No-Tipping Restaurant Concept Keeps Hitting Snags

By  |  0 Comments

It turns out that traditionally tipped employees really like their tips.

If you’ve been following national restaurant trends in the last year or so, you may have heard of a brewing storm coming between those in the front of the house (bartenders, servers, hosts, bussers) and those in the back of the house (chefs, cooks, dishwashers, etc).

The problem is that those in the front of the house make most of their pay from tips, while those in the back of the house get theirs from a paycheck. This has worked fine for a few generations, but problems are starting to arise. The big issue is that demand for cooks in many markets keeps going up and restaurants are scrambling to figure out how to pay them. Positions that used to pay $12 an hour in places like NYC and Boston are now offering $18-20.

In the front of the house, tipped employees have been doing well for quite some time, especially in high-end establishments, because they can make $40+ an hour (your results may vary, yada-yada-yada).

The crux of the matter is that tips from the front of the house can’t be used to pay the back of the house, so there’s a strict division of labor.

Out in San Francisco, That Volger decided to eliminate tipping at his two restaurants Bar Agricole and Trou Normand, and instead raised prices 20%. The front and back of the house were now all making their living off of wages and the disparity between the kitchen staff and servers was greatly reduced…but this experiment failed, miserably.

The problem is that tipped employees ended up having a loss of income. Their hourly income went from $35-45 an hour down to $20-35…and as much as they might have talked a good game about solidarity with their co-workers in the kitchen, it turned out that most weren’t actually ready to face that financial hit.

“They became more and more disgruntled, and we started to experience turnover,” he said. “We were spending a lot of time and energy hiring and training, and rehiring and training.”

He estimated he lost about 70% of his tipped staff — or 30 people — during the 10 months the policy was in place.

Volger estimates that he’d have to raise prices 40% to maintain his servers’ gratuity wage, increase kitchen pay and pay taxes on those wages.

So he’s doubled back. Tipping is back and prices have been drawn back down (though not all the way). The smaller markup allows him to maintain the pay for his kitchen staff 15-25% above last year’s wages.

And so the struggle for restaurants to maintain excellent staffs, while providing good food at competitive prices, continues. Everyone just has to realize that turning the staff’s wages into a zero-sum game is not a great solution to a labor shortage in the back of the house. There’s nothing like telling an employee that his pay is being cut to give another employee a pay raise to spread discord in the ranks.

If restaurants need to increase prices to keep the back of the house staffed, so be it. That bump in prices might actually help the front of the house too, because their tips should increase accordingly. Of course, customers might be a little unhappy that they’re expected to tip on an increased tab, with increased tax, but ultimately, that’s the cost of good food in this day and age.

Otherwise, there’s no reason to re-invent the wheel.

-Tristan Pinnock, Blast Gratuity Correspondent

Tristan's just this guy, ya know?