You couldn't have interviewed a couple members of the staff?

@1, this article is to keep business advertising with The Stranger. If you want balance have the staff buy ad space!

@1 - Or possibly ask, "Why not raise prices 20% across the board, rather than tacking on a 20% up-charge at the end of the bill?"

Looks like another place to avoid.

WHOA

@2, no, that's a whole dry-cured prosciutto. A giant hog thigh that is so cured it can be left out and you hack off what you need - "gyro"-style.

More correctly, it's an jamon iberico in a gondola, ChefJoe.

20% is steep. i'd rather they raised menu prices.

"Almost three months in, the system seems to be working."

Sure, if by "seems to be working", they mean a pay cut for owners & a 20% autograt/'service charge', then...yeah.

Otherwise, the staff would leave.

That's "seems to be working"?

Yeah. Oooook.

If by "Almost three months in, the system seems to be working." you mean the owners had to take a pay cut & institute a 20% autograt/'service charge', then I guess that's "working" if that's what it took to keep staff from leaving...

(Sorry about the double-post above.)

What this story shows us, is that these restaurants can only survive by having the owners take a pay cut to contribute to the payroll to keep their staff.

That is not sustainable.

This is the first story - spun positively by The Stranger, of course - that shows very quickly that $15 does not work. If places like these restaurants (high prices, high margins) can't make it without such extreme efforts, then how is an average restaurant/store suppose to make it work?

And, this ONLY works at tipped businesses. What are non-tipped retail supposed to do? Just raise their prices by 25%?

It will be interesting to see how it pans out over the next few years. They seem optimistic even if slog trolls aren't.

@ 12 or they could raise prices more instep with how much this wage increase will actually affect the bottom line <10%

I run a small restaurant. We raised prices on most items fifty cents to a dollar, which is about a 5% increase. None of our regulars complained or noticed and everyone that comes in still tips 15-30% like they've done for the last 7 years i've been in this industry.

Please quit your hyperbolic fear mongering.

or leave Seattle. Just want to make sure you know that's always an option.

@12: Maybe the people who actually work there and are experiencing it know better than you, who knows nothing?

Weren't you the guy who wrote that article here that was full of lies, and then when you were called out, you admitted it was all lies, but that should not detract from the point you needed to lie about to prove? Why should anyone listen to liars like you?

@4 EXACTLY. If you're going to make the guest pay for it anyway, just increase your prices! I will never understand why this hasn't happened yet. People in Seattle barely look at the price of what they're buying. If they did, Starbucks would be out of business.

Here are some points the article fails to mention-

1) A 20% service charge to the guest is actually a 21.9% charge because the business has to charge sales tax.

2) Service Charge revenue is subject to all revenue taxes and, when distributed to employees, all payroll taxes, which costs more to the business. It also doesn't qualify for the IRS Tip Credit, a credit the federal government gives to businesses for reporting tips (an idea that came along as means to encourage restaurants to make sure everyone was claiming as much of their tips as possible). So service charge income is much more expensive to the business- which means that either the 20% needs to have some costs taken out of it before it's distributed to the staff or the business actually takes a loss on the distribution.

3) Service charge income is the property of the business. It's nice that someone with the reputation and breadth of business interests like Renee and Chad are able to simply pay themselves less but they are able to do so because they have many other sources of income (including the fact that Chad owns the building and the one that the Whale Wins is located in- guess who the rent goes to?) While it is nice that this system is working for them, is anyone really so naive to think that the average owner, when suddenly given a windfall of 20% more money via service charge, is going to give all of that back to the staff, especially if times get tough and they need additional money to continue operating?

4) To address a couple of commenters- the reason people will move to a service charge over a price increase is that people are used to this transaction model. Prices are able to stay in a similar range to other businesses and the 20% added as a service charge in lieu of a tip is a familiar process for people. While some of you might prefer the price increase option, it is a scary endeavor to businesses to assume that they can raise prices 20% and that the general public- many of whom are less than informed- are going to be okay with it.

The second comment is this- for those of you that are arguing for a more European model, that's fine if you truly do not care about the fate of the actual tipped worker. Simply put, there is no better model for ensuring solid compensation for restaurant servers and bartenders than a solid base wage PLUS tips. This whole minimum wage mess and the drive to service charges would have been totally unnecessary if the city had done what made the most sense, which was to recognize tip income (which many tipped employees lobbied for), use the state wage as the base, and build better protections for tipped workers to ensure that they were in fact always reaching the city minimum wage. We could have gotten to $15 and helped those truly in need much faster than our current course of action.

@18 in keeping with @12 erroneous comments, how do you arrive at a 20 - 25% price increase across the board? If you have that many minimum wage workers soaking up that many hours every day you're doing it wrong. Stop.

@4, @17: If they raise their prices by 20 percent most people are not going to realize that the tip is included. It will just look like a very, very expensive restaurant. They'll get killed by the competition.

Not sure why this is so hard to understand.

#19, we're talking about two different things. You're referring to price increases that are necessary to meet this year's raise in the minimum wage for small businesses- and you're right, those increases are relatively small (as a matter of fact, your 5% increase is actually on the high end of the range- we're able to handle the increase with a 1% increase in sales revenue).

However, what I'm referring to is the process that businesses are already going through to deal with what will be $15, in particular the larger businesses that will hit $15 in a year a half. They are the bellwethers of what's to come for all restaurants eventually. Already we've seen a business (Ivar's) raise prices and drop the tip line and others do what Renee is doing with the service charge. When the base wage goes up to $13 for those large businesses in five months, you'll see even more make the move to one of those options. Why? Well, let's use your example from #14.

You run a small business, which means your wage only went up about $.47/hour this year. In order to meet the increased need for revenue, you raised prices 5%. For the big businesses, their's went up $1.47/hour. So in order to meet the city's minimum wage, they had a choice- raise prices 15% (using your math) and expect people to pay it and still tip; raise prices 20% and drop the tipping, which gives them revenue to pay their staff but also, by dropping tipping, means their guests are paying the same as before (assuming they tipped 20%); or go to a 20% service charge for the same reasons.

In the years to come, you'll need to raise your prices 5% again. And again. And again. And again. Then, when the wage increases from $3/hour in two years, you'll need to raise your prices 30% (again, using your math). So the question is- will you just continue to raise prices and just expect the customers, over 90% of which are still making the same amount of money and have the same disposable income, to accept those 55% price increases without changing their behavior? Or will you find a way that allows you to meet the city's requirement AND also limit the ultimate financial impact to your guests? If you don't see what's coming, it's you that needs to stop.

And #20, Ivar's raised prices by 20% and communicates very strongly that tipping is no longer necessary, including removing the tip line from the credit card slip (never mind the enormous amount of press coverage they got about it). Businesses that I've been to in other cities that have also done this make the in-house messaging very clear that they now pay a "living wage" and that tipping is no longer necessary. It's the Uber model and people are more than happy to not have to worry about the tip.

My point in all of this, once again, is that it will be the tipped employees that will be paying for this wage increase in restaurants. It will shift money, now under the owner's control one way or the other, from the from the tipped employees to the back of the house employees. The ideal plan would have been one that allowed the tipped employees to continue to make their money, albeit with better protections, and raised up the wages of the back of the house folks.

@#21 The public may be happy with Ivar's tactics, but the servers are making a lot less money and leaving the company in droves.
At Erickson's company, despite the hourly increase, the server’s wages at this company have also declined. Instead of the public supplementing the FOH wages with tips, now the company is using the tips or "service charge" to pay their back of the house workers as well. And they want a pat on the head for providing health care. The owners took a pay cut? Sure they did.