Three months after opening Upton 43 as a service-included, no-tipping establishment, chef/owner Erick Harcey has abandoned that plan for a traditional tipping model. His other restaurant, Victory 44, has also reverted to a tipping policy.
Is this the end of the no-tipping experiment in the Twin Cities?
Not necessarily. Harcey’s restaurants both used a European-style of service-included pricing, in which menu prices reflect the cost of the entire experience, from food costs to staffing expenses. Two other local restaurants employ a gratuity-included model and report it has been working well. In a gratuity-included system, instead of menu prices going up, the restaurant automatically includes a gratuity in the bill in lieu of a customer-added tip.
The impetus behind both alternatives is to fairly compensate both the front of the house (wait staff) and the back of the house (kitchen staff). Typically, there is a large discrepancy between the earnings of the kitchen staff compared to the pay of the servers thanks to the addition of tips. In theory, it also provides better service overall, as the entire team works together instead of focusing only on their customers.
The main challenge at Upton 43 and Victory 44 was keeping prices competitive.
"In order to keep the model growing in the direction we had planned, we would have priced our food out of the Minnesota market," says Josef Harris of Bodega LTD, public relations and marketing manager for Upton 43 and Victory 44. "Our prices would have been perfect if we were in L.A. or New York, but not in Minnesota."
Menu prices have now been reduced to reflect the reimplementation of tipping.
Harris says there was no backlash from staff or customers regarding the service-included model. Quite the opposite. "We found guests wanting to tip more than the included 18 percent, so we didn't want to limit our staff's earning potential," he says. Back-of-the-house pay was not affected by the return to a tipping system.
Joe Radaich, owner of Domo Gastro in northeast Minneapolis, says he also gets questions about giving a larger tip, even though a 20 percent service charge is automatically added to the bill. And while he included a line for additional tips when the restaurant opened in December, he is eliminating it because he thinks people don’t necessarily understand that a gratuity is already included, even though it is clearly stated on the menu and reiterated by servers.
Radaich says overall, both customers and staff are happy with the arrangement. “I get about one email a week from customers on both sides of the issue,” he says. Some urge him to “go the full European model,” and others tell him to go back to a conventional tipping policy. “They’re split just about 50-50,” he says.
Wyatt Evans, chef/owner of Heirloom in St. Paul, reports that the restaurant, which opened in December, continues to operate with a service charge.
That service charge is distributed among staff, though Evans says he has tweaked the amounts distributed to certain positions based on job requirements and responsibilities. "We still believe strongly in fair distribution as an avenue to foster teamwork and to create an environment where guest satisfaction is the number-one priority."
Even Harcey hasn’t ruled out the possibility of returning to a service-included policy down the road — if more local restaurants embrace the model and it becomes more mainstream.
"Overall the no-tipping experiment worked so well," says Harris. "We created an incredible staff that is unified as a team, that is focused on guiding guests through a unique and original experience versus getting more money out of them. Our service continues to hold those values true with tipping reinstated as well."
1032 Third Ave. NE, Minneapolis
2186 Marshall Ave., St. Paul
4312 Upton Ave. S., Minneapolis
2203 44th Ave. N., Minneapolis