Why Capitol Hill’s newest restaurant — and plenty of others — are adding service charges

Chef and owner Brian Clevenger is celebrating the opening of Contadino and its sibling pizzeria on 19th Ave E. While he would prefer to talk about fresh pasta and pizza, he, like a growing number of Capitol Hill food and drink owners, is answering questions about an italicized note at the bottom of his menus notifying diners of a “5% service charge” that is “distributed in full to the employees you do not see” —

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While pro-labor advocates call the new crop of service charges added by owners like Clevenger protests of “the fact that they have to pay their workers a living wage,” the Contadino restaurateur says he is trying to find a new path to solve an issue close to his heart. And he might soon find some help from the last guy you might expect to lend a hand to a restaurant atop Capitol Hill, Seattle.

“When I started, that was the part that made it worth it,” Clevenger told CHS Tuesday morning about the tips shared in an organic, poorly regulated, process that had been playing out in American restaurants for decades.

In 2016, a Ninth Circuit Court decision upheld a U.S. Department of Labor rule barring restaurants from requiring employees to share tips with back of the house workers. Ever since, owners like Clevenger have been trying to sort out how best to turn the dials to keep his front of house staff satisfied while making sure his cooks and dishwashers get a fair cut. Raise prices a little and the tips only go up for front of house. Raise prices more, tips go up for front of house, and you can now pay back of the house higher wages but you risk a drop in business. How much will your neighbors pay for pizza? Clevenger said it is in that environment that he decided to experiment and move his businesses forward with a service charge at Contadino.

“We’re trying to shorten the pay gap between the cooks and the servers.”

At Vendemmia in the Madrona neighborhood, Clevenger said his staff is still pooling tips and that he could roll back to the old way at Contadino. It’s a risk. With the labor ruling in place, Seattle owners are being advised by industry associations that they could face federal investigation and lawsuits. Other restaurants have experimented with adding a separate tip line for the kitchen while more on Capitol Hill are eliminating tipping altogether.

Meanwhile, Seattle’s march to a universal $15/hour minimum wage also complicates the situation around pooling. Workers at small Seattle businesses — those with 500 or fewer employees — are now guaranteed $13 per hour, up $1 from 2016. Employers either hit that by paying $13 per hour or by paying $11 hourly and either at least $2 per hour toward medical benefits — or ensuring their employees get at least $2 hourly in tips. Seattle’s tip credit toward the $15 wage is scheduled to run through 2025. Without a service charge, a restaurant owner must cut into already slim margins to meet the minimum wage for non-tipped employees in the kitchen.

Clevenger might get some help sorting out the matter from some unlikely places. To start 2017, a petition is pending before the Supreme Court to take up the issue. “The Trump administration is likely to oppose the rule,” industry analysts say, “as being anti-business, because it is seen as economically advantageous for restaurant employers to have back-of-house employees participate in tip pools.”

Clevenger said, whatever the ultimate decision on tip pooling, his service charge is not a protest. It is, like the other policies and practices he has put in place as a small business owner, a solution to make Contadino survive, grow, and be a great place, he hopes, to work.

“Minimum wage is not an issue with us,” Clevenger said. “We don’t want overpriced food. We’re a really small company just trying to survive in a challenging market.”

 

 

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29 thoughts on “Why Capitol Hill’s newest restaurant — and plenty of others — are adding service charges

  1. Easy solution.

    Instead of tipping 15% to 20%, tip 10% to 15%

    I’m usually a 20% tipper, but when I see these surcharges I tip 10% just to make a point and make sure I make some sort of mark on the receipt pointing out the service charge.

    Yea I’m a horrible person. Bla bla bla. I get it.

    JUST INCORPORATE SERVICE CHARGES INTO MENU PRICES.

    • Do you also tip 10% when the restaurant has a 20% surcharge? That makes 30% total, which is ridiculous. If there is a 20% charge, I tip 0.

      There is always a question of how much of the 20% surcharge goes to the server, how much to the back of the house, and how much retained by the owner? These details should be spelled out on the menu.

