No tips policy causes concern
Policy terminated after one day
Local business owner Dave Lund held a public meeting at his restaurant, the Lazy Moose Grille, on Friday, August 8, to take comments from interested parties and to disseminate information regarding a recent change in tipping procedures, and the addition of a service charge on guest checks.
At the beginning of the week, a "No Tipping" notice had been posted via printed table tents in the Lazy Moose as well as Lund's Barnum restaurant, the Lazy Bear. The announcement went on to say an optional service charge had been added to the guest check.
The no tipping policy lasted only one day. It was terminated prior to the meeting, though the service charge on the guest check remains in effect.
Lund called the meeting in Moose Lake due to feedback received from several sources - one telephone call, several in-person comments from customers, and a plethora of comments posted to Facebook.
A small number of past and present employees, an interested observer, and three media representatives attended the meeting.
Terminating the no tipping policy addressed the largest concern voiced by people attending the meeting, however, Lund stated he was open to suggestions as to how to overcome differences in pay scales between servers and support staff. No suggestions were made.
Lund opened the meeting by reading a brief statement about how the no tipping idea had come into being. Lund stated he and manager Jordan Stipp, also present at the meeting, had been discussing the income disparity between servers and support staff for nearly a year.
While researching possible ways to overcome that chasm, Lund said he came across a blog by Jay Porter, owner of the Linkery, a farm-to-table restaurant that served customers for a decade in San Diego, California. Though the Linkery closed in July of 2013, Porter has recently opened two other restaurants in Oakland, California.
He is also a prolific blogger, specifically on the subject of tipping policies in restaurants. Porter's extensive blog begins at http://jayporter.com/dispatches/observations-from-a-tipless-restaurant-part-1-overview/.
Porter's blog states that tipping is a flawed system that rewards servers, which creates a rift between them and support staff including the cook, bus person, dishwasher and others who help make the customer's meal a success.
Lund said this is a challenge for all restaurant owners who operate under the traditional business model.
"When two people come into a restaurant to apply for a job," said Lund in a comment after the meeting, "the restaurant owner has to make a very tough decision. They know only one person is going to be out front, making tips, and the other will be in the back with no similar opportunity."
Minnesota, unlike other states, does not allow a "Tip Credit," allowing servers to be paid less than minimum wage if, combined with tips, the minimum wage standard is met; a "Tip Pool," all tips go in a jar which is subsequently split between all employees; or a "Tip Out," servers giving a portion of their tips to kitchen staff. (Minnesota Statutes 177.23)
It is the responsibility of servers to report their tip earnings to the government for individual income tax purposes, and to the business owner, who must pay withholding tax on that income.
At the beginning of the meeting at the Lazy Moose, Lund explained that a viable restaurant is typically one with proceeds divided into a standard of 30 percent for overhead, 30 percent food cost, 30 percent wages, and 10 percent profit margin.
Adding to the mix of business owner responsibilities is the recent federally mandated minimum wage increase.
As of August 1, the minimum wage for small businesses (annual gross volume of sales of less than $500,000) was raised from $5.25 to $6.50 per hour for 2014, up to $7.75 by August 1, 2016.
The minimum wage requirement for large businesses (annual gross volume of sales of $500,000 or more) was raised from $6.15 per hour to $8 per hour in 2014 up to $9.50 by August 1, 2016.
It is the option of restaurant owners in Minnesota to add a service or gratuity charge to a guest check, only if it clearly and conspicuously notes, pursuant to Minnesota Statute § 177.23, Subdivision 9, "The charge is not the property of the employee."
In comments following the meeting, Lund indicated that table tents and guest checks will continue to be adapted to the specific language of the Minnesota State Statutes, and in response to comments from customers and employees.
Lund also stated that, while the Lazy Moose Grille and Lazy Bear Grille do meet current state wage standards, he is exploring ways to exceed that base wage in a manner that is fair and equitable to all employees.
In a follow-up call Tuesday of this week, Stipp stated verbiage on the Lazy Moose and Lazy Bear table tents had been modified since the meeting.
At the time of this writing, the verbiage reads: "Our staff is compensated with a base wage, plus a commission of sales. All service charges are taxable income to the establishment before they are returned in their entirety to our staff."
"The table tents have changed every day due to feedback," said Lund. "We welcome feedback and are willing to change in response to it."