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JP restaurants add fee to pay kitchen workers more - and customers eat it up

Patrick Maguire reports on an experiment by the owners of Tres Gatos, The Centre Street Cafe and Casa Verde in which diners had a 3% fee added to their checks so that "back of house" workers who don't normally get tips could get pay raises.

It worked, he writes: Those workers are making an average $2.87 more an hour and "despite the initial concern about reducing [server] tips, servers actually saw an increase in their tips by 2.5%." Also, the new policy has led to "excellent" staff retention and made it easier to recruit new workers.

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Comments

3% across the board?

No grandstanding. No looking for free publicity....

Oh.....never mind...

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Everyone knows that the secret to doing well in business is to make sure everyone either hates you and doesn't know you at all. Also, make sure your store is in a really difficult to find location.

Pfah - next thing you know, local businesses will be sponsoring little league teams and hosting charity events. I mean, what's the world coming to Jim, amirite?

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Pay their staff a good wage to begin with.

They don't crow about it in the press and then pat themselves on the back for doing the right thing.

Especially when its the customer who is doing the right thing for them.

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How can you obscure the the price of a simple dinner, beyond summing the prices printed on the menu, plus 6.25% tax, plus %age tip?

Let's add another %age cut in there.

When we dine out, does having a sense of the price matter? If not, why are prices even printed in the menu?

Should we instead say that knowing the price doesn't matter, because this is actually a charity event for employing restaurant workers, not an exchange of money for services and goods?

I'm all for paying everyone a good living wage. Just print the simple price, and stop trying to obscure it even further.

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1. Restaurant staff should be paid a living wage, as a living wage should be every worker's human right.

2. Tipping should be an optional reward for exceptional service, not a requirement to be paid by customers when a worker simply performs their job requirements.

3. It should primarily be the employer's responsibility to assess the performance of employees--including the granting of bonus pay or disciplinary action--not customers. What other service job asks customers to decide when an employee deserves to be rewarded or punished?

4. Adding an additional charge to pay kitchen wages is the same as (for example) Ticketmaster's "service charge," public colleges charging students annual fees 2-5 times the rate of tuition, and Amazon's flat $3.99 shipping charge on used books. All are a way to make the base price seem lower than the end-cost to the consumer after all the fees are piled on. These charges might indeed reflect actual costs paid by the producer, but the money all goes to the same place before being paid out. Most businesses call these "expenses" and pay them in the background, charging customers one, simple price.

Personally, I don't put a lot of faith in what business owners claim these added fees are for. Used booksellers on Amazon don't make their money on books priced at $0.01. It doesn't cost $3.99 to mail most books, so they're making a couple bucks off the shipping charge.

With this 3% kitchen worker fee, consumers have to trust that a business will actually apply this fee where they say they will. Having sold seafood to restaurants for years, I know how much fraud is on the average menu (that "fresh, native cod" is frozen, Chinese haddock, my friends). And I've been stiffed by shady owners. If don't trust restaurants to tell me what I'm actually eating or to pay their suppliers, I don't see why I should trust them in other ways.

All this comes back to all restaurant workers receiving a living wage. If workers industry-wide received fair wages, restaurants wouldn't need to resort to gimmicks like this to give menu items the illusion of lower prices. They could simply sell a product at a price that allows the company to make a profit after paying its expenses, without any trickery or unfair labor practices.

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Public colleges charge fees because the state takes all of the tuition and doesn't adequately fund public higher education.

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If the restaurants had just raised the wages of kitchen workers and raised food prices to match, then tips on the new prices would mean that servers would also get a wage increase, perpetuating the problem that this is supposed to fix.

Or maybe that's just a cover for their agenda of...I don't know, specifically pissing you off?

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Those workers are making an average $2.87 more an hour

This should be illegal.

anyone know why it's not?

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But to be honest, I'm too dumb to be able to figure out what your point is. Care to elaborate?

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i honestly don't know why restaurants are legally allowed to pay employees under minimum wage.

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2.87 MORE, not 2.87 in total!

