The hospitality industry is in flux. Although restaurants and bars got the go ahead to reopen at full capacity and without restriction in the early spring, not all of them were able to do so. The workers restaurant owners and managers were counting on fled for other fields where they believed the wages and benefits would be better. The staffing crisis, some employees would have you know, has more to do with quality of life than the cushion of unemployment benefits.
Most D.C. restaurants still rely on tipping to cover the lion’s share of their workers wages, at least those staffing the dining room. Owners can keep their labor costs down by taking what’s known as a “tip credit” and pay tipped workers $5 an hour so long as tips bring their earnings up to or beyond the $15 minimum wage. Those who oppose the tip credit system argue that it can be difficult to convince employers to pay up if tips fall short of that $15 threshold, even though they are required to do so by law.
In 2018, D.C. voters approved an effort to gradually eliminate the tip credit via a ballot measure known as Initiative 77, but the D.C. Council later overturned it after one of the longest hearings in the governing body’s history.
On June 22, DCist reported that a fresh ballot initiative had been filed. Ryan O’Leary, the individual who filed it, identifies as a former restaurant worker who was laid off during the pandemic and now works for One Fair Wage, a campaign to eliminate the tip credit nationwide. OFW is an offshoot of Restaurant Opportunities Center, the national group responsible for getting Initiative 77 on the ballot in June 2018. The proposed 2022 ballot initiative would phase out the tipped minimum wage by 2027, with increases starting in 2023.
Mayor Muriel Bowser opposed Initiative 77. “I have consistently stood up and spoke for D.C. workers who do not want to see their wages decreased and that’s exactly what will happen if Initiative 77 goes into effect,” Bowser said at a roundtable at Duke’s Grocery that City Paper covered in 2018. “What the Council heard in hours and hours and hours of testimony is that Initiative 77 would do exactly that—decrease the wages of thousands of workers across the District of Columbia.”
At an event at Ben’s Chili Bowl today celebrating the reopening of D.C. to tourists, NBC 4 reporter Mark Segraves asked Bowser about O’Leary’s filing and whether she supports raising the tipped minimum wage to $15 an hour.
“I think you know my position and I think that restauranteurs and workers in a pandemic economy have experienced a different reality,” Bowser said. “I think that I need to know a little bit more about that reality. In a non-pandemic economy, restaurant workers in D.C. on average make much more than $15 an hour. … I don’t have any basis to make a comment on a new proposal.”
Congress also flirted with eliminating the tip credit as part of a plan to raise the federal minimum wage to $15 an hour. The provision in the Raise The Wage Act died in the Senate when the parliamentarian said it couldn’t be a part of the stimulus bill. The National Restaurant Association fought against it and a laid off local restaurant worker, Valerie Graham, wrote an op-ed in the Post titled, “Tipped workers have been hit hard by the pandemic. Congress could make things even worse.”
Some restaurant owners who publicly opposed Initiative 77 have moved at least partially away from the tipping labor model. Even José Andrés, who was against Initiative 77, is pondering a different way of doing business, especially if eliminating the tip credit happens on a national scale instead of on a jurisdictional basis.
Andrés told City Paper in 2018 that he opposed Initiative 77 because he feared it would worsen the pay gap between dining room and kitchen employees: “Servers earn appreciably more than back-of-house positions, and well above the minimum wage when you combine the tipped wage from employers and total tips from guests. As it stands, the system is designed to allow servers to earn as much as 100% or more per hour than cooks. Increasing the tipped minimum wage will only make the current wage disparity more extreme and place downward pressure on small business margins.”
Tips or gratuities can legally only to go restaurant workers who directly interact with customers, leaving dishwashers, prep cooks, and line cooks out of the mix. There’s a trade off. While kitchen workers’ hourly pay is predictable, they don’t have an unlimited earning ceiling like servers and bartenders. There’s overtime pay, sure, but some D.C. restaurants misclassify their kitchen workers to avoid paying it. Being a cook is always a tough job, and during the pandemic, it was markedly more dangerous.
