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Capitol Hill’s tipless bars and restaurants settle in — more to come?

By Nick Twietmeyer, UW News Lab / Special to CHS

Slowly but surely, the concept of a tipless restaurant is gaining a foothold on Capitol Hill. It has been a year since Lionhead and the Renee Erickson trio of Bateau, Bar Mesuline, and General Porpoise ditched tips in favor of a service charge and flat hourly wages for their staff.

Several of Seattle’s high profile restauranteurs have followed suit while others on Capitol Hill say they are exploring the model. Some have cited Seattle’s $15 minimum wage law and concerns over a decrease in tipping as their rationale for the move. Capitol Hill owners who spoke with CHS said they were primarily motivated by offering more stability for their staff.

At the Sea Creatures trio at 10th and Union, owners said ditching tips was relatively seamless and popular among servers.

“Going tipless has actually helped us to attract the types of people we like to work with, namely professional servers and cooks,” said Jeremy Price, co-owner and operations manager of the Erickson parent company.

As part of the tip phase out, Price promised employees that overall take-home pay would not decrease. “Front of house staff is making the same as they were before. The back of house has seen an average 15 percent pay increase,” he said.

Optimism Brewing has taken a similar approach, where tip and tax are all rolled into the price of a beer. “We simply advertise a price for our product and the customers pay that price; the way it is at every other business,” said Optimism owner Gay Gilmore.

Gerene Fox, a 12-year service industry veteran now working at Optimism, said she was attracted to earning a flat wage. “I don’t know if I would’ve come on board if I thought I’d have to work for tips again,” Fox said.

Fox said she understands why some employees prefer to work for tips, but that it leaves out a large chunk of service industry workers.

“I think there’s a lot of people who love being able to work one or two nights a week, work Fridays and Saturdays, bang it out in a crazy bar,” she said. “But it takes a very specific person and I think there’s a lot of people who get lost in the cracks.”

As of January 2016, small business employees should be making a guaranteed minimum $12 an hour. Those with medical benefits or tips could be paid an hourly wage as low as $10.50 per hour. In six months, Seattle’s first true $15 an hour minimum wage requirements will go into effect at businesses with 500+ employees that offer no health benefits. UPDATE: We’ve tortured this paragraph into submission — hopefully. Let us know if it needs further work!HkE92YN

Outside of a few missteps, most owners seem to be rolling with changes. Pizza became a minimum wage talking point last year when the Capitol Hill outpost of the Z Pizza chain closed — the owner said it was because of the minimum wage law. However, warnings that the law would doom future pizza ventures did not pan out. Pizza on Capitol Hill is hotter than ever.

As part of the slow march to a city-wide $15 minimum wage, the city commissioned the University of Washington to conduct a series of studies on the law’s impact. The most recent study showed there has not been runaway cross-industry price inflation like some critics predicted, though prices in Seattle restaurants have risen roughly 7%.

Ivar’s Salmon House, one of the city’s most iconic chain restaurants, dropped tipping in April 2015. The restaurant initially added a 21 percent charge to all menu items while distributing the additional income equally among employees, in part, by increasing worker wages to $15 an hour. Ivar’s later implemented a line on the receipt where patrons can add an additional gratuity specifically for their server or bartender, but it is stated that “tipping is not expected.”

Tipless restaurants are still few and far between, but the $15 minimum wage law has brought some service industry precepts into question.

“Tips do not fix poor service,” Gilmore said. “If someone has a bad experience at Optimism, that is my fault, not the server’s.”

With reporting by Bryan Cohen

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22 thoughts on “Capitol Hill’s tipless bars and restaurants settle in — more to come?

  1. To my mind, it does not seem reasonable to tip at all in those places where prices have risen by 21% (either via a service charge or added to each menu item). But my question is: How much of that 21% goes to restaurant staff and how much goes to the owner? (I think it should all go to staff).

  2. I refuse to go to a place like the donut shop, General Porpoise, where I now have a 20% service charge added to my $4.50 donut. When the clerk at General Porpoise starts making $15 an hour, and then gets a 20% tip for handing me a donut, doesn’t this sound a little unreasonable?

    • If you’d prefer for your donut salespersons to be poorer, there are plenty of other options nearby. QFC lets you serve yourself and doesn’t pay you anything, for example.

    • I thought the service charge at the donut shop was 10%? At least, that’s what it was the one time I went in – and haven’t been back, because I can’t justify any service charge for someone handing me a donut from a case over the counter.