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What's your point? Not being wise, I literally have no idea.
It's around $6k more pre year per worker if full time. Seems good to me. It's extremely expensive to live in Boston.
Why is this bad or should it be "illegal"? Especially if they're being transparent to customers and employees regarding fee structure?

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nevermind.

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So in California, everybody gets the same minimum. That is, tipped workers also make $10 an hour. Why is it that food prices are the same? And yet everyone in MA screams that raising the tipped minimum will result in higher food prices?

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Any evidence to back that up?

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I'm doubting that a bit. My understanding is that produce is a bit cheaper on the West Coast compared to the East Coast which over time may cut into the profits in an industry that tends to run on thin profit margins:

http://mobile.nytimes.com/2016/10/26/dining/restaurant-economics-new-yor...
(This article compares San Francisco and Los Angeles prices vs New York City. The restaurant I used to work at in Cambridge used Baldor as a supplier)

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Many of the commenters here were mentioning questions/issue that were clearly and exhaustively discussed in the actual report Adam linked to. The linked article goes deep into the thinking, the criticism, the alternatives considered and ends with real data being reported by the owners and at least a few staff as well.

Then I clicked above and saw the 404 error. Wonder how long that was there and if anyone actually read the article before commenting.

Anyway; working link is here: http://www.servernotservant.com/2016/12/01/boston-ma-restaurant-group-ho...

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Link fixed. Wish I could claim it was a clever experiment, but, no, I just left off the opening quotation marks in the hyperlink.

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Thank you for reading the entire piece, kernalPanic. It's a long piece, and strategically exhaustive with respect to hammering home the recurring question of "Why not just raise menu prices?" Addressing the 'broken model' of operating restaurants is a very complicated one, requiring creative, innovative solutions like the HAF in JP.

There's been a lot of discussion about Facebook, Twitter and others screening out "fake news." It would be awesome if a mechanism existed to prevent humans from commenting anywhere online without reading and entire piece first, "fake comments." But then we'd still have the comprehension issue to deal with...

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I personally would not eat at a restaurant at which the owner adds a tax to increase his own profit so he doesn't have to pay his lowest paid employees a fair share of the profits via wages. However, if there are customers out there who want to pay the owner an increased profit for that reason then good for them.

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I didn't realize that sharing tips given to waitstaff with back of the house staff is illegal in Massachusetts. But then I assume that the tip I leave someone is for them and no one else. I've also always assumed that the back of the house staff were paid a reasonable wage - or reasonable by local standards.

What I count here however is the following:

Menu price
Tax at 7 %
Tip at 20% (I generally leave 20%)
BOH Fee 3 %

Add that I usually base the tip on the after tax cost and that the taxable amount may wind up including the BOH fee that final cost keeps creeping upwards.

In any case the net result is that a restaurant meal's actual cost is the menu price plus at least 30%.

I agree that the concept of tipping is possibly failing. At any counter where any minor service is provided there is a tip jar. Personal services such as Instacart offer customers to add both service charges and tips. Grocery stores provide the "opportunity" to donate to non-profits at the register (and take the write off on your donation). I see a possible danger of entering a period where the norm is the price of an object or service plus various other fees effectively hiding the true monetary cost until the purchase is made or after the service is provided.

The goal of paying BOH staff better wages is good. But is this better than paying good salaries or hourly rates across the board without tips? Obviously this requires increasing menu prices but then prices are more consistent and income would be more consistent.

I've worked in a commission environment. Made a fair amount of income. I work in a salary environment now. I'll take the consistency of salary over the ups and downs of commissions/tips any day.

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At any counter where any minor service is provided there is a tip jar. Personal services such as Instacart offer customers to add both service charges and tips. Grocery stores provide the "opportunity" to donate to non-profits at the register (and take the write off on your donation).

So just don't participate in tipping where you don't see it as appropriate.

Tip the barista for my black coffee? Nawp. Tip the PeaPod delivery guy after he just hauled my groceries up the ~30 stairs to get to my door? You bet. Tip the cashier at the sandwich shop or pastry shop? Nawp. Tip the maid at my hotel room? Yip, $1 or $2 per night. Tip the charity requests at CVS? Nawp. Tip the pizza delivery guy? You bet.

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