Some restaurants are getting rid of tips and replacing them with a surcharge on the dining tab.
COVID-19’s financial bite has been especially hard on restaurants, forcing many to close. Others that are still operating are taking a fresh look at the way they do business.
During the height of the pandemic, the industry estimates up to 90% of restaurant staff were knocked out of work.
At Thamee, a full-service Burmese restaurant on H Street Northeast, co-owner Eric Wang saw servers’ income plummet as tips dried up when customers opted for carryout and delivery.
Aiming to lift compensation for the staff, including promoting equity between the servers and the kitchen staff, Thamee has come up with a new pricing structure.
“The program we’ve instituted is called Flat-30. What the 30 stands for is, essentially, we took the old model of costing out our goods and services and how much we charge people; and we just tacked on a 30% fee on top of it and eliminated tipping,” Wang said.
Revenue from the 30% surcharge is being used to raise compensation for the entire staff, including providing health care and other benefits.
“We’ve actually changed our entire compensation structure for everybody, not just the servers, but also for the back-of-the-house cooks and dishwashers, as well,” Wang said.
The Restaurant Association of Metropolitan Washington said restaurant owners have had to institute many changes since the pandemic began.
“They’ve had to pivot and to reimagine concepts, new business models,” said Kathy Hollinger, of the Restaurant Association of Metropolitan Washington.
She said some restaurants have had to reduce staff by 80-90%.
“So, what we are seeing is that they are doing anything and everything to think about what makes the most sense for their particular restaurant operation,” Hollinger said. “What is most important is that they are deciding what works for their business versus others suggesting what could work for their business,” she said.
There’s no doubt the pandemic has helped spark the elimination of tipping at some area restaurants replaced by a surcharge, but at Thamee Restaurant the owners see the overhaul in compensation as a plan for the future.
“I think there needs to be more equity in the restaurant industry,” Wang said. “We, as a society, have deemed these people essential; but when it comes to actually paying them a survivable wage, there’s a lot of push back on it. So we need to really rethink what it means to dine out, and treat it as something special and something essential.”
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