One of the biggest restaurant industry headlines of the past year was Danny Meyer and his grand no-tipping experiment. The famed New York restaurateur announced last fall that he would eliminate gratuities (and raise prices) at 13 of his Union Square Hospitality Group restaurants by the end of 2016. The company is by far the largest and most notable American restaurant group to change up its business model in this way.
Locally, only a few places, including Sally’s Middle Name and The Public Option brewpub, have opted for gratuity-free systems, whether that means increasing prices or adding a flat fee to the check. Other restaurateurs say they’re curious about getting rid of tipping, but few want to be among the first to take the leap to see if it actually works.
Proposed changes to D.C.’s minimum wage laws could ultimately force the issue to a head sooner rather than later.
Mayor Muriel Bowser recently introduced legislation to the D.C. Council to increase the minimum wage from $10.50 (becoming $11.50 in July) to $15 an hour by 2020 and the tipped minimum wage from $2.77 to $7.50 by 2022. Employers are required to make up the difference if the wages of tipped employees, who get the bulk of their pay from gratuities, fall short of the full minimum.
Meanwhile, a coalition of advocacy groups is collecting signatures for a ballot measure that calls for a universal $15-an-hour minimum wage.
Many restaurateurs say raising the tipped minimum would force them to raise prices and cut back on staff or staff hours. It could also result in an even more profound shift: “It will for sure threaten the existence of the tipped system,” says Kathy Hollinger, president of the Restaurant Association Metropolitan Washington. “In order to cover the added costs, they’re going to have to impose some kind of mandatory service charge, and then tipped employees will earn a set hourly wage.”
While no-tipping models might be a hot topic of discussion, Hollinger says a lot of her organization’s members want to see how it plays out for the restaurants experimenting with it already. So far, she says, there’s not enough longterm data about how such a change would affect the bottom line and quality of service in American restaurants.
“It’s a huuuge national culture shift, and it’s very, very difficult for a jurisdiction to push that issue versus allowing it to play out and see the impact nationally,” Hollinger says.
In other words, it’s one thing to choose a new business model, but another to be cornered into one.
Meyer opted to get rid of tips in large part to help eliminate the pay disparity between the kitchen staff and dining room staff. In New York, cooks and dishwashers aren’t legally allowed to share in tips. By increasing prices and adding a “hospitality” charge to checks, Meyer is looking to help spread the wealth to the kitchen and attract and retain better back-of-house employees.
Restaurateur Paul Ruppert, who owns Petworth Citizen and soon-to-open Slim’s Diner, predicts restaurants will move away from tipping one way or another. “I don’t know how long it’s going to take to get there, and I think it’s going to be a bumpy process along the way,” he says. Ruppert is not opposed to an increase in the tipped minimum wage, but if it happens, he’d like it to be a very gradual process.
Others consider “bumpy” an understatement. “Nothing has ever worried me so much,” says Joe Englert, an owner in a number of bars including Capitol Lounge, H Street Country Club, and Rock & Roll Hotel. “You can’t base life on Danny Meyer’s $46 lamb chops… What do I do on chicken wing night at Capitol Lounge? Two beers and a dozen chicken wings are $10. Am I going to service charge people?”
Englert says he would likely cut staff down to part-time and probably serve less food to make up for an increase in wages. If he opened another place, he’d avoid serving food altogether. But really, Englert isn’t sure he’d even want to do that if the tipped minimum increases. “I don’t know how much I’d like to be in business at that point,” he says. “They’re going to kill restaurants.”
Gaby Madriz, the D.C. director of Restaurant Opportunities Centers United, says these doomsday scenarios are overblown. She thinks Bowser’s proposal doesn’t go far enough and would like to see “one fair wage” of $15 an hour for all. Madriz points out that seven states—Alaska, California, Minnesota, Montana, Nevada, Oregon, and Washington—already have a uniform minimum wage. “Those places, even with the highest minimum wages, are booming,” she says.
ROC United isn’t anti-tipping, but Madriz says businesses should pay employees a wage that doesn’t require them to rely on the generosity of their customers to make a living. She argues that a tip should be a bonus on top of a wage, not most of the wage.
