You may have seen the signs on tip jars: “Tipping," they say, "is not a city in China."
It's not even a policy in China. Or in much of Europe. Nor in Latin America, according to Marco Franca, executive director of Posto 9, a Brazilian gastropub slated to open in Florida in December.
Franca's background is in tech startups, which he has launched in several countries. He's taking his business acumen to his latest venture in the U.S., where tipping has become a point of contention.
Months before opening, Franca knows Posto 9's servers won't live on tips. Instead, all employees will be salaried and receive health, dental, vision and life insurance through the company. They'll also get performance-based incentives. Franca hopes it will slow turnover, a huge problem in the restaurant industry.
Though running a restaurant like a tech startup is unusual, Franca says it's a commonsense approach. The traditional restaurant practice of tipping “is destined to die," he says. "It's Jurassic."
He's not alone in his thinking. A recently released Restaurant Trade Survey says 18 percent of restaurant operators have already adopted the no-tipping trend, with 29 percent saying they plan to follow suit.
Restaurateurs like Danny Meyer, whose Union Square Hospitality Group owns vaunted eateries like The Modern and Gramercy Tavern, have eliminated gratuities for a variety of reasons. For starters, the model subjects server's pay to the whims of customers.
Not all diners have been receptive. Joe's Crab Shack tested out a no-tipping model last year, but recently ended the practice. Company representatives said 60 percent of their customers believed it eliminated incentive for good service.
But Franca says believes that if you prioritize the needs of your employees over those of your clients, then your employees will take care of your clients for you.
“We take care of our people and make sure the culture is going to be different," Franca says. He hopes that culture breeds exceptional service.
So does Alethia Mariotta, owner of the Tarragon Bar and Rosmarin restaurant at Hotel Providence in Rhode Island, who instituted a no-tipping policy in February.
“We believe this is the future of hospitality," she explains. “We feel like we can get this right."
At both Tarragon and Rosmarin, menu items cost a flat fee, inclusive of labor, tax and other service-related costs. All employees make an hourly wage, and a bonus structure adds incentives for servers.
Feedback from customers has been generally positive. But not every guest understands most servers make a tipped minimum wage, which can differ from state to state. In Rhode Island, it's $3.39 per hour. “You're relying on your customers to pay your wage," says Mariotta. “That's a fundamental concept we don't agree with as a company."
Mariotta says the practice takes the guesswork out of dining, since customers don't need to calculate gratuity. It also lessens the risk for servers, who could walk away with nearly nothing on slow nights, and levels the playing field for all restaurant workers.
“Often what people don't understand about the tip system is that it's grossly unequal to the people in the back of the house... the people who are actually making the food," Mariotta explains. These workers often log long hours yet take home far less cash than servers.
Mariotta is big on making sure hard work never goes unnoticed. “People who create the art, create the food, often that job is undervalued," Mariotta says. “And that's something as a society I hope we learn to value more."
Equality is high on the list of reasons Andrew Hoffman eliminated tipping at his Berkeley restaurant Comal in 2014. His other restaurant, The Advocate, opened in August 2015 with a no-tipping system.
“And we have no intentions of turning back," he says.
Like Mariotta, Hoffman says it's important to chip away at the wage discrepancy between kitchen and service staff. “We didn't think our restaurant would be sustainable in the long term with a wage gap continuing to grow," he says.
He fields four or five calls per week from restaurateurs with the same concern, especially as the tipped minimum wage is poised to rise in some states. “It's no surprise that these conversations are coming up at the same time that the country is rethinking minimum wage," he notes.
Hoffman says many diners are “fairly apathetic" about his policy of adding a 20 percent service charge to the bill, which gets distributed to the entire staff.
Other customers are not so easygoing. “They get offended on a philosophical gut level," Hoffman says, adding that some patrons believe they should have the power to determine how much servers get paid. “And we fundamentally disagree."
The Brazil-born Franca acknowledges that tipping is a firmly entrenched custom for some. But he thinks Americans suffer for it, especially as servers rush to turn tables.
“I'm appalled by when you walk into most restaurants in this country, you're being pushed out the door," he said. “The bill is being given to you before you even finish your entrée, practically.
"That's not an experience."
But he thinks there's a strong future for his already well-publicized service model — and the proof is in the pudding. Even though his restaurant is still under construction, about half of the seats in his 15,000-square-foot space are reserved for opening day.
“We strongly believe the restaurant industry will go through a lot of change in the next several years," he says. “If new restaurants from day one begin to implement this principle, this is going to catch on like a tsunami."
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