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Is removing tips, adding surchage in Seattle restaurants the right move?

Seattle restaurants are falling into a trend of removing tips from their operation and replacing them with an automatic fee on customers' bills. (AP)
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Seattle restaurants are falling into a trend of removing tips from their operation and replacing them with an automatic fee on customers’ bills.

Ivar’s Salmon House recently announced its move to go no-tips, and now three other local restaurants are doing the same.

But KIRO Radio’s Jason Rantz is skeptical about the fees. Taking away tips could hurt take-home pay for workers, Rantz proposes. On the other hand, what incentive will there be for servers to provide better service if the tip is removed?

But Jeremy Price contends that outlook. Price co-owns Seattle’s Barnacle Bar, The Whale Wins, and the Walrus and the Carpenter restaurants with Chad Dale and Chef Renee Erickson.

“I think the assumption that tips equal good service is a dubious one,” Price told Rantz. “That’s something I understand having worked in restaurants, but is also born out in a number of peer reviewed studies.”

The three business partners recently announced that tips will no longer be a factor at their restaurants, but an 18.5 percent service charge will be included on bills from now on.

Related: Is Seattle’s minimum wage law impacting business owners?

“The 18.5 percent service charge will allow us to close the wage gap between back-of-house workers and front-of-house workers,” co-owner Price said.

“It will allow us to provide benefits like health insurance and matching retirement savings accounts to our full-time,” he said. “Also, it will allow us to provide a higher guaranteed minimum wage to our employees.”

Price told Rantz that customers at the three restaurants typically tip 21 percent on average, so the 18.5 percent fee is a “win-win between customers and employees, where customers will be paying less at our restaurants and employees are going to be getting benefits and higher wages.”

There will be no price increases to cover the change. Profits from the business owners will be affected, however, Price notes. Also, the restaurants have always split tips between front and back of house; a practice that may not be legal after pending court cases, Price said. The fee is one way around that issue.

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