A New Hampshire restaurant is banning tips in favor of raising menu prices, saying it will give its staff a salary of $45,000 to $50,000 a year. Owners of 7th Settlement Brewery in Dover say they will no longer accept tips starting Labor Day.
The restaurant's co-founder, David Boynton, spoke with NHPR’s Peter Biello about the new policy.
Why did you decide to make this change?
One of the main reasons is, the traditional restaurant business model doesn’t work that well when you want to pay your staff equitably. That doesn’t mean paying them all equally—different skills and different time with the company deserve different pay—but it should be commensurate with the position and what they’re doing for the company.
There are a lot of issues and problems behind the current tipping model that a lot of people don’t notice at first. But it’s kind of become an imperative if we want to become a leader in our community and run our business based not just on financial success but also our values.
What are some of the problems with that model that most folks don’t see?
One would be sexual harassment against staff. [With tipping,] you’re creating a power position with a customer. They’re paying for service, instead of it being embedded in the menu price. A little secret here is that people don’t want to lose that perceived control over the service.
What we’ve come to believe is that our staff is just like everyone else, in that they want to work hard and do well at their job. There are better ways to provide feedback for their service, and better ways to motivate staff to provide great service.
What we want to do is take away the extrinsic motivation of money. We want them paid fairly, paid what they’re currently making, if not more, and we want to pay our back-of-house staff fairly as well, and change the whole model.
This will result in prices rising as much as 21% in some cases. How do you think your customers will respond to that?
I think once they come in and try it—prices [will be] raised by 21%, but you’re not leaving a tip, and most people tip between 18% and 25%. At the end of the day, the guest check will look very similar when they look at their credit card statement.
What we’re doing is saying, let us, as a professional business, be responsible for paying and motivating our employees, like every other industry. And let’s make this a professional career. I can’t, in the current model—we offer some health benefit options, which is more than most restaurants, but we can’t afford to offer paid time off and health insurance and other benefits unless we switch to this model.
It’s a competitive job market right now, and some companies are reporting having trouble finding qualified employees. To what extent is finding and keeping good staff members part of this decision?
For almost any restaurant, the hardest place to find and keep staff is in the kitchen, and that’s because for years they’ve been so unfairly paid and it’s been so inequitable, and we’re trying to change that. In fact, we’ve already put most of our kitchen staff on salary with paid time off.
What if people can’t break that habit of tipping, and they feel strange walking away from a table without leaving something?
We really do have to change the mindset of people. So, if someone tips, that will go to a local charity, and we will be very transparent about that.
But what we really want people to think about is, if they’re leaving a tip, who are they leaving it for? Are they leaving it for just the server, or are they paying the kitchen, the food runner, the host, or our brewer? What they have to consider is, we’re changing the model so that everyone is paid fairly, and they’re going to get better service because of it.
If you feel awkward because you can’t thank a server for their service, just come back and bring some friends. Build this community and support this model that supports a fair and equitable lifestyle for everyone involved.