The owners of St. Vincent Wine never expected to open in the middle of the global pandemic and need a little extra cash to cover the costs of keeping staff and customers safe. But when the doors opened in November, they decided to add a $1 “COVID compliance fee,” to each check. It helps pay for professional cleanings, sanitation, and propane containers to heat outdoor seating areas. Why? Because “pandemics are expensive,” according to the bar’s website.
St. Vincent is one of more than 30 D.C. restaurants and bars that have added service fees of some sort during the pandemic. (In July, City Paper reported on three of them.) Without substantive economic relief, these fees help business owners offset some expenses such as purchasing personal protective equipment, to-go packaging, and even higher wages as customers opt for takeout and delivery instead of dine-in service, reducing workers’ potential for tips.
While tips or gratuities are optional and typically go to the dining room or “front-of-house” workers like bartenders and servers who directly interact with customers, money collected through a service charge belongs to the employer, who decides how to disburse it. Customers have to trust owners are allocating the money equitably. When restaurants explain on their websites or menus where and to whom the fees go, it helps ensure that diners aren’t surprised when they see the bill.
Nationally, service charges related to COVID-19 have been met with mixed reactions from customers. Business Insider reported that employees of Kiko Japanese Steakhouse and Sushi Lounge were harassed after the Missouri restaurant added a COVID-19 surcharge. Some customers are concerned businesses won’t remove the fees once the pandemic is over.
One city’s government got involved. In September, the New York City Council passed a law allowing restaurants to add a “COVID-19 recovery charge” for indoor dining, even though they banned indoor dining for a second time shortly thereafter.
Some economic relief for restaurants is on the way, including a fresh round of Paycheck Protection Program loans. In the District, the restaurant component of the Bridge Fund promises to award $35 million in grants ranging from $10,000 to $50,000 to at least 700 restaurants. The Office of the Deputy Mayor for Planning and Economic Development tells City Paper award notifications have started going out.
While D.C. has targeted aid to the hospitality industry, the federal government has not. The RESTAURANTS Act, which would have directed $120 billion in aid to independent restaurants, passed in the House but died in the Senate. Service fees have subsequently emerged as a temporary, stop-gap measure: A bandage on the worsening wound that is the pandemic.
“Is it a crying, almost criminal shame, that there has been no support from the federal government to the local government for independent restaurants specifically?” St. Vincent co-owner Frederick Uku asks rhetorically. “Yes, it is. And in order for our restaurants to survive and continue to do what’s right for my employees, those costs have to be made up somewhere.”
Esther Lee, the owner and chef of Obelisk, estimates that sales at her intimate Dupont Circle restaurant are 30 percent of what they were this time last year. When Lee reopened Obelisk in September for takeout, she incorporated a 20 percent service fee into menu prices to help offset the costs of packaging and PPE. Pandemic-related expenses amount to an extra $1,000 a month on average, according to Lee.
Still, the fee doesn’t make much of a dent in covering the restaurant’s overall losses. “You can talk about fees all you want to, but when you’re only pulling in about 30 percent with carry out, then it’s a drop in the bucket,” Lee says.
Lee sees the fee as part of doing business. “It’s sort of like if you get wine from different countries, and there are tariffs—that’s definitely going to show in the price of your wine,” she explains. “If it costs more to keep safe for both your staff and your customers, there is going to be a cost all around.” Customers have been understanding about the charge, Lee says. Some loyal regulars have even been ordering takeout from the restaurant twice a week.
Rose Previte, who owns Compass Rose and Maydan, says she has also seen extensive community support after adding a 22 percent service fee at her restaurants. (In fact, all the restaurant owners that City Paper spoke with emphasized that these fees were supported by diners, with few—if any—complaints.) Many customers tip on top of the fee, including a Maydan customer who tipped $80 in cash recently. “He was just like, ‘Thank you for being here, thank you for doing this,’” Previte recalls.
The owners of Rooster & Owl on 14th Street NW also say their new 20 percent service charge has been well received. Carey Tang says they’ve noticed customers are regularly tipping on top of it. Tang attributes part of that generosity to the time they invested building relationships with regulars. “They understand it’s not just a job,” she says. “It’s something we love to do.”
While the restaurant’s service charge emerged in response to COVID-19—covering everything from PPE to transitioning to a takeout and delivery operation—Tang sees it as a possible model for change within the industry after the pandemic.
“We’ve learned a lot this year about inequities in our industry and how we need to improve them, and we know that the way people get paid is a part of that,” Tang says. “We are definitely coming out of this differently. Using service fees could play a part of that.” In the meantime, she adds, the service charge is a “survival mechanism.”
All-Purpose Pizzeria and The Red Hen levy service fees to collect funds for staff members, some of whom the restaurants had to lay off. Other restaurants, such as Bresca and Shilling Canning Company, have temporarily replaced tipping with 20 percent and 22 percent service fees, respectfully.
At Bresca, front-of-house workers, such as servers, and back-of-house workers like dishwashers receive a portion of the money, according to director of operations Jhonatan Cano. Shilling Canning Company chef and owner Reid Shilling says servers, bartenders, and dishwashers share the service fee. “This is how we can ensure that, right now, they are able to make a living wage,” Shilling shares.
Albi, Yellow, and Colada Shop, meanwhile, are among a handful of establishments that have added fees to cover safety and sanitization costs during the pandemic. At Albi and Yellow, from Chef Michael Rafidi, charges are tiered. There’s a 3 percent “health and safety” fee at daytime cafe Yellow and a 20 percent fee at Albi, a fine dining restaurant.
William Simons, the general manager at both of Rafidi’s businesses, explains the charges also help cover employer-sponsored health insurance. (Healthcare coverage has been part of the business model from day one.) “There were already a lot of improvements that our industry was due for prior to the pandemic,” Simons says in an email. “Some of the needed changes have just been a little more intensely felt since it started.”
At 2Amys, which has been takeout- and delivery-only since June, owner Peter Pastan uses a 20 percent service fee to help give employees financial stability. “It allows us to provide a predictable income to all of our staff regardless of sales variability,” he says in an email. All staff are paid hourly. The kitchen staff who lost the opportunity to earn overtime have received raises. And front-of-house workers now earn an hourly wage based on an average of what they were previously making with tips.
Back at St. Vincent Wine, which is currently open for on-premise dining, Uku shares Pastan’s goal of taking care of his staff. “I have a staff of about 20 people whose livelihoods they have entrusted in me,” he says. “I have to do what’s best for them. For right now, we’re just trying to keep the lights on, to keep people employed. People have families to feed.”