Restaurant raises prices and pay, and ends tipping

Dan Weissmann Apr 1, 2015
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Restaurant raises prices and pay, and ends tipping

Dan Weissmann Apr 1, 2015
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In the national debate about the minimum wage, the city of Seattle is taking the lead. Effective April 1, minimum-wage workers there get a raise, thanks to an ordinance passed last spring. Workers at big companies get $11 an hour, with the minimum wage stair-stepping up to $15 for all workers over the next few years.

However, one local restaurant is jumping to that top rate right away. It’s also raising prices—and getting rid of tipping. 

Ivar’s Salmon House, an iconic room on Seattle’s waterfront, starts using brand new menus on April 1, reflecting a 21 percent price hike across the board. The money will go to raise base wages for the whole staff, including kitchen workers who haven’t gotten a share of tips in the past.

Management tinkered for months with a formula that would fund those “back-of-the-house” raises, while also protecting servers from taking a hit when tips went away.

“We were very nervous when we put it all together, to actually give it to employees and say this is what we’re thinking about doing,” says Bob Donegan, the company’s president.

He says staff gave the plan a standing ovation—but some people have come up to him since to say they’re nervous.

“We’re all nervous,” Donegan says. “We don’t know how customers are going to react to this. We don’t know how staff will react to this.”

The move essentially changes the restaurant’s business model.

Others may follow suit, says Anthony Anton, president of the Washington Restaurant Association. 

“Everyone’s talking about it,” he says. “It is the conversation among restaurants in Seattle.”

The new model may spread beyond Seattle, as other cities adopt higher minimum wage laws, says William Lester, a professor of city and regional planning at the University of North Carolina who studies minimum-wage policy.

“I wouldn’t be surprised if that were to become more common, as more cities push the labor standards higher,” he says.  

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