Some restaurants might decide to eliminate tipping because of minimum wage law changes, but the way Madriz sees it, that wouldn’t be the worst thing. “It’s new, it’s different, it seems scary, it seems not possible—until restaurateurs have to do it, and they figure it out,” she says. “And it turns out that having people who have higher wages and stable wages means less turnover and eventually more money in the economy.”
Jessica Wynter Martin spent a decade working in the restaurant industry—including a recent stint as a server at L’Hommage Bistro Francais—but recently left for a job with Good Sense Farm. She says on average as a server, she made little more than the minimum wage, but her pay could vary from $40 for a Monday lunch shift to $200 for a Friday night. Even the weather might have had an impact on how much she made. That uncertainty and instability is one of reasons why she supports one minimum wage for all.
“The way the financial system is setup, we can’t live off of potential,” Wynter Martin says. “I can’t go to a rental company when I’m looking for an apartment and say, ‘Well, sure I might have only made $400 last week, but I could’ve made $1,000.'”
Wynter Martin also finds tipping innately discriminatory. “Men get tipped better than women. White people get tipped better than brown people,” she says.
Wynter Martin says she would be OK with restaurants eliminating tipping if it meant a “fair” living wage for workers. But she argues that the issue—whether restaurants forgo tipping or not—has nothing to do with increasing the minimum wage. “It’s just thrown out there as a strawman argument to get the workers to be against one fair wage so they can justify paying their workers less,” she says.
But many other servers don’t see it that way. They see a real threat to the tipped system in D.C. and their livelihoods. Many tipped employees already make far more than minimum wage—and sometimes more than salaried managers or even owners. They argue the latest legislative efforts attempt to solve a nonexistent problem.
“I’m all for everyone getting a living wage, but we already have it,” says Ripple bartender Ryan Aston, who makes between $25 to $40 an hour with tips. “If tipping went away, I would move, which is terrible because this is my hometown.”
Shannon Donohue, a bartender and server at District Commons and Burger Tap & Shake, likewise predicts a mass exodus of skilled waitstaff if D.C. restaurants phase out tipping. Donohue previously worked in corporate events for professional sports but left to come back to the restaurant industry, which ultimately pays more.
Donohue argues that what servers make generally correlates to how hard they work. Those who go above and beyond to educate themselves about food and wine and provide excellent service wouldn’t be rewarded adequately without tips. “I have never met a server in my 18 years in the industry that walked around complaining about being tipped,” she says.
Aston agrees: “The restaurant industry is this really cool and unique thing where it doesn’t matter where you came from… You work hard, you do well, you make money. And taking away the idea of tipping would radically change that. Everyone would be the same. And unfortunately, not everyone is the same. Some people work harder than others.”
Clyde’s Restaurant Group Managing Director David Moran notes that restaurants have been a major part of the revitalization of areas like 14th Street NW and H Street NE. “I think we’re about to put the brakes on a very organic part of our economy,” he says.
Tipped employees cumulatively work 11,500 hours a week at the Clyde’s group’s five D.C. restaurants. An increase in the tipped minimum wage would add up to millions of dollars in additional labor costs. “Even the most successful restaurants, there’s not just sacks of money laying around,” Moran says.
Still, Moran believe that the Clyde’s group will figure out a way to operate no matter what, likely by increasing prices and eliminating tipping. But smaller restaurants? “I don’t believe many single operators are going to be able to survive this kind of drastic change.”
Indeed, smaller restaurants are worried too. Granville Moore’s owner Teddy Folkman has calculated that an hourly increase to $7.50 for tipped employees would cost him an additional $30 an hour—or around $300 a night—to keep the restaurant open. “We would have to close… That’s your profit. That’s actually more than your profit,” he says. “It’s going to destroy us.”
Actually, Folkman says, he wouldn’t close the restaurant. He’d do what he had to to keep it open. But he’s not happy about what it would take.
“I’ve been in restaurants for 20 years now, and there’s been formulas and ways of doing things for so long,” he says. “And this completely throws everything out.”
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Illustration by Stephanie Rudig