Restaurant service reaches tipping point

Russ Parsons
Los Angeles Times

Restaurant tipping is at a tipping point, and a proposed minimum wage hike in Southern California may be the lever that pushes it over the edge. The big question seems to be this: What comes next?

The alternatives appear to be limited, and each has its own problems, said Mike Lynn, a professor at Cornell University's School of Hotel Management who has studied U.S. tipping customs.

"There just doesn't seem to be a whole lot of options: You either pay people a wage, pay them a commission or you just keep paying them a tip," he says.

The problem with the current practice of voluntary tipping, as critics see it, is that, because tips can't legally be shared with kitchen workers, it creates a pay disparity between servers and cooks. At the fine dining level, where customers may be paying $100 or more per person for dinner, that can result in the workers who serve the food making three or even four times as much money as the workers who cook it.

This is controversial, particularly now when most restaurants are identified by the chef and many restaurateurs have come from the kitchen rather than the wait staff, as had historically been the case. But identifying a problem and solving it so far have been two different things.

While many restaurant owners say they're looking at the all-inclusive model, they're hesitant because it requires adding as much as 20 percent to menu prices to offset the lack of tips.

Ferndale restaurant owner Eddie Farah said if there was proof that raising prices to pay servers more would keep everyone happy he would try it, but he's not convinced.

"How much more would I give my employees per hour, because sometimes on a Friday or Saturday night they're making $30, $40, $50 an hour on tips. I obviously can't raise the prices by that much because I'd be out of business in a week."

"I raised the price on one thing a couple nights ago by a dollar and people got really upset," said Farah, who owns Crave Lounge, a sushi restaurant and cocktail bar in Ferndale.

When Lucy Carnaghi and Molly Mitchell opened the quaint diner Rose's Fine Food last summer in Detroit, they created a buzz by being an establishment that did not accept tips. Any extra money left by customers was donated to a local charity.

Carnaghi said that while the diner employees are paid better ($10 an hour) than at many other restaurants, the owners have realized that Americans like to tip.

"People were just leaving money anyway," she said.

"We started off with the no tipping thing and it wasn't a perfect system. It was maybe a little too radical too soon because people were generous with the tips."

Carnaghi said that while she's not anti-gratuity, she doesn't think people should have to live on tips.

"It's a completely outdated kind of thing and it turns your server into a racial profiler and kind of a prostitute. It's a terrible feeling when you have to approach someone that you have an interaction with and you're bound up in all the psychology. It's really weird and it doesn't need to be like that. Everyone just comes to work and knows that they're going to get paid. The emotion component is gone."

Now at Rose's, all the tips are collected and distributed among staff members at the end of the week based on how many hours each employee worked, Carnaghi said. It works out to be about $4-$5 extra an hour per employee, turning their wage up to about $14 or $15 an hour, she added.

When Ludo and Kristine Lefebvre and Jon Shook and Vinny Dotolo opened Trois Mec in Los Angeles, they didn't have a problem with using a sweepstakes method for reservations or for charging people for dinner as if they were buying tickets to a play, but going all-inclusive was one jump too many.

"We talked about it at one point," says Kristine Lefebvre. "I think the education gap may have been just a little too much. We went to tickets, and I don't know if that many messages all at once was something everybody was ready for."

Instead of the all-inclusive plan, the Trois Mec team opted for a flat 18 percent service charge.

Quinn and Karen Hatfield also considered going all-inclusive when they opened Odys & Penelope this spring, but they also ended up opting for a service charge.

"Ultimately, like everyone who has thought about it, we passed," says Karen Hatfield. "Customers even at fine dining are very price sensitive. They know a $35 entree is very expensive, and adding on to that is hard. The difference between a $9 and an $11 dessert is huge."

There's also a practical business consideration. Many restaurant leases are calculated based in part on total sales. Tips and service charges don't count toward that, but increased menu prices would.

Not that the service charge has been trouble-free either. In the first place, the LA City Council is still entertaining a motion to limit how it can be used. Some customers aren't crazy about it either, complaining that, while a tip is at least in theory voluntary, a service charge is obligatory.

"It's just the matter of their sense of control being taken away," Karen Hatfield said. "It's only been a small percentage of our customers, and I understand that. Change is hard."

The service charge system is also unpopular with some servers, who could see their income cut.

"We have had some people who weren't interested in working under that structure because they wanted the opportunity to make $700 in a night if one of their tables is feeling super-generous," says Kristine Lefebvre.

There have been a couple of outside-the-box alternatives tried. When Gary Menes opened his 10-seat haute farm-to-table restaurant Le Comptoir, one side benefit of the sushi bar approach was that all of his staff can share tips since there are no pure servers — the cooks hand you the food.

"Every single person in the restaurant has skin in the game," Menes said. "So if they want to get paid more than their minimum wage, let's make sure we all have a great service."

Zach Pollack went even further when he opened Alimento a year ago. He added an optional tip line specifically for his kitchen workers. He says about half of his customers use it.

"It's hardly a solution to the problem," Pollack said. "I always thought of it more as a Band-Aid that sort of temporarily balances out a broken situation until a more enduring solution is found."

Staff writer Melody Baetens contributed