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Should Restaurants End Tipping? Trend Comes With Struggle

By  Kelly Bauer and David Matthews | October 30, 2015 5:44am 

 Should Chicago restaurants ditch the tipping model? Owners are asking that question amid changing trends.
Should Chicago restaurants ditch the tipping model? Owners are asking that question amid changing trends.
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CHICAGO — As more restaurants ditch tipping, owners are asking: Should they?

Or, just as important: Can they afford to?

Baker Miller, 4610 N. Western Ave. in Lincoln Square, pays all of its employees at least $14 an hour and has a unique, staff-elected tipping system that tries to ensure staffers are paid equally. Staff members get paid vacation and sick days, and the owners hope to one day give them health insurance and pay $15 an hour.

"Raised wages are a very, very positive thing," said owner Dave Miller. “It’s a very bold and ambitious and very scary thing to embark on. There's a lot of problems with [paying a living wage] that aren't always talked about."

 Baker Miller pays employees $14 an hour while guaranteeing full-time hours, paid vacation and sick days.
Baker Miller pays employees $14 an hour while guaranteeing full-time hours, paid vacation and sick days.
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DNAinfo/Patty Wetli

Scary because, as Miller and other restaurateurs said, there are quite a few difficulties to overcome. Baker Miller is cutting into its profits to fairly compensate its employees, and some of those that earned tips are now making less money. In addition, it has raised menu prices on some items.

Despite the difficulties, Baker Miller is among a growing group of restaurants that are eliminating or considering getting rid of tipping. Honey Butter Fried Chicken is an outspoken advocate for fair wages for restaurant workers, and Alinea, which nixes tips, has a starting wage of $12 an hour for all staff, even interns.

"By eliminating tips we can then be more equitable in paying ALL of our employees from [front of house] to [back of house] to office more fairly without such a steep skew between people working in the same building," Alinea owner Nick Kokonas said in an emailed statement to DNAinfo Chicago. "In short, we treat service as a profession. The [Fair Labor Standards Act] explicitly does not. This was written to protect the waitress at a $5 diner from an unscrupulous owner pocketing tips and that's great. But, it breaks at the high-end places."

In recent weeks, high-profile chains have joined the movement, like the Danny Meyer and Union Square Hospitality Group, which is eliminating tipping and trying to make pay more equitable among front of house and back of house employees. The restaurant group owns GreenRiver on the 18th floor at 259 E. Erie St. (where tipping will continue for now), as well as a number of New York eateries, and employs about 1,800 people.

"Once these changes are implemented, the total cost you pay to dine with us won’t differ much from what you pay now," the restaurant group wrote in a public statement from Meyer. "But for our teams, the change will be significant. We will now have the ability to compensate all of our employees equitably, competitively and professionally.

"And by eliminating tipping, our employees who want to grow financially and professionally will be able to earn those opportunities based on the merit of their work."

The hard part is successfully implementing those non-traditional pay models. Miller said he has met with other restaurant owners and seen them agonize over how they want to pay their employees a living wage but are unable to. There are two main things, Miller said, that need to change for restaurants to be able to pay their workers a living wage: customers and the law.

Higher wages means restaurant owners — who are already often struggling to cover their costs, Miller said — have to raise prices for food and service. The prices at Baker Miller have fluctuated based on need and what customers are willing to pay, with mixed results: Oatmeal once cost $7, but it's now $7.75. And Baker Miller is getting rid of bagels because it would have to charge customers $3-$3.50 per bagel, which customers are unwilling to pay since they're used to it being cheaper, Miller said.

Customers should support restaurants that are paying their employees a living wage, Miller said, and they can do that by intentionally choosing where they eat. In exchange, Miller said, restaurants should be "just as intentional about what we're serving." Baker Miller, for example, is offering critically acclaimed avocado toast for $6.50. They plan to continue selling it — but at $5 — even though they'll lose money on it.

One of the other difficulties is the law. Laws that prohibit pooled tipping that share wages between those that deal with customers and those that work in the back make that difficult, Miller said.

Changing trends aren't for everyone, though. Chris Bisaillon, of the Bottleneck Restaurant Group, said his restaurants — including the Old Town Pour House and Howells & Hood in River North — have stuck by the traditional model: Some employees get tips, while some work purely on an hourly wage. Changing that structure comes with "fundamental difficulties," Bisaillon said, like the possibility wait staff will be less motivated without tips.

"If I know that regardless of my level of effort, regardless of my level of attention to the table or knowledge of the menu, be it food or drink, that I’m going to make the same amount of money, I don’t think that’s a great way to motivate folks," Bisaillon said. "... It's our position that customers shouldn't have to pay the same price regardless of the level of service."

And changing how staff are paid poses another issue, Bisaillon said: Many restaurants' leases have a "percentage rent component" where the restaurant pays the landlord a percentage of their gross sales. Tips are excluded from gross sales, but if tipping is removed and prices go up to accommodate for higher staff pay, restaurants will have to pay landlords more.

Regardless of the difficulties and disagreements, Miller said he and his staff have made their non-traditional pay model for Baker Miller, and he's trying to help other restaurants adopt living wages for their workers.

"I really think people should support restaurants that are doing that, that it is the right thing to do, it’s ethical. But they need support," Miller said. "They need the community to come around them and specifically choose to go to the places that are doing this."

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