How does the new restaurant service charge work and should we tip?


A Young Joni meal in Minneapolis now comes with a new service charge.

Photo by TJ Turner

Welcome to a new world for restaurants in the era of the pandemic. Service charges are common and customers are confused: should I tip? Is not it ? What is the money used for?

Restaurant spending across Minnesota has increased this year due to COVID-19. At the same time, income opportunities have diminished due to limited capacity restrictions. It also costs more for all those take-out containers and to purchase additional PPE for employees, including gloves, thermometers and disinfection equipment. So restaurants had to find a way to get some of that money back.

I asked many local restaurants about their new policies when they opened after the COVID-19 closures. Although each restaurant has a specific policy, there are some things in common.

New service charges on your bill are not a tip

You’ll see this language in restaurants, and it’s important to know they say it because of Minnesota laws. It’s the law in Minnesota, tips go directly to the service member, and restaurant owners cannot require you to pool tips. Employees can decide to do it themselves, but it cannot be a condition of employment. That’s why notifications on menus and table signs say “this charge is not a tip.” This is so you know the money belongs to the business, not your server. It’s not because you feel guilty and still tip the waiter.

What happens with the money?

If you ask your server what happens to the money, you will probably get a slightly confusing answer. It’s like asking what they do with the $ 14 they ask you for a cheeseburger. It’s their money. Overall, it aims to provide all employees with a higher base salary. COVID-19 has revealed something that many restaurants have struggled with: Waiters are paid minimum wage but can make real money from tips, while cooks and dishwashers do not have access to these tips. The dining experience is always shaped by the whole team, but the tip by law only goes to the waiter.

“We have wanted to move to the ‘lump sum’ structure for quite some time and in my opinion this has become one of the silver liners of COVID because it gave us the opportunity to go there,” said Jami Olson. , the owner of Center/ Popol Vuh in northeast Minneapolis. 20% are the costs at Centro, which increased the base salaries of the servers and for the back-of-house. “It also provides a little extra cushion in the event of a pandemic. We can only accommodate 50% of our restaurant, which means our reality has just become twice as expensive! Olson said.

TO Rock Elm Tavern in Plymouth and Maple Grove as well as Holman’s table in St. Paul, they also charge a 20% fee for on-site meals, 10% for take-out. Most go to higher wages, but “a small portion goes to our benefits (health, dental, vision, retirement, Serve those who serve EAP) and increased remediation, ”said Nikki Wallace, Marketing Director of Ally Restaurant.

You can always tip sometimes

Most places, but not all, still provide a tip line on your bill. And this constitutes a real enigma for the guest. If I pay a 15-20% service charge, am I supposed to tip 18-20%? Then you potentially pay 40% on top of the price of the food.

Centro has left the queue. “We’ve thought about it and it’s definitely something that could change. I feel like, especially given the circumstances, people always want to leave a little something extra and I didn’t want to take that option away from them, ”said Olson. Her staff have received what she calls a “substantial raise,” so she doesn’t want people to feel pressured to tip.

“It’s just another ‘damn if you do and damn if you don’t’ situation to add to the restaurant’s list of struggles right now. If we’re transparent about the fees, we feel good to leave the tip line, ”she said.

Rock Elm and Holman’s also skip the tip lines. “Customers can tip if they want to. If they tip, that money only goes to the person who served them directly (according to state law), ”Wallace explains.

But many places are tip-free

Surly Brewing doesn’t want you to tip. They added a 15% service charge to everything. “The service fee model aims to create a sustainable and fair working environment for the hospitality industry,” says Tiffany Jackson, public relations and communications manager at Surly. “This is a no-tip model; there is no tip line on receipts. If customers are receiving exceptional service (and they will), we encourage them to let us know. Thank you cards are kept for years, ”she says.

hello pizzas added a 15% surcharge to take out, no tip. For delivery, they charge a $ 5 delivery fee and offer customers the option to tip their driver. It’s all in the air to see what works for the business and what guests are saying. “We have not yet made a decision on the supplements and salary structures for the reopening of our dining rooms, but we remain open to the possibilities,” said Rachael Crew, Marketing Manager for Hello Pizza, Pizzeria Lola and Young restaurants. Joni from Ann Kim.

