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Customers Can Keep The Tip — Which Might Please Restaurant Workers

Kurt Stephens (right) is general manager of Packhouse, a restaurant in Newport, Ky., that has eliminated tips in favor of a higher hourly rate for its servers, including Jessica Krebs, pictured here.
Courtesy of Packhouse Meats
Kurt Stephens (right) is general manager of Packhouse, a restaurant in Newport, Ky., that has eliminated tips in favor of a higher hourly rate for its servers, including Jessica Krebs, pictured here.

Imagine there's no tipping. By getting rid of gratuities, a few restaurants believe they'll make life easier for customers, while providing a more stable income to servers.

"It eliminates the pressure on the guest to worry about paying our staff," says Brian Oliveira, chef at Girard, a French-style restaurant opening in Philadelphia in a few weeks that intends to offer its staff up to $13 an hour in salary, plus health benefits, but with no tips.

Successful ideas in the restaurant business always get copied. Oliveira said he and his partners were inspired by no-tipping experiments happening at a handful of restaurants in California, Texas and New York.

Those restaurants say employees are more satisfied and that service has actually improved. Moving away from tipping may never spread industrywide, but it's a model that may help answer some complaints about poor salaries.

, a no-tip meat emporium that opened in Newport, Ky., in January, pays servers $10 an hour and gives them the chance to earn 20 percent of their total sales per shift if they hit certain targets — whichever is higher. Servers bring home the bigger amount most days.

"If it's dead all day, they don't walk out making nine bucks," says Kurt Stephens, Packhouse's general manager.

Not all servers will be better off under this type of arrangement, but lack of tipping makes for easier accounting for customers and the business itself.

Menu prices might read a bit higher, but diners will know what they'll end up paying at meal's end — probably no more than they would have at an equivalent place where they'd tip.

And lack of tips simplifies compliance for restaurateurs obligated to make up the difference between servers' base pay and the standard minimum wage, if they don't make enough in tips. Currently, the federal minimum wage for tipped workers is $2.13 an hour, although that baseline is higher in a majority of states.

Tipping creates winners and losers. The people who bring you your steaks at high-end restaurants are probably doing quite well off tips, but many restaurant workers can't count on bringing home big bucks, especially after slow shifts on off days. A recent study from the labor-backed Economic Policy Institute found that 17 percent of restaurant workers live in poverty.

"I'm very aware that at some establishments, people would do far better under the existing tipping model," says Bill Perry, who is about to open Public Option, a no-tipping pub in Washington, D.C. "In our category, which is much more neighborhood-oriented, we're concerned that the variability of tips may not produce a good income."

This is an idea still very much in the making. Girard and Public Option aren't even open yet. With only a few other restaurants around the country having made the move away from tipping, it's not at all clear this will be a successful alternative.

But the increasing pressure on restaurants to pay their employees more — from fast-food workers to waiters hustling for tips — is one reason outlets should consider the tip-free approach, says Dennis Lombardi, a restaurant consultant based in Columbus, Ohio.

Wage increases are bound to translate into higher menu prices. "By going to nontipping, they can pay that living wage," Lombardi says, "without having the additional cost of tipping that will determine whether the customer comes back to the restaurant."

It works in Europe. But tipping has long been a part of the American way of dining out, a tool for diners to reward good service — and, less often, to punish those who fail to satisfy. The desire to earn good tips is part of what prompts people to give good service and "promotes the spirit of hospitality," says Hudson Riehle, senior vice president of research at the National Restaurant Association.

"Along with flexible work schedules, tipping is part of what makes [being] a restaurant server an attractive profession for millions of Americans," he says.

Even a labor advocate such as Saru Jayaraman, who directs the food labor research center at the University of California, Berkeley and calls the no-tip approach "a fabulous model," worries that it won't pay off for all workers. An increased base wage is a step in the right direction, she says, but she worries that salaries of $10 or $13 an hour won't be enough.

"Restaurant workers are professionals and in other countries are paid like professionals — $18 or $20 an hour," Jayaraman says.

But many restaurant workers in the U.S. don't make anything near those amounts, she concedes. So the prospect of a guaranteed income will be enticing for many who have come home with hardly anything to show after a quiet Tuesday afternoon lunch shift, suggests Perry, the D.C. restaurateur.

"Some of the folks we spoke to really cited the variability — that they never know what to expect," Perry says. "They can't wait to actually try [the no-tipping model] out."

Restaurant workers have traditionally experienced either feast or famine when it comes to their own pay packets. Some workers might be content just knowing the exact amount of take-home pay they can count on — at least, that's what the number of applicants at the new no-tipping establishments would suggest.

"We're kind of taking the risk off the server and putting it back on the business," says Stephens, the Packhouse general manager. "There's hardly any turnover, and everybody's making money."

A former NPR staffer, Alan Greenblatt is a journalist based in St. Louis.

Copyright 2020 NPR. To see more, visit https://www.npr.org.

Alan Greenblatt
Alan Greenblatt has been covering politics and government in Washington and around the country for 20 years. He came to NPR as a digital reporter in 2010, writing about a wide range of topics, including elections, housing economics, natural disasters and same-sex marriage.