As restaurants reopen their doors and look for workers to fill long-empty positions, some are making permanent changes to the way they distribute tips to their employees in an effort to make wages fairer and jobs more attractive.
Paul Bognar, president and COO of restaurant operations group Service Inspired Restaurants, which owns and operates franchises such as Jack Astor’s, Scaddabush and Canyon Creek, said the company made two changes in recent months to help improve the wages for back-of-house workers, which have been especially difficult to find recently.
The firm permanently boosted the base pay for back-of-house workers by a dollar or two, said Bognar.
They also raised the percentage of tips that servers have to chip in for support staff (including cooks), from 4.5 to 5.5 per cent in urban locations, and from 3.5 to 4.5 per cent in suburban locations.
It’s a change that makes a small difference for servers, but a big difference for everyone else, said Bognar.
“It’s helped a lot” with the company’s hiring struggles, he added.
James Rilett, vice-president for central Canada for industry group Restaurants Canada, said that the pandemic, like many other trends, has only heightened the move in the restaurant industry towards fairer tip distribution models.
These changes are usually aimed at improving pay for back-of-house workers, he said, and are easier to implement in new restaurants than in established ones.
Tip distribution models vary greatly from restaurant to restaurant, but generally the largest percentage goes to servers, said Rilett. However, in recent years the percentages doled out to other employees have been increasing, he said, in part to attract back-of-house staff, who have always been more difficult to hire.
Ideally, Rilett said an employer should be able to sit down with their staff and come up with a system everyone can agree on.
Rebecca Gordon, a spokesperson for the Canadian Restaurant Workers’ Coalition, said that in the most common tip distribution model, the server tips out a certain percentage of their earnings to the other workers, usually a total of between one and five per cent. However, it’s often not a percentage of the tips they earned, but of the sales they made, Gordon said. That means if a customer doesn’t tip, the server still has to pay a percentage of that sale to the other employees, in essence from their own pocket.
Regardless of whether servers give a percentage of their tips or their sales, there is often a significant hourly pay gap between back-of-house workers like cooks and dishwashers, and front-of-house workers like servers, she said.
Even before COVID-19, some employers were moving to close that gap, said Gordon. Some raised the percentage that servers had to give for support staff. Others chose to pool all the tips and then dole them out based on hours worked, which Gordon believes is a fairer way to share tips that results in better employee retention.
“For the most part … if you have a good team of people, it works out really well,” she said.
That method became more popular during the pandemic because of restaurants pivoting to takeout, said Gordon, though she’s not sure it will take over the industry anytime soon.
Toronto’s Bar Volo and Birreria Volo have used a tip pool for several years, though they’ve made a few changes along the way, said co-owner Julian Morana.
Any tweaks to the tip pool percentage distribution has been in an effort to eliminate the wage gap between front-of-house and back-of-house workers, said Morana.
“Rome wasn’t built in one day,” he said.
During the pandemic, they decided to start distributing tips as part of workers’ paycheques, said Morana, meaning taxes and other premiums are deducted. They have also raised base wages for workers amid an industry-wide bottleneck making it more difficult to hire.
He’s also considering averaging the tip pool bi-weekly so everyone would get the same tip percentage regardless of which day of the week they work.
Sylvain Charlebois, a professor in food distribution and policy at Dalhousie University, said during the pandemic more restaurants are looking at a variety of ways they can make their jobs fairer and more stable for employees, and changing their tip distribution is just one option.
Tip pooling doesn’t just benefit back-of-house workers; it can also protect servers and make their wages more consistent, said Charlebois.
They’re just trying to spread the wealth a little bit more,” he said. “Democratizing tipping is going mainstream now.”
Restaurants may be faced with pushback from employees, especially servers, when they try to change how tips are distributed, said Charlebois. The business may even lose some employees. But if they can make the tipping structure part of a positive workplace culture, in the long run it can benefit everyone, he said.
There are a lot of different ways to distribute tips, said Charlebois, and restaurant owners have to walk a fine line between ensuring fairness and rewarding individual success.
“You want fair wages, but you also want to motivate your employees.”
In an industry currently “desperate” for workers, Charlebois thinks the industry has no choice but to make “democratizing” tips a widespread practice.
Some restaurants have taken this ethos several steps further and either eliminated tipping altogether in favour of higher menu prices, or by instituting a mandatory service charge. One example is Toronto’s Richmond Station, which last year abolished tipping but increased prices instead. Co-owner Carl Heinrich previously told the Star that he changed his tip distribution model around five years ago, but regrets not abolishing tipping straightaway back then.
“We were trying to right the wrongs back then and we should have gone all the way,” he said.
Whenever a restaurant eliminates tipping altogether, or institutes a mandatory service fee, that often gets a lot of attention, said Gordon, but it doesn’t always stick. That kind of radical change is not a silver bullet, she said, and needs to be done in consultation with the staff. She noted that higher pay isn’t the only thing restaurant workers are after — they’re also looking for stability, benefits and better hours.
While some restaurants have abolished tipping altogether, Charlebois said consumers aren’t always on board with that route.
A June report by the Agri-Food Analytics Lab at Dalhousie University in partnership with Angus Reid found that many Canadians like the perceived autonomy of tipping culture, and don’t want to forgo that completely.
Clients are “empowered” by tipping culture, said Charlebois, “but they don’t necessarily see the dark side of tipping.”
— With files from Karon Liu
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