said.

Many local restaurants have shifted from tips to service charges during the pandemic as working conditions from COVID-19 have pushed service workers to their limits. But a few restaurants have experimented with service charges and then reverted to the tip model.

At the Troy Reding restaurants (Holman’s Table and Rock Elm Tavern), the company applied a 20% service charge and has since reverted to tipping.

The widespread shortage of staff in the hospitality industry was part of the reason the group returned to a traditional model. According to Reding, when the restaurant reverted to the tip model, it became easier for the company to hire waiters and bartenders.

“I think people are resistant to change. The people who served and served at the bar are used to having money, getting tips and going out with money, ”Reding said,“ and it’s a tough transition for people to go through. ‘a weekly paycheck to daily cash.

Customers, too, were resistant to change.

“I got tired of reading negative reviews from customers stating that we were trying to take money from the waiters and bartenders, that we were forcing customers to spend more money,” Reding said.

Many restaurants that avoid the service charge model add a welfare fee to checks to help pay for employee health benefits. Reding’s group adds 3% to all checks to fund health and mental health insurance as well as hourly and salaried workers’ pension plans.

Gavin Kaysen, chef / owner of Spoon and Stable, Bellecour and Demi in the Twin Cities.  Contribution / Eliesa Johnson via St. Paul Pioneer Press

Gavin Kaysen, chef / owner of Spoon and Stable, Bellecour and Demi in the Twin Cities. Contribution / Eliesa Johnson via St. Paul Pioneer Press

Some restaurateurs, including chef Gavin Kaysen, started using a service charge model before the pandemic.

“The abandonment of tips is inevitable as our profession continues to evolve. It may not be a model that works for all catering businesses, but we find it is the best way to support our teams, ”said Kaysen.

Kaysen implemented a service charge at all of its restaurants, starting with Demi in 2019, then translating the model into Spoon and Stable last summer.

So is the service charge model the future of local catering? Sébastien d’Estelle sees it as “a future”.

“I think an alternative future would be for customers to slowly be educated about the true costs of restaurant meals,” he said. “In an ideal world, customers understand the high costs of a dining experience – all it takes to put that plate of food on the table.

“Until people accept that to do this at a higher level it takes a higher cost – it’s really hard to see us going in that direction. But I think a service charge brings us closer.


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