An Oakland Restaurant is Using an Interesting Hybrid Tipping System

An Oakland, CA restaurant is trying something unusual in response to the city’s rising minimum wage: a hybrid tipping system involving both a service charge and tips — but tweaked so that it actually saves customers money and appears to allow employees to make a living wage.

Oakland’s Toast Kitchen & Bar is now utilizing something creative in the wake of the city voting to raise the minimum wage: they’re posting a 15% service charge on every check (split between servers, cooks, dishwashers, and bussers, leaving out only owners and managers), but then also encouraging a 5% extra tip (service-dependent, obviously) be left purely for servers. Owner Heather Sittig Jackson explains how this move helps customers as well as employees, via Eater:

Sittig tells Inside Scoop that this isn’t just an issue of fairness: it will save diners money. The alternative many of her fellow restaurateurs are considering is raising prices 30%, which will affect customers far more. She uses the example of a party spending $40 on brunch: with tax, the service charge and extra 5% tip, the meal would be $52.25, but with tax, a 30% price increase and a traditional tipping system (with good service and a 20% tip assumed), the meal would be $66.84, an increase of $14.59.

Customers reportedly are enjoying it, too: Jackson reports that they’ve been leaving comment cards out for feedback on the new system, and they’ve yet to receive any negative reactions.

I’d have to see the actual numbers to figure out how well this system works, but it’s important to note that one of the reasons it might be able to is that minimum wage is higher in the Bay Area than elsewhere — Oakland voted to raise the minimum wage* from $9 to $12.25 starting in March. Granted, this still isn’t as high as San Francisco’s plan to raise minimum wage to $15 by 2018, but Oakland’s cost of living also isn’t as high as SF.**

You might be wondering how the money from the 15% charge can go to cooks and dishwashers, considering they’re not legally allowed to be a part of a tip pool.*** I’m wondering that too, to be honest, although I suspect what’s happening is that the tip pool regulations don’t apply when there is no tipped sub-minimum hourly wage (California is one of the six states that does not have a sub-minimum wage) — I can’t see where the linked Department of Labor regulations explicitly state this policy, although it would make sense. Either that, or the service charge isn’t applied as a tip pool since customers are still encouraged to leave a little extra on top of it, although that sounds like shakier reasoning to me.

Regardless, at least in theory, this seems to be a system that could function. The key is the base minimum wage: this absolutely would not work if servers were making even $7.50/hour. A tweaked percentage of sales model is still the ideal to me (particularly if the established minimum under that system is $12-15/hour), but this could work.

Then again, very little would be worse than our current system. At the very least, this seems like an improvement.

* Also worth noting: efforts to raise the minimum wage passed nearly everywhere they were on the ballot, including deep red states Arkansas, Nebraska, Alaska, and South Dakota. None were as high as they should’ve been, nor were they nearly as high as the Bay Area, but $9.75/hour also goes a lot farther in East Frozen Nutsack, Alaska than in San Francisco. Alaska and South Dakota also had the foresight to index their minimum wage to inflation, which the federal government hasn’t been able to do because reasons. The only possible reason to oppose indexing the minimum wage to inflation is “fuck the poors.” There is no other argument; if you’re arguing against that particular policy, sooner or later, your argument revolves back to poor people being subhuman. There’s just no getting around that.

** You have no idea how hard I’m resisting the urge to call it “San Fran” or “Frisco” just to piss off the people that live there right now. Fucking Giants.

*** I realize there are restaurants that do this anyway. It’s still illegal in the US (except, presumably, in states without a tipped sub-minimum wage). Every time I bring this up, I get people arguing that it must be legal since their former place of work did it, but look at the link — it’s pretty clearly against the rules, regardless of whether you think that’s right.