For chefs and servers, minimum wage hike changes tipping

Facing a big rise in labor costs from a city-mandated minimum wage, chefs in the Twin Cities are tinkering with new ways to run a full-service restaurant. So far, the experiments have failed.

Minneapolis passed a $15 wage last year that does not count tips as wages, despite pleas from restaurant owners and servers to allow lower wages for wait staff who earn most of their living in tips. Now St. Paul is preparing to pass its own minimum wage, and Mayor Melvin Carter has gone so far as to sing his opposition to a "tip credit."

"We're going to raise the wages. Tell them I said it," he sang to the tune of "Brown-Eyed Girl" at MinnRoast in April. "And so we're on the same pages. I'm not for a tip — penalty."

The minimum wage for small businesses will rise from $7.87 to $10.50 per hour in Minneapolis on July 1 and nearly double, to $15, in six years. Restaurateurs say that will force them either to do away with wait staff or eliminate tipping in an industry that employs roughly 44,000 servers and bartenders across the Twin Cities.

Counter-service restaurants that eliminate waiters are on the rise, but a tip-free experience has fallen flat at table-service restaurants.

Customers bristle at what they view as a forced service charge; servers and bartenders make less money; the tip culture that is dear to many in the restaurant industry is upended; and restaurant owners say having to explain a new system disrupts the delicate equilibrium of the dining experience.

One restaurant that replaced tips with a service charge — Heyday on Lyndale Avenue S. — is closing and preparing to relaunch in a few months. Two others that opened with a service charge — Bardo in northeast Minneapolis and Heirloom in St. Paul — have abandoned the policy and restored traditional tipping.

"The reason we raised the minimum wage in the city of Minneapolis was to help low income workers who, even though they're working full-time, are not making enough money to meet their basic needs," Bender said. "After hearing from everyone, we felt it was important to include all workers, and not leave anyone behind."

Bardo opened in the fall with an 18 percent service charge on every bill, but switched to conventional tipping in January after too many customers resisted the practice and it "took away from actually talking about the food and drink," said Remy Pettus, the chef and owner.

"We had to do something that was safer in the long term," Pettus said. "We'd get 1-star Yelp reviews that would say 'food, drinks, experience, everything was amazing and then I got the bill and there was an 18 percent service charge on it.' One star."

Since restaurants have six years to adjust to a $15 minimum wage, few have done anything about it, which makes trying to get ahead of the change more difficult.

Leah Anderson helped Pettus open Bardo and worked as a wine captain at the restaurant. She said servers and bartenders disliked the service charge, since they could easily go elsewhere and earn more in a restaurant that allowed tipping.

The competitive reality of restaurant service — do the best job to earn the best tip — is undercut when the restaurant collects a service charge and distributes it equally, Anderson said, and this doesn't sit well with experienced servers.

Another former Bardo employee, Rachel Wagner, signed up to work at the restaurant because she loved Pettus' food and the concept. The service charge turned out to be untenable for her, though.

"I quit there after a month, not because of the chef or the place or the food itself. I loved everything else about it," Wagner said. "I really wanted it to work but I couldn't live off of maybe 40 hours a week at about $21 an hour."

She said at a restaurant with normal tipping, she can make around $40 an hour in wages and tips, and added that "I haven't met one" server or bartender who is happy with the new ordinance.

Wyatt Evans started his restaurant Heirloom in St. Paul with an 18 percent service charge on the bill in late 2015. He thought it would be a more equitable setup, and felt that enough other restaurant owners were talking about doing the same thing that he wouldn't be alone.

It didn't last. At first the restaurant offered no way for customers to leave a tip unless they had cash or ran their credit card a second time. That led to a conversation no one enjoyed, in which the server asked the customer how much of a tip they wanted to leave before they ran the card.

"That's a slightly less comfortable interaction between guest and restaurant worker," Evans said. "It's very conditional here that when you leave a gratuity, you write it down or you leave cash and you turn it over. It's a secret handshake."

Evans said he was "stubborn," however, and added a tip line to the bill in addition to the 18 percent service charge, with a careful explanation that there was no obligation to leave a tip. That move bothered customers who felt the restaurant was trying to have it both ways.

"It just wasn't resonating in the way that we wanted it to with our guests," Evans said. "The service charge was the focal point, as opposed to the experience."

Six months after Evans opened the restaurant, he dropped the service charge and went back to traditional tipping.

His next venture, a deli with a full bar in the Lyn-Lake district of Minneapolis slated to open in June, will be a counter-service restaurant, his first establishment of the type.

"We've built a concept that will work within the parameters of the new minimum wage legislation," Niver said. "Certainly we hadn't planned on doing a fine dining or table-service restaurant in Minneapolis."

Eventually his full-service restaurants must move to some sort of service charge, Niver said, but he hasn't figured out how it would work. In his view, no one else has either.