A small number of U.S. restaurants are replacing tipping with higher fixed wages, arguing that the model gives workers more predictable pay and reduces differences between front-of-house and kitchen staff. The trade-off is higher menu prices, which some restaurants say can make the system difficult to sustain.
At La Cigale in San Francisco, dinner costs $140 per person with no tip, tax, or service fee added at the end. Wine waiter Caroline Kraetzer earns $40 an hour and says the fixed wage means she no longer depends on customers’ generosity to cover her income.
Some Owners Say Tip-Free Pay Is Fairer
Rachel Miller, chef and owner of Nightshade Noodle Bar in Massachusetts, moved to a tip-free model after reopening following the Covid-19 pandemic. She said one motivation was to reduce the pay gap between service staff receiving tips and kitchen workers who often earned much less for similar hours.
Miller also said she had seen tipping produce differences in earnings between workers based on gender, race, and sexuality. Nightshade raised menu prices to cover higher wages, with tasting menus starting above $100.
New York restaurant Dirt Candy has operated without tipping since 2015. The restaurant says its starting wage is $29 an hour and that employees also receive benefits including paid time off, additional sick leave, and health insurance.
Chef and owner Amanda Cohen said the model was introduced to make pay more equal across the restaurant.
Higher Menu Prices Can Discourage Customers
Not every restaurant has been able to maintain the approach. Talulla in Cambridge, Massachusetts, eliminated tipping in 2020 and raised menu prices by 23%, but eventually returned to tipping last year.
Co-owner Danielle Ayer said running a non-tipped restaurant was more expensive overall. Unlike tips, higher menu prices count as restaurant revenue, which can also increase taxes and other costs.
Cornell University professor William Michael Lynn, who studies tipping behavior, said customers often perceive higher menu prices as more expensive even when they no longer need to add a gratuity.
He said that perception can reduce demand and make it difficult for restaurants to compete with businesses that continue to display lower menu prices and add tips later.
Restaurants Also Face Staffing Challenges
Some employees prefer receiving tips because busy shifts can produce higher earnings than a fixed hourly wage. That can make recruiting and retaining experienced service staff more difficult for restaurants that remove tipping.
Others value the stability of knowing exactly what they will earn. Filmmaker Cassidy Van der Kamp, who previously worked at a tip-free restaurant in Oakland, said her hourly pay rose from about $10 plus tips to $21 after the change.
Despite growing frustration among customers over tipping expectations, Lynn said he does not expect the practice to disappear widely in the near future because of the financial disadvantages restaurants can face when eliminating it.
For restaurants that have maintained the model, staff retention can be one measure of whether it is working. Miller said some Nightshade employees have remained with the restaurant since it made the change, despite high turnover rates across the wider industry.
Featured image credits: Magnific.com
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