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The Tipping Point

When Oakland's new minimum wage kicks in on March 2, many restaurants plan to raise prices — and, in a few cases, eliminate tips altogether.



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Although tip-free restaurants are still relatively rare in the United States, Homestead is hardly the first to do it in the Bay Area. For many years, Berkeley's Chez Panisse has had a mandatory 17-percent service charge that includes an option for customers to give an additional tip. Camino recently adopted an all-inclusive pricing system very similar to what Homestead is planning. Last month, the restaurant eliminated tips and raised prices by 20 to 25 percent, which the owners say has allowed them to boost everyone's base wage and narrow the pay gap between cooks and servers. Duende, in Uptown Oakland, has announced plans to move toward this all-inclusive model as well, although owner Paul Canales said he's holding off until he has a clearer idea of how customers will react to the more modest price increases he's implemented so far.

Of course, all of these restaurants are, if not strictly "fine dining," then, at the very least, businesses that appeal to a wealthier demographic that's less likely to experience sticker shock from menu price jumps. And, in any case, as Homestead's Sassen pointed out, his 20 percent price hike is equivalent to what most diners give as a tip anyway, meaning that their out-of-pocket expenses will be essentially the same. When they look at the menu and see a ribeye for $36, they'll know exactly how much they're spending.

For these restaurants, perhaps the biggest question isn't so much whether customers will rebel against not having the right to determine the gratuity (though, of course, that's very possible). Rather, it's whether that in evening out the disparity between servers and cooks, they might inadvertently drive their most highly qualified waiters away. After all, why stay at a restaurant when you could make $10 or $20 an hour more at one down the street that has kept the tipping model in place?

Sassen and Camino co-owner Russell Moore argue that they're also giving their servers some benefits in the new arrangement. According to Moore, servers at Camino now have more stable hours and have an easier time accumulating enough hours to be considered full-time employees, thus qualifying for health benefits. A server also no longer gets shortchanged when he or she is assigned to a slow shift when customers, and thus tips, are few and far between.

"Yes, they don't experience the highs of New Year's Eve, but neither do they experience the lows of a rainy Saturday brunch — or not working at all," Moore said.

Sassen also believes that the removal of tipping helps to create a more professional career track for front-of-the-house employees, whom he plans to offer opportunities for incentive-based raises and promotions, rather than placing the burden of compensation on the customer. Right now, Sassen argues, there's not much incentive for an individual waiter to go the extra mile and, for instance, become an expert on different wine varietals — especially not at a restaurant like Homestead where the tips get pooled and divvied up at the end of the night, so that every server on the shift takes home the same amount. And currently, an ambitious server at Homestead who got a "promotion" and became a manager would actually wind up taking a 30 percent pay cut, because as managers, they would no longer receive tips. That won't be the case once the restaurant eliminates tipping.

Still, Sassen concedes that the possibility that his servers will decide to go elsewhere is the biggest fear he has about the change — though he also pointed out that other restaurant owners who don't equalize their front- and back-of-house disparities probably won't be able to compete with him on the pay they're offering their cooks.

And, as The Half Orange's Porter, who ran a tipless restaurant in San Diego called The Linkery for many years, has argued, there are various philosophical and ethical reasons to eliminate tipping as well. Porter cited a number of studies by Michael Lynn, a Cornell University professor of consumer behavior and marketing, whose research indicates that the culture of tipping doesn't necessarily result in better service, and can lead to all kinds of unintended negative consequences — for instance, the fact that middle-aged white men tend to get treated better than other customers because they're perceived to be better tippers. Porter said tipping also allows restaurant owners to skirt the law by punishing their employees simply by assigning them to less busy shifts, where they'd be all but guaranteed to make less money.

Local labor activists aren't convinced that the nascent movement to eliminate tipping isn't just a way for restaurants to skirt their own responsibilities to pay their kitchen employees a fair wage.

Ellouise Patton, the director of ROC the Bay — the Oakland-based Bay Area outpost of the Restaurant Opportunities Center — said that her organization opposes the elimination of the tipping system because of the negative impact that it would have on the workers who benefit from tips. Patton pointed out that restaurants in San Francisco and San Jose were able to manage recent minimum wage increases without getting rid of tips.

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