Austin Restaurants Are at Forefront of No-Tipping Movement

By Cate Malek

Reporting Texas

Jam Sanitchat has never been afraid to take risks at her restaurant Thai Fresh. She made a name for herself with her coconut ice cream experiments and gluten-free fried chicken and waffles. But when she eliminated tipping at her South Congress eatery, she landed in the middle of a nationwide controversy that may have long-term implications for the U.S. restaurant industry.

“I don’t think I did it because I saw anybody else doing it,” Sanitchat said. “I just thought it was a good idea.”

Sanitchat is one of a small but growing group of restaurant owners around the country who believe tipping leads to low, unstable wages for restaurant workers and causes unnecessary guesswork for customers. Restaurateur Danny Meyer is eliminating tipping at all 13 restaurants in his Union Square Hospitality Group, which includes Union Square Cafe and Gramercy Tavern in New York City. Other high-profile restaurants to join include Alinea in Chicago and, in California, Chez Panisse in Berkeley and the French Laundry in Napa Valley. In November, Joe’s Crab Shack announced that it would be testing a no-tipping policy at a few locations around the country.

 

Despite the national interest in the movement, Texas restaurants have been slow to join. As far as Sanitchat knows, Thai Fresh is only the second restaurant in Texas to try a no-tipping policy, after the Black Star Co-op, also in Austin.

Sanitchat was first drawn to the idea because she wanted to pay her cooks fairly. Texas labor law prevents sharing tips with workers who aren’t directly dealing with customers. Although it’s common for restaurants to share tips anyway, servers still typically walk away with much more than the workers making the food, a practice Sanitchat always found unfair.

She raised her prices by 20 percent and, with the increased revenue, raised her cooks’ salaries from $10 to $12 an hour to $14 an hour. She was also able to give all her employees benefits, including health insurance and paid time off.

Gary Smith, 30, who has been a cook at Thai Fresh for three years, said the wage increase has raised morale in the kitchen.

“Now we know that we’re not busting our asses for a smaller amount of money,” he said.

The servers at Thai Fresh used to be paid $6 to $8 an hour, although with tips they were making $14 an hour or above. They, too, said they’re happy with the change, although it doesn’t mean significantly more money for them. 

“I’m very thankful that Jam did this,” said Levy Hinojosa, who has been working as a server at Thai Fresh for a year. He said having a regular salary allows him to budget and plan ahead instead of seesawing from a few weeks of great tips to a few slow weeks.

Johnny Livesay, co-founder of the Black Star Co-op in North Austin, adopted a no-tipping policy almost 10 years ago. His brewery is member-owned and cooperatively managed by its workers.

Black Star is also committed to paying its employees fairly, starting its employees at $13 an hour. Livesay has been involved in advocating for higher salaries for restaurant workers around the country. He points out that although some servers in the U.S. make a comfortable living, that’s not typical.

The problem lies in the minimum wage for tipped workers, which is only $2.13 an hour, unchanged since 1991. Tips are supposed to make up the difference, bringing that salary up to a living wage. But the reality is that the national median wage for servers is $9.01, according to the U.S. Bureau of Labor Statistics. That exceeds the minimum wage in Texas but is not a living wage, especially for restaurant workers with families. Restaurant workers living in Austin would need to make at least $13 an hour to meet their basic needs, according to the Austin City Council.

“It’s not about the kid in college working at the steakhouse,” Livesay said. “It’s just not. It’s about the 29-year-old woman with kids who can’t find daycare and so she works nights. The most important thing is that people should be paid enough to be able to pay their bills, pay their rent, have food on the table and not be on welfare.”

Although her workers like her new policy, Sanitchat is waiting to see if customers accept it. She said the overall feedback has been good. Several of Thai Fresh’s customers recently said the new policy saved them the trouble of calculating the correct tip.

“(The policy) saves the customers money anyway,” said Nina Fitzgerald, who was having lunch recently at Thai Fresh. She and her friend Ellen Crady said they paid less for their lunch, despite the higher menu prices, because they didn’t feel obligated to tip excessively to make sure their server was paid fairly.

But Both Thai Fresh and Black Star Co-op get some negative responses from customers who feel tipping gives them some control over the service they get. Livesay said over the years he has gotten comments on Yelp from customers who thought their service suffered because Black Star’s staff isn’t working for tips.

Livesay dismissed those concerns.

“(Customers) never had any control,” he said. “It was just the illusion of control.”

Rebecca Steen, a manager at Thai Fresh, agrees. She said it’s almost impossible for management to guess the reason for a low tip.

“If someone has an issue, I’d much rather have them come talk to me,” she said.

Still, whether the movement will continue to grow in Texas is an open question. Richie Jackson, chief executive of the Texas Restaurant Association, said many restaurant owners are interested in the movement, but they’re holding back from making any big changes.

“I would say it’s a work in progress at this point,” Jackson said. “One thing I can say about the (restaurant) industry is they’re very innovative, and if customers accept it, if customers like it, I think you’ll see wider spread adoption.”

But ultimately, Sanitchat said, her goal to end tipping is not so revolutionary.

“We’re just more like a normal business now,” she said.