Service charges are growing in popularity. They’re different than tips—any money collected through a service charge belongs to the employer, who decides how to disburse it. They could theoretically pocket it, but what staff would stay? Some restaurants divvy up the money between kitchen and dining room workers. Others put the money toward paying higher hourly rates across the board or covering the costs of benefits and professional development opportunities.
***
Restaurants and bars are experimenting with new ways to compensate their workers in order to hire and retain them in a hyper-competitive environment, level the playing field between the kitchen and the dining room, and attract diners who are paying closer attention to the wellbeing of those who cook and serve their food. Employees, too, are sussing out what’s best for them given they have so many choices of where to work.
Chef Andrew Markert, who co-owns Fight Club, opposed Initiative 77 in 2018 when his restaurant was operating as Beuchert’s Saloon. Now a sandwich and cocktail operation, Fight Club includes a 15 percent service charge on each check; it’s split between kitchen and dining room employees. Customers can add additional tip if they’re like.
“We all know change in any form is or can be scary and eliminating the tip credit back during the days of … 77 … was a very scary and eye-opening time for many people and businesses, myself included,” Markert says. “I didn’t know how my business could or if it would survive that change and, to be honest, I still don’t know.”
He says the pandemic made him revaluate the best ways to support staff. “We saw many guests, for whatever reason, not tipping at all,” Markert continues. “This was the main reason we added the charge to all checks. Costs were not going down, and in fact, we had added costs with masks, sanitizer, gloves, and to-go packaging, and we needed to find a way to pay the staff a liveable wage. We let people know about the charge and still have a few guests who ask for it to be removed on occasion.”
Markert thinks individual restaurants should be able to chose what labor structure works best for them instead of a one-size-fits-all solution. “No system is perfect, but I think we all agree we need to find a way to pay our staff better,” he says. “We are currently paying the staff from the service fee as well as a percentage of tips. I’m looking into adjusting this model even more by increasing the service fee to 18 percent for Fight Club and raising the hourly rates to $18 to $22 per hour, plus a percentage of the tips we get.”
Bartender Karim Soumah, who works at Cork Wine Bar and Market, agrees bars and restaurants should be able to determine which labor model works best for them. Employees can then decide where they want to work. Both he and his current employer were against Initiative 77. He says he would not work at a restaurant that uses a service charge. He prefers receiving tips, but hedges that there’s room for restaurant owners to dig deeper to improve wages across the board.
“In my experience, the tip culture in this area is solid, but that does not absolve owners from looking at practical measures to enhance the salary of their workers,” Soumah says. He thinks restaurants shouldn’t operate if owners can’t fairly compensate both kitchen and dining room workers without having to rely on gratuities from diners. “Is there more ability within their own resources to find a way rather than burden the customer?” he wonders. “If you think the restaurant industry is too much of a burden, don’t get into it.”
Soumah, who recognizes he’s privileged to work at an upscale business on 14th Street NW, would like to see more restaurants in underserved neighborhoods have the chance to be both successful and good employers. “The government should help assist small businesses in ways that can help ease the burden of providing benefits for workers,” he says. “It’s beyond me that anyone can open a restaurant and not have basic workers benefits for back of the house employees.”
Jade Aldrighette has been working at ANXO Cidery & Pintxos Bar for three years. She previously earned tips there as a front of house employee who did a mix of serving and bartending. During the pandemic, her employer made the switch from tipping to adding a 22 percent service charge to bills. There’s no space for diners to add an additional tip on credit card receipts. She likes that her pay is now predictable and that wages are more even.
“I feel good about it because I feel like I’m making the money that I need to make and also that our back of house staff is making a good wage and not less than the front of house people who are getting a bunch of tips,” she says. “I’ve never worked with a kitchen as much as I do now. They seem happy. I think it’s going really well for them.”
Aldrighette, however, doesn’t expect a significant number of D.C. restaurants to adopt a similar system. When ANXO first announced its plans, she says there was backlash from her hospitality industry brethren. “So many people were completely opposed and it was extremely controversial,” she says. “They’re used to making their tips and that’s how they make their money to provide for themselves and their families.”
