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No-tip approach to $15 wage can work, Ivar’s finds

Restaurants looking for ways to contend with a $15 wage had their heads turned back in March by the radical plan Ivar’s said it would try at one of its restaurants, a full-service seafood place. Early results suggest the strategy of eliminating tips to pay every worker $15 an hour and a sales commission is working for management, employees and guests alike, according to a report by Bloomberg.com.

Ivar’s plan called for equalizing front and back-of-the-house compensation at Ivar’s Salmon House, one of its restaurants in the Seattle area, by paying every employee $15 an hour. Front-of-the-house employees would split an 8 percent sales commission, and back-of-the-house staffers would divvy up a 9-percent kitty.

Guests were informed that they should no longer tip servers, and that the 17 percent they paid on average as a gratuity would now be factored into menu prices, which were increasing by a total of 21 percent. Customers would really be paying only 4 percent more than they formerly had, management explained, and that hike would have been levied even if tipping had been retained, since it was needed to cover higher food costs.

The only adjustment that had to be made to the model, said Ivar’s CEO Bob Donegan, was the rule that patrons not tip. Customers who wanted to reward outstanding service can still leave a gratuity, though the restaurant explains that a small show of appreciation would do the trick.

Ivar’s has since adopted the model at a second restaurant, Ivar’s Acres of Clams.

Wages in Seattle have yet to hit the $15-an-hour threshold, but are scheduled to reach that level within seven years. Businesses with at least 500 employees are mandated to pay that amount by 2018.

Developments on the West Coast are likely to be followed by restaurants on the other side of the nation. New York Governor Andrew Cuomo has pledged to raise the minimum wage for the state, the nation’s four-largest restaurant market, to $15 an hour.

He has the overwhelming support of constituents. A poll conducted last week by Quinnipiac College revealed that 62 percent of voters favor the increase, as opposed to 35 percent who oppose it. And a survey this week by Sienna College pegged the supporters at 59 percent of the population, with 38 percent opposed.
 

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