    • As a socialist, liberal – I was never in favor of the $15 wage as it sets precedent that rather than building up and individuals expecting to live where the work, which opposes the rest of the world, I am doing two things on this front

      1) I will not dine at the Ethan Stowell’s and the like restaurants that have an automatic 20% service charge. Note: I’m always tipped 20% even on bad service, but I have to say servers in Seattle are poor and seem entitled
      2) When I see these lower service charges in the range of 3% – 5%, I simply reduce my tip.

      I puts me as a client in an uncomfortable position where now I want to really evaluate the service and possibly have my net “Tip” be below 20%; whereas in the past, I’d give the somewhat obligatory 20% without blinking.

      From my wallet, this will not work in anyone’s favor

  2. I will not eat at a restaurant that does this- do we pay a “service charge” to cover raising the minimum wage in any other store or industry? No, and it feels like a slimy cheat to the customers. Either incorporate it into the cost of doing business and the prices you charge, or eliminate tips completely. Tipping is already too reflexive, and yes, the waitstaff can get ridiculous wages for work that can be hard, yes, but no where near as hard as teaching, for example (and I’ve done many years of both), which is horridly underpaid. Make it a living wage, and maybe we’ll get better, more consistent service w/out all the chummy intrusions trying to cajole a “nice” reward out of us at the end of a meal.

  3. This seems like a way of disguising a price increase, and makes tipping more complicated to boot.

    Are people expected to give a full tip on top of the service charge?

    How are we supposed to compare one restaurant’s costs to another?

  4. I am livid at this manipulation of customers and self-righteous behavior by owners and servers. I run a business. My clients pay the company and the company pays the employees. And I don’t have to bribe them to do a great job. There is no separate line item for clients to pay the employees. I hate tipping but put up with it, but do it at 15% given the fact that food prices and drinks have gone up. I have thought of passive-aggressively tipping far less since wages have gone up to a ‘living wage’. I have traveled the world and only in the US is tipping a thing. I am well-heeled but don’t like to be played. Eating out is optional, and more and more I avoid it because of this sort of crap, along with vastly overpriced wine by the glass. In any event, this is a restaurant I will not be coming to, or any other place that mandates a surcharge for a small party. Just raise your damn prices and pay your staff a living wage – oops, they get one now with the new local regulations.

    • You must not have traveled very much. There are just as many countries where tipping is customary or a service charge is added at restaurants.

    • “only in the US is tipping a thing”

      That is not so. In Japan and Korea tipping not the norm and not expected. Many European countries either have a flat service charge (i.e. service compris), or practice tipping, or a hybrid. In my travels in Russia and most of Western Europe, a meal in most restaurants warrants up to 10% – even locals do this.

      In Argentina and Chile, 10% was the norm and expected. It is most definitely expected in Mexico from tourists, but even locals will often tip up to 10% if there is no service charge (propina), meaning you don’t need to tip on top of that.

    • I am most familiar with the custom in Europe. Most of the restaurants there (not all) add a service charge, and this is usually noted on the menu. Most locals say that they add a very small tip if they are pleased with the service…but just a few euros. This system seems to work quite well, and is vastly superior to the confusing hodgepodge of policies now emerging here….no tipping, 20% service charge (with no tipping, but still a line for a tip on the credit card receipt), 5% service charge, etc.

    • Just like in a bar, if you pay $15 for a glass of wine, stay consistent, and only tip $1-$2 as you would at a bar. Being at a restaurant people sometimes automatically tip 20% on $15 = $3

      It’s already marked up 300%, the server/bar tender put no extra work into a $15 glass vs. a $9 glass

  5. Reading about this gets me more incensed.

    The only way to really fight this as a consumer is to encourage workers turn against the restaurant owners.

    I’m going to make it a point at eating at these “surcharge” restaurants and purposely leave a $0 tip and make sure I circle back to the surcharge item line.

    The waiter sees this, gets upset at the owner for instituting this bogus charge. If this happens enough, the employee leaves or the owner relents on the publicized surcharge and incorporates it into menu prices.

    It’s my way of attempting to make change.