At present, there is an additional 18% for every order at Young Joni and Pizzeria Lola for a “fair” salary and benefits for the whole team. “We pay both the front and the back of the house a fair hourly wage. We don’t ask customers for tips when ordering or picking up, ”says Crew.

Same deal with Lat14 in Golden Valley, where owner Ann Ahmed added an 18% surcharge to all orders and removed the tip line. “The 14th will be a NO TIP surgery.” Brasa also has an “18% welfare surcharge to support fair wages and benefits” and is a no-tip operation.

Hai Hai and Hola Arepa now have a 20% service charge for on-site meal orders, 15% for take-out, and they’ve eliminated the tip line.

Mike Rakun’s spots, Cuisine of the mill valley and by Benoît, 18% is the service charge and there is no tip line. “In return, we pay all the servers a higher hourly wage,” Rakun says. “Trying to be tip-free,” he says, “removing the line takes away any obligation and no awkward feeling of leaving the tip line empty. “

Targeted fees and creative approaches

Birch Coffee added a 15% “Staff support fund service charges. “They eliminated the tip last summer instead of a“ fair wage sharing ”charge. Now they’re adding an SSF fee to help provide hot meals and free groceries to their laid-off staff. This money is also used to stay open and continue paying their small staff their salaries and benefits before COVID. “Every restaurateur is in trouble right now. COVID-19 and the next minimum wage increases on the way to $ 15 / hour requires all of us to re-evaluate old compensation structures and find ways to operate sustainably in the face of a very uncertain future, ”said owner Tracy Singleton.

Broder Restaurants add a 15% “Service and fairness fees”In all restaurants. They have turned the traditional compensation model upside down. Their fees support a base salary of $ 16 / hour for all employees, people receive more money based on tenure and managerial positions. And it’s interesting: 5% of all weekly sales will go to all hourly team members. So everyone has their share of the action. “This is the first step we are taking as a company and as a family to address the need to address systemic inequalities within our industry,” according to Broders’ new policy.

Estelle Saint-Paul charges a 20% service fee and continues to create incentives for direct customer positions. “The waiters and bar staff earn their base salary as before and earn a commission based on their sales. It gives them an incentive to sell wine or stay late and take that extra table, for example, ”said Peter Sebastian, CEO and co-owner of Estelle. Bartenders receive a percentage based on the alcohol sold by the waiters (in lieu of the waiter’s tip) and the support staff earn a percentage of the restaurant’s total income. The kitchen team also receives a percentage commission based on total food sales. “For the first time in our experience, line cooks, the dishwasher, etc. will be encouraged to be busy, ”Sebastian said. The reality: Estelle’s servers can see their pay (which averaged $ 30 / hour) drop by about $ 3 / hour.

Why not just increase the prices?

Ah the classic question. Ideally, we would pay the true cost of our food – including rent, utilities, profits, and labor costs. However, because the tip model has been around for so long, we’ve gotten used to what we think food should cost. You can also easily compare: pizza to pizza, cheeseburger to cheeseburger. If some restaurants increase their prices by 20% to make their business more like a business, it only works if everyone increases prices by 20%. And that will not happen. If a place you love brought their $ 14 to $ 17 cheeseburger, would you agree? (I would! I’m paying $ 17 with the tip anyway!) Most likely not.

What should you do

After all these years of tipping, it’s hard not to tip a waiter. And I don’t know what you should do. The reality is, if there is a 20% charge and you see a tip line, I personally wouldn’t tip 20% more. First of all, it makes dining out unaffordable for many of us. Second, it ruins the restaurant’s goal of trying to have fairer wages for all employees. If I had exceptional service, I would be more tempted to add a round amount. So if I had a $ 50 meal my bill is $ 60, maybe I would drop $ 5 more. I don’t know, it’s tricky! What would you do? Leave your thoughts in the comments section below.

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