The last few years have fundamentally changed Americans’ relationship with restaurants. As the pandemic made diners more aware of the long hours and low wages associated with the business, many began tipping more, donating to employee funds and lobbying elected officials. elected to protect workers.
Now, that realization has been translated into legislation that could reshape restaurants as we know them. Voters and lawmakers in 10 states, including New York, will decide whether this year should end or not. minimum wage – a long-standing loophole that allows restaurant owners to pay their tipped workers much less than the minimum wage for other employees, on the understanding that tips make a difference special.
For many years, labor groups such as A fair salary has argued that the practice deprives many employees of a living wage and leaves them dependent on the willingness of customers to tip. Supporters of the minimum wage say it helps reduce owner profits in a business that already has thin profit margins. Many had predicted that its repeal would spur customer checks, discourage them from dining out and force many places to close.
How valid are those concerns? And will workers really benefit from this change?
A useful place to look for answers is Washington, DC, one of the first US cities in decades to begin phasing out tipping — a move so controversial it took two elections. can only be implemented. (The measure passed in 2018 with 56% of the vote, but was defeated repealed by the Council of the District of Columbiaonly to surpass again with nearly 75% support in 2022.)
More than a year into the trial, the city — where food service, including many independent restaurants, is the third-largest sector of the local economy — remains torn. Trupti Patel, a server, said she has received death threats for speaking out in favor of ending the minimum wage and is still harassed. Another server who voted for the change, Britt Lucas, said that even today, she still doesn’t talk to some people because they disagree on the issue.
It’s still unclear exactly how the restaurant business will operate as the city slowly increases tip wages to match the standard minimum wage by 2027. But after interviewing more than 25 owners , chefs, workers and diners, we can offer some lessons learned on how to implement this policy. , known as Initiative 82, is still being implemented today.
The dining scene is by no means booming.
The number of restaurants in Washington has actually increased – to 3,472 last year, from 3,307 by 2022, according to the US Bureau of Labor Statistics. And new ones continue to open up; According to Yelp, there are 283 openings in 2023, compared to 254 the year before.
But many owners remain concerned that as tips increase, the added costs will put them out of business. Rick Allison, who operates several restaurants in Virginia and Maryland counties, said labor costs are level King Street Oyster Restaurant, in Washington, up 12% from a year ago. He blamed initiative. In addition to rising rents and inflation, the upcoming wage increases are unsustainable, he said.
“Everybody is closing,” he said, adding, “My next restaurant is in Virginia.”
Chris Kennedy, co-owner of the bar Trusted pub, View current challenges as short-term growing pains. “It’s going to be a tough few years in DC, but we’ll find our way.”
Diners say high prices are hurting.
Average dining prices in the Washington area increased 5.6 percent from December 2022 to December 2023 – a significantly larger jump than the 3.4% increase nationally, according to the Bureau of Labor Statistics.
Of course, higher prices are hardly unusual in the Beltway these days. But many Washington restaurants have tried to offset the more expensive wages by imposing service fees or raising menu prices.
Many customers say steeper tabs won’t completely stop them from eating out, but they may do it less often. Kashira Al-Sabir, human resources assistant people watching the Super Bowl at a Mexican restaurant Mission, is used to paying $120 per person for brunch. “We used to spend up to $50 to get a similar experience,” she said.
Nicole Malli, head of digital, is having breakfast at Elle, said she is satisfied with the higher prices because restaurants contribute to the community and she has adjusted her budget accordingly. “Why don’t we complain so much about Uber and DoorDash, but complain about the restaurants that serve the community?”
Workers’ wages are rising, but not for all.
On paper, the numbers are strong. The tipped minimum wage has increased to $8 an hour from $5.35 and will increase to match the school district’s standard minimum wage by 2027. (Now $17 .) Median hourly earnings for all restaurant workers in Washington — including tips, overtime and other compensation — rose to $20.19 last December from $18.93 USD a year earlier, according to payroll data from payments company Square.
In interviews, most workers said they supported the initiative. But many people are unhappy with the way it turned out. Noelle Phan, a waitress at a high-end cocktail bar, said her salary has dropped about $300 a week. The bar charged an additional 20% service fee, which she believed discouraged tipping. It has also started offering contactless ordering via QR codes, so her working hours have been reduced.
But Ms. Lucas, a waitress at the Supreme, a Belgian restaurant in affluent Georgetown, said her salary has increased by $200 or $300 for each twice-monthly paycheck, while tips have remained steady. The restaurant recently increased menu prices to help meet higher labor costs.
