This morning, in a newsletter sent to customers, Tom Douglas, Seattle's most high-profile chef and prolific restaurateur, announced that starting February 1, his company will eliminate tipping and raise base wages to $15 an hour at three restaurant: Dahlia Lounge, Palace Kitchen, and the Carlile Room. In place of gratuity, a 20 percent service charge will be added to each bill. According to Douglas, "This charge will go to 'the house' and then 100% of the charge will be redistributed to our team through wages, commissions and benefits."
The announcement comes two months after the company, which employs more than 1,000 people, held an employee meeting to discuss possible changes with staffers. Douglas also wrote that he expects the company's nine other full-service restaurants to "follow this path by the end of March."
In the newsletter, Tom Douglas Restaurant's CEO/CVO, Pamela Hinckley, writes that the 20 percent service charge will allow the company to maintain benefits, "participate in the changing culture of tipping," and "work towards greater compensation equity for Front of House and Back of House."
According to Hinckley, the service charge will also allow the company, which is a large employer and must therefore reach the $15 minimum wage faster than most local restaurants, to "afford the minimum wage increase." Hinckley noted that "just one year ago, minimum wage was at $9.47 per hour. On January 1st 2016, it is $13 per hour. This $3.53 per hour increase per person raises our payroll expense by over $1,000,000."
By beginning with just three restaurants, the company hopes to be able to closely review and track both employee incomes and customer reactions. Hinckley says the new system of commissions and revenue sharing "will be scrutinized daily and adjusted to the best of our abilities to keep everyone close to their historic earning averages."
No doubt other restaurant owners will be tracking the changes as well.