In response to Seattleâs new minimum-wage law, restaurateurs have begun to make various changes to accommodate higher compensation for their employees: Ivarâs raised prices and eliminated tips, while Tom Douglas added (and then deleted) a surcharge. Last week, chef Renee Erickson announced that, effective May 4, tipping will be eliminated at her restaurants the Whale Wins, the Walrus and the Carpenter, and Barnacle. Instead, customers will pay an 18.5 percent service charge that will be distributed to employees.
Also beginning May 4, all of the front-of-house and back-of-house workersâservers, cooks, and dishwashersâwill make a base pay of at least $15 an hour. In addition, employees will receive a bonus based on daily sales and hours worked.
For Erickson, the move has less to do with the cityâs new minimum wage and more to do with addressing the income disparity that exists between back-of-house and front-of-house workers, the latter of whom commonly make two to three times as much as their colleagues.
âThe industry needs to evolve,â says Erickson. âThe system weâve adopted in America favors the front of the house in financial value, and thatâs really not fairâat least we donât believe it to be. Weâre taking that 18.5 percent [service charge] and redistributing it to everyone in a system that weâve come up with. Back of house is still not making as much, but itâs better. Itâs moving in the right direction.â
According to Ericksonâs business partner Jeremy Price, the new system will affect workers in essentially the same way as the current tip-pooling system that their company, Sea Creatures, uses in all of its restaurants. Day-to-day sales numbers are âopen and everyone sees them, with some percentage going to front-of-house workers and some to back-of-house workers.â
âIf weâve done our jobs, everyoneâs pay stays the same,â says Price, with the exception of dishwashers and entry-level cooks, who are the only workers in the company who werenât already making at least $15 an hour.
For the last year, Erickson and her partners (also including Chad Dale) were looking into changing the system through which they offered employees health-care benefits. Because Sea Creatures employs close to 60 people, it falls under the large employer mandate to provide health insurance for full-time employees. âWe started out thinking about the Affordable Care Act and minimum wage but realized it was a much bigger conversation than that,â says Price.
âThe conversation we always defaulted to,â says Erickson, âwas the legitimizing of the [restaurant] industry that we felt wasnât there. Thereâs this idea that being in a restaurant is a stepping-stone to whatever youâre going to do when you grow up. I definitely chose a career that Iâm super-proud of, and it feels hurtful when people are not treating you as equal to a cabinet builder or some other person in a craft.
âWe wondered what other changes we could facilitate,â Erickson continues. âWe knew $15 an hour was coming, and it meant we could consider bigger changes.â
Throughout the minimum-wage debate, the restaurant-industry norm was to advocate for the inclusion of a tip credit, which allows employers to account for tips and health care in an employeeâs wage increase. Many business owners claimed the tip credit was essential to their ability to survive an increase in labor costs, citing the industryâs slim profit margins.
âRestaurant owners talk about margins being small, and they are,â says Price. âBut if youâre doing well, that small margin comes from a pretty big pool of revenue. So it might be a small margin in terms of percentages, but you can effectively have enough money [to do more for staff]. And we feel that itâs incumbent on us to do so.â
Erickson herself wasnât initially keen on a service charge, preferring an across-the-board menu price increase. According to Erickson and Price, the decision to implement a service charge came not from them, but from their employees.
âIt was really our staff that pushed for it,â says Price. âThey worried about having to explain the price increase to every guest, every night.â
âThe concerns from staff,â recalls Erickson, âwere âWhat will people do if they donât know anything about what weâre doing with this extra money, if they donât know itâs going to help employees?ââ
âItâs nerve-racking,â she continues, âwondering if weâre going to alienate ourselves because our chicken is $35, while everyone elseâs is $26. Without a service charge, we donât get to explain why. This is a business: We want to compete.â
Both Erickson and Price see the service charge as an intermediate step: âEventually we just want to charge what has to be charged to pay people what they deserve,â says Erickson. âThatâs where our hearts are.â
Kristen Roewer, a server at the Whale Wins, says she believes Erickson and Price have the staffâs best interests in mind. âIâm in favor of the conversation that is being brought up, especially as it relates to tipping culture and equity between front of house and back of house,â she says.
Price acknowledges that there is âcynicism around whether or not we, as owners, are trying to keep this service charge for the house. Weâre not. Itâs all going back to the employeesâand more. By the time weâve paid everyone $15, weâve run through that 18.5 percent and into our own pockets as owners.â