Seattle restaurant owner says nixing tips is worse for workers

While celebrity chef Tom Douglas is embracing Seattle’s $15 minimum wage change and replacing them with a service charge, fellow Seattle restaurant owner Dave Meinert thinks such a move would actually be detrimental to his own employees.

“The net result for workers is their income will go down,” he told KIRO Radio’s Jason Rantz. “Especially servers and bartenders.”

Meinert, who owns The 5 Point Cafe, Lost Lake Cafe, Comet Tavern, Grim’s and Big Mario’s Pizza, among other business ventures, said many restaurants are moving away from the classic tipping structure, instead adding anywhere from an 18-24 percent service charge to the bill. In turn, staffs are being compensated with different calculations: Using the service charge to cover benefits, giving a flat percentage or wage to servers or basing it on commission.

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Meinert says adding a 20 percent service charge in place of gratuity will create a “higher wage for some, but less income,” which means little to no net gain. He explained his position in some detail on his Facebook page.

“We don’t know yet how it’s going to play out and I think a lot of restaurant owners are going to try different ways to deal with this and it’s going to result in different incomes for the staff, but eventually, just because of the market, it will balance out and that balance out will be lower than it is now,” he said.

In general, the real winners, Meinert told Rantz, are the owners.

“There are restaurant owners who are saying to me, ‘Hey, just let this go; you’re gonna make more money,'” Meinert said. “Which is ironic because I don’t think the minimum wage activists set up this system to increase profits for owners and lower people’s wages, but in fact that’s what’s happening.”

Meinert said he will not be following Tom Douglas’ lead, in part because Meinert’s restaurants are in the small business category, which means his base minimum wage is only $10.50. Douglas, on the other hand, has to pay $13 per hour.

“I don’t like the service charge solution; I think my staff will make less,” he said. “…It’s beneficial for owners. As an owner I could say, hey I’m gonna get rid of tips, I’m gonna take that money, pay people a little bit less and keep 5 to 8 percent of it and I could make more.”

Meinert said “at the end of the day this is about politicians getting donations from labor unions,” which he says are opposed to tipping because they don’t always get a percentage of that money in their dues. He told Rantz that unions want to see McDonalds open up their franchise agreements, which will in turn get them new members. He said many restaurant workers tried to speak out during the process, saying it would hurt them, but that the Seattle City Council refused to listen and labor activists attacked them as pawns of the owners.

“I don’t have much hope that the politicians are going to come to their senses suddenly and say we care about these workers and their incomes because in fact these workers aren’t donating money to their campaigns and other people are,” he said. “And that’s who gets listened to.”

Meinert said the change is good for fast-food restaurant workers, but officials didn’t properly consider how it would impact others.

“I’m for raising the minimum wage, I just don’t like the way we did it,” Meinert said, noting that he doesn’t buy many activists’ claims that tipping is sexist and racist. “…In the case of full service restaurants with a tip model, I think this ends up being bad for the workers.”