By striking the tip line, a restaurant revolution is born

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Jessica Manning, a server at Upton 43 in Linden Hills, doesn’t get tips.


"I'm taking a big-ass risk," says chef Wyatt Evans, owner of Heirloom Kitchen & Bar in St. Paul.

Evans thinks about this a lot. On a bright but frigid Minnesota morning, he's driving toward Merriam Park to start prepping for dinner service and musing on his decision to make Heirloom, which opened in December, a tip-free restaurant. Opening a restaurant is always a risky proposition. Introducing the concept of a service charge in lieu of tipping doubles down on that risk.

"It would have been a hell of a lot easier to do what everyone else is doing," he says. "I'm sticking my neck out to say, 'Can this be done?'"

Last year, prominent New York restaurateur Danny Meyer announced that he would eliminate tipping at all 13 of his restaurants by the end of 2016. The news sent shock waves through the industry. Why would a successful businessman risk employee and consumer backlash by eliminating tipping? Why would anyone?

"Bottom line, I just think it's the right thing to do," says Evans. At his restaurant, all staff receive a set rate of pay. He adds an 18 percent service charge to every tab, which is split evenly between everyone who worked a given shift. If there's a busy night, everyone, including the kitchen, benefits.

Eliminating gratuity and paying all of the restaurant staff a salary addresses one of the biggest issues in the dining world right now: the disparity between what tipped servers can earn and the low pay of the kitchen staff.

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Jessica Manning, a server at Upton 43 in Linden Hills, doesn’t get tips.

"The highest paid person in my kitchen is making half or less of what servers are making," says Lenny Russo, chef-owner of Heartland in St. Paul's Lowertown. "And everyone in my kitchen earns more than minimum wage."

Industry insiders will tell you the current system isn't working, even if they can't agree on how to fix it. Is the end of tipping the future of a more stable restaurant workforce? Or is the act of leaving gratuity so ingrained that the tip-free model will flash and fade like the cronut?

Gratuitous

Leaving a tip after a meal is something most of us don't even think about. You eat, you drink, you pay, you tip.

Ironically, the American tradition of tipping was adopted in the late 1800s by wealthy Americans who brought the custom back from Europe — where they no longer tip. The origin of the word is thought to be an acronym for the phrase "to insure promptitude."

Early on, tipping came under fire in the United States for being anti-democratic. There was even a movement to abolish tipping, and an Anti-Tipping Society of America. In the early 1900s, six states passed anti-tipping laws, all of which were repealed by 1926. The tradition of tipping has been firmly ensconced in our dining experience ever since. In the 1960s, Congress decreed that workers could be paid a lower minimum wage if a portion of their salary came from tips, further cementing the role of gratuities in the hospitality industry.

Minnesota is one of seven states that say tipped employees must be paid the minimum wage, even if they receive tips on top of that amount. Restaurant owners argue that, in effect, they are subsidizing the wages of employees who earn well above the $9 minimum. In some cases, servers take home more than the owners themselves.

When Joe Radaich opened Domo Gastro in northeast Minneapolis in December, correcting this lopsided pay scale was part of the plan. He was formerly the owner of Sporty's Bar, and as he thought about opening a new restaurant, "I decided I would get rid of all the things I hated about the business."

That meant eliminating tips. It also meant keeping a revolving door between front-of-house and back-of-house positions. At Domo Gastro, staff roles are fluid; Radaich took his cue from the trailblazers at Travail, where employees rotate through all jobs in the restaurant, from cook to server to bartender.

From there, "Things just got more and more idealistic," says Radaich. He decided to stay closed on Mondays and Tuesdays so all staff could have two days off in a row, a rarity in the restaurant world. "I'm very excited about the idea of being able to try this and be a model," he says.

Erick Harcey, chef-owner of Victory 44 since 2009, just opened his second restaurant, Upton 43, in Linden Hills. He's also nixed tipping, but instead of implementing a service charge, he raised menu prices by an average of 18 percent. A bowl of squash soup goes for $12; no entree sells for less than $22. "We don't look at it as charging for service; this is just the price," says Ryan Koller, the general manager at Upton 43 and Victory 44. Servers at both restaurants will start at $17 an hour versus $9 plus tips.

Evans, Harcey, Radaich, and a few other restaurant owners are in the vanguard of testing alternative payment ideas in the Twin Cities. Others are waiting, watching to see if this could work.

A house divided

Although the Food Network would have you believe otherwise, earning a living as a prep or line cook is one of the least glamorous ways to make money. And diners might be surprised to learn that the prep cook at their favorite restaurant earns not much more than a high school kid filling hard shells at Taco Bell.

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Erick Harcey of Upton 43 and Victory 44 eliminated tipping and raised menu prices to give staff equitable pay.

Meanwhile, waitstaff earn gratuities over and above the minimum wage mandated by the state, an arrangement that makes it possible for an experienced server at a popular restaurant to pocket hundreds of dollars on a lucrative Saturday night.

The disparity can create a rift between the back of the house and the front of the house.