      The problem with these “tipless” restaurants is that many are not really tipless – it’s just a mandatory tip. ROLL IT INTO THE PRICES. Separating it out into a mandatory tip just makes the business seem douchey and passive aggressive about paying a living wage.

    • Agreed regarding rolling it into the prices. I went to Kickin’ Boot recently and saw a 4.6% surcharge for wages. That’s less than $1 for each of their menu items. I don’t need to know how a place pays its expenses – that’s what the menu price is supposed to reflect.

    • I don’t think you understand this business model. They are no longer tipped employees! The SERVICE CHARGE, goes to the house, and they use that to pay their wages.

    • I do understand the structure. The service charge is for SERVICE. It’s taking the place of tips, which made up a significant part of the server’s (and a smaller portion of the back of house’s) compensation. It’s a disingenuous way of hiding the true cost of the items being sold, by breaking it up into unit price and additional fee.

    • If my kid was the donut server I don’t think he should be paid $15.00 hr. + a 20% service charge to hand me a $4.50 donut. Where will this all end up ? Do you think a donut server should be paid say $25-$50 an hour so they can live in an $1800 studio apartment in one of the most expensive cities in America? And yes I know I can serve myself at QFC, in fact I can get great donuts at Top Pot for much less.

  3. Lionhead was tipless when it first opened and you could justify higher prices for quality ingredients and no need to tip. The most recent time I visited, I saw a new surcharge at the end of my bill and the service was significantly worse than the first few times I visited.

  4. Optimism is cool! Awesome activation of an underused space into a pleasant lively setting.

    Do they take cash yet? Is refusing my cash considered to be good service? I prefer cash mainly for privacy reasons, but also it annoys me when the banks get to collect fees every time I buy a beer.

    • wait – there’s a business that doesn’t accept cash? How is that legal? I mean, I understand why you can’t use cash on an airplane, but a brick-and-mortar business? wow.

    • It is legal to not accept cash just as it’s legal to not accept checks, credit cards, gold, etc. The Amazon Books store up in U-Village is also card-only. I’ve also seen some food trucks either prefer or insist on cards for payment.

    • Handling cash (counting, transportation) can be costly for small business, so perhaps card processing fees aren’t so bad? In any case, if the business has decided not to accept cash, I’m sure they’ve taken those costs into account.

  5. Mollusk in South Lake Union tried to go the Tipless route and paid a flat $15 an hour. But they found that their customers were confused by the increase in prices and didn’t quite understand the “no tipping” policy and business dropped substantially. They’re catering to a different, less “hip” crowd than Capitol hill, however.

    Eventually they had to drop their prices and added a standardized “gratuity” charge to make up the difference. So everything still ended up costing the same, it was just the appearance that changed.

  6. WOW.

    So basically the cashier at General Porpoise should be receiving a $1 cut of nearly every donut sold?

    I highly doubt that is the case.

    But a 20% service surcharge on someone providing you counter service for handing you a donut? Reach into case, throw into a bag, take your money. That’s nearly $1 in service? The butcher at QFC does way more than that and you don’t see QFC adding mandatory service charges.

    With tax and surcharge you’re looking at $6 per donut.

  7. I frequent Lionhead as the food is delicious, but it is a revolving door for FOH staff. I’m not sure this is a good example to have in this story, especially comparing it to the wealthy harem of Renee who can afford to pay her staff more. You’re not going to keep good staff if you don’t pay them well.

  8. I believe this article is incorrect. It states “As of January 2016, small business tipped employees should be paid $10.50 per hour and non-tipped small business employees at least $12.00 hourly.” As I understand it, the difference in minimum wage is based on whether an employer pays medical benefits, NOT if they are tipped or not.

    • You had it right the first time Bryan. The minimum compensation level for small businesses can include up to $1.50/hour of tip income OR health care costs. It’s the large businesses (over 500 employees) that are only allowed to credit health care costs towards the minimum compensation levels.

  9. Generally-speaking, service charge restaurants make the servers less $. A service charge is really a way for the owners to not have to themselves pay their staff more, it’s just taking income from servers to be able to pay the back of house, more.

    Past that, it generally; unless it’s a very expensive or touristy-spot, does not work, as evidenced by the many famous failures.

    Prices just have to rise, but that then harms smaller businesses that don’t have competitive advantages. Franky, it’s more ideology & PR than anything else.