Call them 'service fees' or 'living wage fees' or “creating happy people” fees, but they can range from 4 to 22% -- and they are catching on as a way to offer stability in a volatile industry
Edwin Zoe speaks to employee Fatima Ordaz at Zoe Ma Ma in Denver on Tuesday, March 10, 2020. is money from a service charge can be distributed as the owner sees fit and employers must collect sales tax on them. Tips can only be distributed to front-of-the-house employees.
Zoe said he implemented a 15% service charge, and eliminated tipping, to avoid the unintended consequences that come with tipping, like customer bias or racial discrimination, and to create a clear and set relationship with his employees.“Personally, I think if you have a service fee, you should have a no-tip policy,” Zoe said. “It makes it clear to our guests what we’re about. We’re not trying to have our cake and eat it too. Tipping is relatively rare around the world.
But for diners like Mike Gore, not knowing the full price upfront is an irritant. Gore stopped by Milk Market, which is owned by Bonanno, in July during his lunch break, looking for a cheap option. He decided to grab a $9 burger from Ruth’s Butchery, but with the 22% “creating happy people” fee, it ended up being $17. The cashier told him about the fee beforehand, so he decided not to tip on top of it but said he probably won’t return.
He also acknowledged that some of his front-of-the-house workers, who are used to closing out the night with a pocket full of cash rather than waiting for a paycheck, didn’t like the change. Hourly workers at his restaurants make $24 to $55. Before, he said, they were typically making minimum wage, which is currently $13.65 for non-tipped workers in Colorado.
“The service charge has been great in the sense that it offers a stable and safe environment,” Labrador said. “You never have those days anymore where you come in and do a four-hour shift, where you make only $40. You’re protected from that, and there’s a lot of value in that.” “Having that service charge there takes away the autonomy from customers,” she said. “And at the end of the day, tips incentivize us to do a better job and to show up even if we’re having a bad day.”Is the end of tipping in Denver near?
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