"It gets kind of weird when kitchen staff see waitstaff counting tips," says Emma Reid, who has worked as a server at various restaurants, including five years at the Local. Many restaurants have an unwritten rule about waitstaff not counting tips in front of the back-of-the-house crew.

It's one reason Marshall Brotto, who works at Domo Gastro, is a fan of community tips. "I think thanks (in the form of tips) should be shared," he says. When he worked in the kitchen at Café Lurcat, he saw the front of the house "rake in tons of money," he says. "Watching your hard work be tipped to someone else and not sharing in it is frustrating."

But waitstaff cannot be required to share tips with kitchen staff. "The law is quite clear that tips are the property of the person they are given to," says Dan McElroy, executive vice president of the Minnesota Restaurant Association. While it is common for servers to "tip out" a portion of their gratuities to non-tipped members of the staff at the end of their shift, the decision is up to the individual.

Steven Brown, owner of Tilia and now St. Genevieve, says he doesn't look at servers as being overpaid as much as he thinks of kitchen workers as being underpaid. Radaich agrees. "Something is wrong when people can't make a living working a 40-hour-a-week job," he says.

And that limited earning potential for back-of-the-house staff, coupled with the long hours and the physically and mentally stressful nature of the job, has made it increasingly tough for restaurants to hire and retain prep and line cooks, the backbone of every kitchen.

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Joe Radaich opened Domo Gastro and got rid of all the things he hated about the restaurant biz — including gratuity.

With competition for experienced kitchen help at an all-time high, Pig Ate My Pizza, the always busy offshoot of Travail, announced last August that they would close an extra day a week due to a staff shortage. Last October, Brasserie Zentral decided to close on Sundays citing kitchen staffing problems (before closing permanently in January).

Even Travail, a nominee in the prestigious James Beard Awards and a finalist for Bon Appetit's top 10 new restaurants, struggles to staff its kitchen. There, pay for cooks starts around $26,000. A talented server at an upscale restaurant can easily earn double that or more.

But the tipping system isn't always beneficial for servers. Take-home pay varies wildly. A server's income depends on the whims and generosity of customers. Every diner is a boss, evaluating performance and paying accordingly.

The whole idea is arbitrary and subjective, says Russo, if not sexist, racist, and degrading. "It's a fact that white male servers make more money than anyone else," he says. "[However] if I have a table of eight guys on a business trip here on their way to the strip club, an attractive woman will get a big tip."

There's virtually no other business where you get to penalize the staff for poor service. "When you go to the doctor, you don't get to say, 'I'd like to take $20 off my bill because the receptionist was kind of rude — and be sure to take that $20 out of her salary.'"

Nor do you get to walk back to the kitchen and take $20 out of the cook's pocket because "the steak was overcooked," says Russo.

A system based on tips also robs restaurant owners of the opportunity to offer incentives in the form of raises and promotions. "Many employees who would make great assistant managers don't want the job, since it would mean less money," says Koller, general manager at Victory 44 and Upton 43. Now that all staff at both restaurants are salaried, he is looking forward to seeing them freed up to learn new skills without suffering financially.

For all these reasons, Radaich of Domo Gastro predicts that within five years most of the restaurants in the metro area will move to a service charge model. But Heirloom's Wyatt Evans isn't so quick to predict. "The market will win out," he says. "The future will depend on what guests prefer."

Are you being served?

Chances are the only way you'll know you're dining in a non-tipping restaurant is because they will tell you. They're proud of what they're doing, of course, but they're also legally obliged to inform diners that their gratuity will not go directly to their server.

At Victory 44 and Upton 43, the host explains tips are not expected and the server repeats it. "Feedback has been incredibly positive from guests," Koller says. "People are curious, they like to hear the story."

Whether the restaurant has opted for a service charge or higher menu prices, they are quick to assuage your fears: You won't pay any more than if you left a 20 percent tip. Sometimes you wind up paying less. If you enjoyed Victory 44's "perfect burger" at its original price of $15 plus a 20 percent tip, you would have paid a total of $18; under the new system, it's a dollar less.

But tipping is more than a financial consideration. Many diners like the idea of tipping because they feel it gives them some control over the transaction — a way to express their gratitude, as well as a way to show their displeasure. Without the option to withhold a tip, what will diners do if they don't like the service?

Simple, says Koller. Do what you would do at any other business: tell the manager.

Koller says he welcomes customer engagement as a learning opportunity. Radaich tells customers that if they have any issues, they should "ask for Joe." He says so far only two people have sought him out to voice concerns. He offered in both cases to remove the service charge from the bill. Both customers declined.

At Domo Gastro, diner Christopher Thomas says he likes having the option to tip, though he adds, "I would gladly give some part of that up to make sure people are treated fairly."

Neither Evans nor Radaich reported anyone questioning the amount of the service charge, or asking if they could leave less of a tip than the service charge. Evans says he actually had to add a tip line to his receipts after repeated requests from customers who wanted to leave an additional gratuity.

One thing non-tipping restaurants have noticed is that a salaried workforce means servers no longer vie for certain lucrative and coveted shifts. "Now a Monday shift is the same as a Saturday shift," says Koller, "so the best servers aren't there only the weekends. It increases the level of service every night."