Customers don’t always dig it either, especially if restaurants aren’t transparent about charges up front on their menus or websites. “A lot of customers complain about it,” Aldrighette says. “That’s an aspect of it that I don’t appreciate. There’s only so much you can explain to someone. It goes to employees’ wages so you don’t have to tip us. It’s helping this business run.”
Part of the frustration is that diners have to do more these days, like order off a menu generated by a QR code. Maceo Thomas, a Northeast resident, visited ANXO recently and learned he had to order off the website and then head inside to pick up his order when it was ready. “I go online and decide to order a beer and get to the check out and there is an automatic service fee of 22 percent that I cannot change,” he says. “I decided I wasn’t supporting that and left.”
Seven Reasons tried out a 22 percent service fee model when restaurants first reopened in 2020. But co-owner Ezequiel Vázquez-Ger says they recently did away with it. Customers didn’t understand it, he says, which eventually impacted front-of-house employees. “Our servers started to ask us to return to the previous system,” he says. “After several weeks of consideration, we decided to do so.” They’re back on a traditional tipping system, but there’s still a 5 percent service charge on every check that goes toward elevating back-of-house wages that start at $17 an hour.
There are some new restaurants that are coming out of the gate with a service charge in place. Shaw’s Oyster Oyster, which offers a plant-based tasting menu from Chef Rob Rubba and sommelier Max Kuller, adds a 20 percent service charge to checks. Rubba says he and Kuller sought to “tear down the wall” between kitchen and dining room workers.
“The kitchen team runs dishes that they know inside and out and talk to guests,” Rubba explains. “Kitchen staffs rarely work on public speaking and it’s a great trait to have as you work your way up to a chef position.”
Rubba worked his way up from cook to restaurant owner. “It was always frustrating as a cook to work 16-hour shifts on busy nights and leave with the same shift pay while service staff would leave with hundreds of dollars,” he says. “Splitting this between kitchen and services staff creates balance, the staff all wins together and removes tensions between the positions. One team, one dream.”
The Duck and The Peach and La Collina added a 22 percent “living wage” charge to checks for similar reasons. The restaurant’s website clearly states that “there is currently a deep pay disparity between those working behind the scenes, in kitchens and dish rooms, and our front-of-house service staff, despite both teams being critical to the guest experience.”
Hollis Silverman owns the new Eastern Market restaurants and says money from the charge goes directly to payroll and ensures “employees aren’t reliant on tips for income.” Hourly employees make between $17 and $21 an hour and Silverman’s newly formed Eastern Point Collective restaurant group covers 50 percent of health, dental, and vision insurance premiums for our hourly team members after 90 days of employment and 100 percent of those premiums for our managers after 30 days.
“Working here is great,” says Marilyn Sanchez, who works in the kitchen that does double duty for The Duck and the Peach and La Collina. “Everyone here is a team player. You get to work with people who love their job and everyone collaborates together. It’s cool to work with people who are enjoying what they do.”
It’s the first time she’s worked at a restaurant with this labor model. She says she’ll seek it out again in the future because she says she’s been able to sustain herself financially even though the cost of living is high. “We’re not really seen as much when you go into a restaurant,” Sanchez continues. “In the restaurant industry, everyone works as a team. Back of house puts in a lot of work. The beautiful dishes that you see, we put a lot of effort into it.”
***
City Paper will track which restaurants move away from the traditional tipping model and experiment with something new. If you know of a restaurant that should be added to this list, email LHayes@washingtoncitypaper.com.
The owners of one of D.C.’s most popular pizzerias recently said they will no longer accept tips because they’re increasing menu prices to “include hospitality.” “I will not bore you with a lecture on the origins on tipping, but it is time to remove this awkward clash of power, money, judgement, and work,” the letter to customers reads. In it, Peter and Amy Pastan vow not to chase you down the sidewalk if you “leave a little bit of cash on the table.” Any money left will “be divided equally among all non-management employees.” The same goes for the virtual tip jar link that’s still up on its website.
