In response to Seattle’s new minimum-wage law, restaurateurs have begun to make various changes to accommodate higher compensation for their employees: Ivar’s 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 workers—servers, cooks, and dishwashers—will 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 city’s 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.
“The industry needs to evolve,” says Erickson. “The system we’ve adopted in America favors the front of the house in financial value, and that’s really not fair—at least we don’t believe it to be. We’re taking that 18.5 percent [service charge] and redistributing it to everyone in a system that we’ve come up with. Back of house is still not making as much, but it’s better. It’s moving in the right direction.”
According to Erickson’s 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 “open and everyone sees them, with some percentage going to front-of-house workers and some to back-of-house workers.”
“If we’ve done our jobs, everyone’s pay stays the same,” says Price, with the exception of dishwashers and entry-level cooks, who are the only workers in the company who weren’t 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. “We started out thinking about the Affordable Care Act and minimum wage but realized it was a much bigger conversation than that,” says Price.
“The conversation we always defaulted to,” says Erickson, “was the legitimizing of the [restaurant] industry that we felt wasn’t there. There’s this idea that being in a restaurant is a stepping-stone to whatever you’re going to do when you grow up. I definitely chose a career that I’m 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.
“We wondered what other changes we could facilitate,” Erickson continues. “We knew $15 an hour was coming, and it meant we could consider bigger changes.”
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 employee’s wage increase. Many business owners claimed the tip credit was essential to their ability to survive an increase in labor costs, citing the industry’s slim profit margins.
“Restaurant owners talk about margins being small, and they are,” says Price. “But if you’re 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 it’s incumbent on us to do so.”
Erickson herself wasn’t 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.
“It was really our staff that pushed for it,” says Price. “They worried about having to explain the price increase to every guest, every night.”
“The concerns from staff,” recalls Erickson, “were ‘What will people do if they don’t know anything about what we’re doing with this extra money, if they don’t know it’s going to help employees?’”
“It’s nerve-racking,” she continues, “wondering if we’re going to alienate ourselves because our chicken is $35, while everyone else’s is $26. Without a service charge, we don’t get to explain why. This is a business: We want to compete.”
Both Erickson and Price see the service charge as an intermediate step: “Eventually we just want to charge what has to be charged to pay people what they deserve,” says Erickson. “That’s where our hearts are.”
Kristen Roewer, a server at the Whale Wins, says she believes Erickson and Price have the staff’s best interests in mind. “I’m 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,” she says.
Price acknowledges that there is “cynicism around whether or not we, as owners, are trying to keep this service charge for the house. We’re not. It’s all going back to the employees—and more. By the time we’ve paid everyone $15, we’ve run through that 18.5 percent and into our own pockets as owners.”