Michael Rostance, who worked as a chef at Broders' Pasta Bar in south Minneapolis for more than 20 years, sees how service might improve if tips were eliminated. "I've seen people say, 'That person is a lousy tipper, I'm not wasting time on him,' or fawn over someone they know to be a big tipper while ignoring the customer next to him," he says.

He is "cautiously in favor" of the no-tipping policy in principle. Experienced waitstaff accustomed to the tipping model will be reluctant to take a chance on it, he says.

Morgan Oie, who works at Amazing Thailand, isn't interested in becoming a salaried employee. Leaving with money in her pocket at the end of each shift is a job perk, she says. She knows how hard the back of the house is working, and is happy to tip them out at the end of her shift.

Rocky Olson, who has worked in the industry for over four decades and is currently a server at Broders' Pasta Bar, believes that if restaurants go to a no-tip system, they will lose experienced front-of-house employees like him, who have grown accustomed to a certain income. His restaurant career started in the kitchen before moving into managing. He switched to serving when he figured out how much more waiters make than their managers.

But Koller expects the server's mindset will change. Response to a recent help wanted ad was the strongest ever.

How they vote

For many restaurants, keeping the gratuity line is all about dancing with the devil they know. Their diners are familiar and comfortable with tipping.

"It's how they vote," says Tilia's Brown. "If they really thought this was a spectacular experience, they have a way to say thanks. It gives validation. We've mastered our craft. Tipping shows that."

Many believe working for tips elevates the quality of service diners receive. Servers hustle more in pursuit of the Holy Grail of a good tip.

"It's interesting that we're talking about this given the recent eviscerating review of Per Se," says JD Fratzke, chef-partner at the Strip Club Meat & Fish and Saint Dinette, both in St. Paul. He's referring to a recent New York Times review of renowned chef Thomas Keller's famed New York restaurant, which hinted that service may have suffered since the restaurant eliminated tipping.

There is also concern that adjusting menu prices to be able to pay kitchen staff better would drive customers away. "In this neck of the woods, you have to worry about sticker shock," says Fratzke. Russo concurs. "Do I decide I can no longer serve steak on my menu because if I raise my prices, it will be absurdly expensive?"

Options are limited for restaurant owners grappling with the best way to fix the pay gap. The Minnesota Legislature has consistently rejected a tip credit — a lower minimum wage for employees who also receive tips. Unless the law changes, restaurant owners will continue to pay servers at least $9.00-$9.50, starting August 1, when the state minimum increases. Nor can they mandate that waitstaff share tips with the kitchen. For businesses that work on profit margins in the low single digits, there just isn't a lot of extra money to work with.

Russo thinks it is hypocritical that the state won't allow gratuity to apply toward the minimum wage requirement when servers in his restaurant can earn in excess of $35 an hour. "When you try to legislate things for the greater good, there's always collateral damage," he says.

The owners of Wilde Roast Café in northeast Minneapolis say they have managed to increase wages and other benefits for employees without a tip credit. "In this business there are things you can control and things you can't," says Tom DeGree, who owns the restaurant with partner Dean Schlaak.

Dialogues with staff "created some soul searching," and in December they began offering paid time off in addition to phasing in pay increases for non-tipped employees so that by April, the pay for dishwashers will go from $9 an hour to $14. Cooks will see a bump from between $10 and $12 per hour to $14 per hour. Employees also get one hour of paid time off for every 30 hours worked, so they earn roughly one hour off for every week worked. "That only costs 16 cents per hour," says Schlaak.

They're the minority. Most restaurant owners are still weighing their options. The consensus is that something has to change, even if it doesn't happen overnight.

Jumping together

Russo has spent two years analyzing the issue, collecting data, crunching numbers on spreadsheets, and discussing alternatives with his staff. He has also attempted repeatedly to discuss it with elected representatives, to no avail.

People waiting tables support change, he says. "Our service staff know the work of the kitchen contributes to their ability to make those big tips."

Restaurants can't depend on the government to come up with a solution, Russo says, but changes have to follow the law. His waitstaff has come up with three ideas for evening out the wage disparity between themselves and the back of the house. "They were thoughtful, generous, open hearted — and illegal, unfortunately."

Meanwhile, the no-tipping movement is gaining momentum even with large, established restaurant chains. Joe's Crab Shack began testing the waters starting last August at 18 of its restaurants. The company eliminated tipping while upping pay for front-of-the-house staff to between $12 and $14 an hour, paying for the increase by raising prices by 12 percent to 15 percent.

The topic is trending locally. Koller had four conversations in one week with people from other restaurants curious about how it's going at Victory 44 and Upton 43. And as Evans puts it, "I've gotten more attention for this [the service charge] than for my food."

Brown feels that the structure of remuneration in restaurants will change "real soon." He says that in his discussions with other restaurant owners, "The opinion among my peers is if we jump [to a non-tipping model], we all have to jump together."

Correction: An earlier version of this story reported that employees of Wilde Roast Café get a day of paid time off for every week worked. Employees receive roughly an hour of paid time off for each week they work. The story has been updated to reflect this.


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