While the ANXO Cidery & Pintxos Bar in Truxton Circle is closing after July 18, the owners are enhancing operations in Brightwood Park. Both locations currently put a 22 percent service charge on every bill. “It’s been great and we’ll never go back,” ANXO Cider President Sam Fitz says. No gratuity line appears on credit card slips. “I think that doing so conflates the message,” Fitz says. “Ours is pretty clear; tipping is not needed, our staff are already taken care of.”
The owner of this new Edgewood brewery, James Warner, says they add a 15 percent service charge to checks that gets split between employees who take care of customers, plus people on the operations side of the business. There’s an option to tip on top—7 percent is recommended—and that tip goes to taproom employees only.
A banner at the top of Flight Wine Bar’s website now reads: “In lieu of tipping, we add a 20 percent service charge to each check to support a living wage for our entire team. 100 percent of the service charge goes towards wages for our employees.” Co-owner Swati Bose confirms that the service charge is shared between dining room and kitchen staff and shares that the change will most likely be permanent. There is no option to add additional tip.
“As we attempt to return to normal, we felt we were ready to make some changes that would enable us to provide more stability to our employees’ income which is essential for their livelihood,” co-owner Kabir Amir says. “Hence, moving away from the tips to the service charge.”
“We believe it also changes how guests treat restaurant staff, and it makes the job more enjoyable for our staff as well,” Amir continues. “We also felt that our guests were ready for these changes, and so far they have been more than supportive.”
New Mount Pleasant pizzeria Martha Dear recently opened for outdoor dining. They charge an 18 percent service fee and there is no line for adding additional tip on checks. Co-owner Tara L. Smith says that could change once they open for indoor dining. “Since we have mostly operated as a carry out since opening, the service fee allowed us to offer higher hourly rates and benefits to our small crew,” she says.
The Shaw restaurant includes a 20 percent service charge that’s split between kitchen and dining room staff. Customers can add additional tip, though it’s not expected. “It’s genuinely out of gratitude and not about determining an individuals value or wealth,” Rubba says. “It’s about dignity.”
Brookland’s wine bar and bistro adds a 20 percent service charge to all bills that are shared between dining room and kitchen staff, according to general manager Peter Young. There is an option to leave additional gratuity.
When these Adams Morgan sister restaurants reopened they instituted a 22 percent service fee in lieu of tipping. “By doing this we are able to offer everyone on our team—part-time or full-time—fully-covered, employer-sponsored healthcare at no cost to them and offer transparent hourly pay rates to all of our team members,” says partner Jill Tyler. She notes that they try to be as transparent about it as possible. “Our service fee is listed on our website, our menu, on the itemized receipt, and a guest’s credit card slip is stamped with a bright green stamp saying a 22 percent service fee is included.” That said they kept the tip line on the credit card receipt because some diners “want to leave a little something extra” even though “it’s in no way required or expected.” Any tips that are left are put into a tip pool that is shared amongst all hourly employees.
The Duck and The Peach/La Collina/ The Wells
The new Eastern Market concepts add a 22 percent “living wage” charge to checks. That said, both restaurants allow diners to add tips should they choose to do so. The same will true when gin bar The Wells opens later this month.
In Petworth, Anna Bran adds a 20 percent service charge to checks at her taqueria. It’s split between dining room and kitchen staff. Diners can add additional tip, but Bran explains that all of her dining room staff start at $15: “Tips and a service charge are not how I pay my staff.”
Back in July 2020, the H Street NE Burmese restaurant added what they call at “Flat 30” service charge to checks in lieu of tipping. The 30 percent fee allows them to “ensure our employees have access to a livable wage, quality health benefits, learning and career-advancing opportunities, employee profit-sharing after one year, and more,” according to the restaurant’s “Flat 30 Manifesto.”
The rum distillery with a tiki bar attached at The Wharf adds a 22 percent service charge to all checks with all of it going to hourly dining room staff including hosts. Patrons can choose to add additional tip if they want.