    • So… your response to a restaurant posting a clarification on pricing is class warfare and outright screwing a server out of their tip after their efforts at serving you? Sounds mature and well-reasoned.

    • I agree. Servers are entitled to a salary. Nobody is entitled to a tip. I would leave about a 5% tip and a note saying that in light of surcharges and the fact that our city fathers and mothers have paternalistically decided to look after you with a higher minimum wage (and no special low wage for servers like in some states), I assume the prices I paid and the pay they get are more than adequate and the 5% is a thank you for being a nice person.

    • If the restaurant has a 20% service charge, I’m certainly not going to leave any tip. If this is a problem for the server, or back of the house people, then it’s their responsibility to talk with the owner and be sure they get a fair share of the automatic 20%.

    • I’ve assumed that if a restaurant adds a 20% surcharge that this *is* the tip and therefore nothing extra should be expected. It doesn’t cheese me off, because I’ve in general been a 20% tipper unless the service is really, really bad…

      but the above sounds like bait and switch to me – it sounds like the business is getting the unsuspecting customers to subsidize the salaries by baiting them in with the menu prices when the real prices are actually 5% higher. It also says that the money goes to the back and not the wait staff, so I would guess they still expect their 15-20% too… It’s a big shell game..

      At this point I think I’d be more than happy to just be rid of the idea of tipping. Charge what you mean and be done with it – and get rid of all the crazy tax stuff that tipped staff need to do and just pay them normal wages… It might freak customers out a little while to get used to the look of what it costs up front, but they’ll realize pretty quick that the cost in the end isn’t really different.

  6. This would not have been an issue at all if restaurant owners
    could count tips as part of the server salary, AKA tip credit.
    there are only seven states that do not allow.it, In my mind, the restaurant owner is providing a setting in which servers may earn a great deal of money. As prices rise to cover cost (mainly labor cost), the server continues to get raises on a regular basis.
    The cooks get screwed. Hence, the service charge. At the least they should be in the tip pool. Our legislature has ensured that everyone suffers; including the customers.

    • Actually the tip credit was removed by citizen initiative because it is not fair! Servers do more than their wage pays for. Back of house should be paid tips also however, maybe if thats an issue the owner should stop pocketing all the money and pay their cooks more! Also, cheap people make me sick!

  7. Here is a novel idea – pay the cooks more, pay the servers more charge the customer more, and bag the damn tips. Seems to work in Europe and Japan just fine. American exceptionalism seems to be accepted when it comes to the hospitality industry.

  8. I wish the CHS would stop perpetuating the idea that a place has “Eliminated tipping all together” when they have actually just FORCED it upon consumers in the form of a “surcharge”.

    Thanks for the articles though, I’m making a list of these places so I make sure to never go to them.

  9. Ivar’s Salmon House on Lake Union raised prices by about 21%, and gave everyone a raise right off the bat, rather than tinkering as the minimum wage increases hit every year. Employees front and back of the house also get bonuses based on total as opposed to individual sales figures. There was a bit of (menu) sticker shock at first, but now the prices don’t seem so out of line, and it is clearly stated that no tip is expected. Go give them a try…

  10. Sad to see so many people in here talking about withholding tips due to service charges. That’s punishing the server for your disagreement with or confusion about the restaurant’s policy. You should just not patronize a restaurant whose policies you disagree with. Stay home and let the server have tables that will tip them for their time and effort. I super disagree with service charges but stiffing your server isn’t a fair or constructive way to show your disagreement. Talk to the decision makers at the restaurant if you want to send a message.

    • Excuse me Amy, but my understanding is that anyone who imposes a service charge is saying that this replaces tips.

    • Again, it’s the responsibility of the servers to negotiate with the owner to be sure they get their fair share of a 20% service charge. If they are being paid $15/hr and get, say, half of the service charge, then they are making a pretty good income. It might be somewhat less than before the $15/hr legislation was passed, but that’s the downside of that law.

    • I was under the impression that servers and other tipped workers were still in the position that they do not have to be paid minimum wage as tips are expected to make up the difference. Has this also changed?

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