Service fees have become the norm.
As restaurant owners grapple with higher labor costs, their most popular tool seems to be the service fee — a fee of about 3% to 22% or more added to the bottom of the check. Each restaurant allocates money differently; some go directly to employee salaries, while others split it between employees and management.
Some owners who have added service fees say they don’t want to increase menu prices, which could scare away customers; The service fee seems more reasonable, they say, because it resembles the tip diners are used to paying.
But these fees have been criticized by workers, who say they often don’t know where the money goes, and by customers, who can feel ambushed at the end of a meal by the surcharge, even when the The restaurant publishes the policy on its menu or website. Consumer protection group Vuong Tourism has filed two lawsuits against restaurant groups in Washington over service fees.
“It’s a bit misleading when you look at the prices on the menu and think it’s going to cost a certain amount of money,” said Marcelo Kapelo, an investment banker who was dining at the restaurant. bar, a seafood restaurant with a 22% service charge. Partly because of the new fees, he said, “I think DC is now more expensive than New York.”
Beatriz Pacheco, a server at a high-end restaurant near the White House, said that since a 20% service fee increase last year, her weekly pay has dropped several hundred dollars. She said the owner did not disclose how the money was spent. “When we asked questions, he said, ‘Don’t worry. You have your check,’” she said.
Customers are more confused than ever.
With all the different additional fees, diners aren’t sure how much to tip or whether to tip at all. Many said they wanted restaurants to simply increase menu prices or institute a mandatory tip.
Nada Elbasha, a bartender at a restaurant that doesn’t charge a service fee, said because those fees are so common, people often don’t tip because they assume a fee has been added.
Some places, like Indian restaurants Daru, is trying to clear up the confusion surrounding service fees. The waiter explained to the diners that there was no need to tip because 20% of the service fee would go directly to the staff. All of Daru’s workers earn a minimum wage of $22 an hour, said Dante Datta, general manager. (However, the restaurant has not yet removed the tip line from the bill.)
Maddi Cole, a bartender at a neighborhood bar Saint Vincent Wine, which automatically adds a 20% tip to each check, says diners seem much happier paying that amount than the service fee. “And I know I’m getting the right tip,” she said.
There are jobs, but jobs are changing.
Employment in local restaurants is up — the number of workers rose to 14,168 last September from 13,690 a year earlier, according to federal data.
However, some owners say because of higher salaries, they are cross-training their existing employees in new roles instead of hiring new people. At Hiraya, a Filipino restaurant in the H Street Corridor, the cashier at the downstairs coffee shop also works as a barista and bus desk staff.
Mr Allison, who runs King Street Oyster Bar, said he would only hire experienced workers from now on. “We don’t want to waste money on training,” he said.
Many restaurants are being reinvented.
Responding to Initiative 82, Elle, a cafe and pub, is converting to an all-day cafe to save on labor because there will be more overlap between menus and staff won’t have to open and close the restaurant twice everyday. The new evening menu will also be cheaper. Elle general manager Monica Lee said weeknight dinner service is attracting fewer customers because many are deterred by higher menu prices.
“I think it would be better if someone ordered two $20 dishes instead of one $30 dish,” she said. “That’s where we want to get to — to entice weekday diners to come in at a little lower price point.”
Others are taking a more creative route. Rock Harper, co-owner of H Street Corridor cocktail bar Hill Prince, wanted to turn the space into a podcast studio during the day. Hirayaa nearby Filipino restaurant, will soon open a bistro downstairs.
Workers are now the top concern.
For all the debate about ending tipping, there is broad agreement on one point: The change has made the public think more carefully about the people who prepare and serve their food. That momentum pushed workers to organize restaurant unionlawmakers scrutinize labor conditions and more restaurants offer paid time off and 401(k) plans.
“We are seeing a rise in the labor movement that we haven’t seen since the ’20s and ’30s,” said Eli Pine, a waiter at a Spanish bistro in Washington. .
The experience of Flagstaff, Ariz., which began phasing out its minimum wage in 2016, points to a promising future. Both restaurant employment and number of restaurants in Coconino County has increased in the decade since the measure passed, according to the Bureau of Labor Statistics.
Meanwhile, Washington diners — many of whom voted to raise wages at a time when almost everything is getting more expensive — may be faced with a difficult choice.
“Obviously you want workers to make enough money to live on, but you also want to go out and have a good time without breaking the bank,” said India Hamilton, who works as a recruiter and was dining at the Mission. product”. “It’s a sad situation all around.”
