Chicago Restaurants See an Opportunity to Phase Out Tipping

The COVID-19 pandemic has devastated the hospitality industry in Chicago and across the country for more than a year. According to the Illinois Department of Employment Security. numbers, the state lost 216,500 hospitality jobs between January 2020 and January 2021.

During this economic uncertainty, restaurant operators have reassessed their business models, while workers have cried for change. Buoyed by energy from last year’s Black Lives Matter protests, workers began raising their voices about workplace issues. Among those concerns in Chicago, the upheaval has revived an issue that’s been hotly contested in the restaurant world: tipping.

A recent Tribune story stoked online debate, as the topic stirs a variety of opinions within the service industry. Last year, the owners of Honey Butter Fried Chicken, a counter-service restaurant that eliminated the practice years ago, made a well-intentioned Instagram post about tipping’s racist and sexist origins. But given the tensions brought on by the pandemic, a wave of discussion and backlash emerged on the internet. Some doubted owners Josh Kulp and Christine Cikowski’s sincerity. Others falsely claimed that eliminating tipping provides cover for unscrupulous owners to direct money from newly created service charges into their own pockets, a myth perpetuated by restaurant lobbyists.

The restaurant industry in the U.S. has long relied on a system of tip credits that allow owners to use servers’ tips to fill the gap between a worker’s base pay (often referred to as a subminimum wage) and the standard wage as required by law. Many restaurant owners have argued that changing that system would be too costly, forcing them to increase prices to an extent that diners would find unacceptable. Some also express concern that without the incentive provided by tipping, quality of service would decline.

Local restaurant owners who have made the switch, however, say neither of those scenarios have come to pass. Chef Paul Fehribach is part of a growing group of local restaurateurs who have eliminated tipping. Fehribach runs Big Jones in Andersonville, a nationally known Southern restaurant that ended tipping in June 2020. He added a 10 percent surcharge for online takeout and 20 percent for dine-in meals. This allows him to pay servers $18 to $25. While he’s motivated by the ability to pay his staff a living wage, the tipping debate for Fehribach comes down to power.

“I think the biggest problem with tipping for me is the power that it gives a customer over one of my employees,” Fehribach says. “It’s a power that’s not appropriate in any other business. Why it’s appropriate in the restaurant business, I don’t know.”

That dynamic creates an environment for workers that’s ripe for abuse by both employers and customers, Fehribach says, citing the recent example of Tank Noodle, a Vietnamese restaurant in Uptown that is alleged to have stolen wages and illegally taken shares of workers’ tips. He believes that American restaurant culture promotes a submissive form of service that empowers customers to treat employees as less worthy than themselves, dangling tips as both a promise and a threat.

Fehribach tracked his servers’ tips, along with other metrics, since 2015 and says those numbers often don’t reflect an employee’s performance in the dining room — especially when that server is a woman, a Black or Indigenous person of color, or is perceived as being LGBTQ.

The dynamic is different for traditional restaurants with table service, like Big Jones, and casual counters like Honey Butter and Bungalow by Middle Brow in Logan Square. Middle Brow co-owner Pete Ternes has slowly eased his restaurant into a no-tip model over several years.

“Tips allow you to rely on customers to effectively pay your labor costs,” says Ternes. “It’s a little bit backward: Like every other industry in the damn world, we should be pricing labor costs into our product. If everyone did that, we’d have to design a business plan around it.”

Ternes had initially planned to open Middle Brow, a pizzeria and brewpub, without tipping, but changed his mind at the last minute out of concern for how customers and workers would react. Middle Brow has since added a 20 percent service charge for takeout orders, 15 percent for items made on-site, and 10 percent for grocery items. Despite his initial worries about blowback, Ternes has been pleased to find virtually no negative reactions from patrons or employees. Instead, his staff can now focus on operating as a team instead of worrying about whether or not the system is fair.

An operator’s mentality always comes from a customer’s perspective, says Ty Fujimura. Fujimura owns a few restaurants with different service models, some with table service, some with counter: West Town sushi spot Arami, Small Bar in Logan Square, and Michelin-starred restaurant Entente.

He supports raising the minimum wage and includes an optional 2 percent surcharge to cover health insurance for employees, but he says he’ll never mandate a tip in the form of a service charge. He also says that he hasn’t observed a gap in tips based on race or ethnicity at his restaurants.

“[Tipping] is one of those customs that we know is imperfect, but is just kind of part of the experience, to a certain degree,” he says.

He adds: “I don’t think that tipping is ever going to be a perfect science.”

• Critics call tipping unfair and archaic. Pandemic emboldens Chicago restaurants trying to end the practice [Tribune]
• Gratuity (Still) Not Included [Eater]
• The Case Against Tipping in America [Eater]
• The Racist History of Tipping [Politico]
• These Chicago Chefs Support Raising Prices If the Minimum Wage Increases [ECHI]