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Diners inside Palace Kitchen

Image: Amos Morgan

Why is this happening now?

The City of Seattle’s historic $15 minimum wage, which began its phase-in April 1, 2015, forced many restaurant owners to take a look at their books. And while assessing how to deal with rising overhead, some began to rethink tips, which had for years created pay discrepancies that favored front-of-house employees.

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Making Up the Difference

The money to pay higher wages—not to mention to cover for lost tips—has to come from somewhere, and restaurants basically have one of two options: raise prices or add a surcharge to each meal. Here’s who’s doing what.

Higher Prices:

Ivar’s Salmon House/Acres of Clams
When:  April/July 2015
By how much:  21% 

Lionhead
When:  Upon opening, in August 2015
By how much:  Roughly 15%*
Why Raise Prices?  “Why charge one price and then add 20 percent if that money isn’t going directly to tips? It seemed a lot simpler if I just raised prices. Then there’s no issue, and I can just put that wherever I need to in my business.”  —Jerry Traunfeld, owner-chef of Lionhead 

*Because the no-tipping policy took effect with the restaurant’s opening, it’s more accurate to say that the higher cost of overhead was “baked in” to prices.

Surcharge:

Tom Douglas Restaurants (The Carlile Room, Palace Kitchen, Dahlia Lounge)
When: February 2016
How much: 20%

Ram Restaurants
When: January 2016
How much: 19% 

Renee Erickson Restaurants (The Whale Wins, the Walrus and the Carpenter, Barnacle)
When: May 2015
How much: 20%
Why Add a Surcharge?  “If we raised prices and someone looks up the price of our oysters on our website, they might wonder why they were so much more than someone else’s.” —Renee Erickson

The First to Go Tipless

The same day that the minimum wage increase took effect, Ivar’s rolled out a then unheard-of policy at its Salmon House location: The tip line would be removed from checks. But to pay for an immediate bump to at least $15 for all employees, including servers, prices would increase by 21 percent. The plan expanded to the company’s Acres of Clams spot on July 1.

15%

...is the breakeven point for service gratuities. If the percentage is higher, customers are more likely to accept the increase built into the price of the dish. If the percentage is at or below that amount, they’re more likely to accept it as a separate service charge.

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