This year has brought a lot of focus on the topic of tipping. There are times when you may feel delighted to reward your favorite barista with a generous tip (after all, he makes your iced coffee exactly how you like it!), there are other times you find yourself annoyed when a pre-selected tip option is presented and no special service was provided. We get it! Even people who tip regularly experience confusion and fatigue around tipping, unsure why they're being asked to tip or how much is usually expected or how to exit out of a pre-selected tip screen as they check-out. Some businesses apply service charges or "automatic gratuities" to get around this issue, not without experiencing from backlash, while others are making a bold move of going tip free.
Lassi & Spice has accepted tips from customers since we opened our doors in 2019, but we are making a change. Customer tips have always gone 100% to our team through a tip pool: the total tips that come in during a period are divided by the total hours worked by the team, and everyone ends up getting the same amount per hour. Tips usually represent a $2-3 per hour bump to paychecks above their hourly wage, which is fairly low from an industry standpoint. Part of this is due to our being a counter service cafe, where our team is not waiting on tables. In this environment, tips are requested before the order is made, so they don't reflect the service received. The rest is due to the fact that many of our customers come from countries where tipping 15-20% is not standard, so they tip much lower and often not at all. This creates an imbalance of what customers ultimately pay for their order that is not based on quality of service, complexity of the order or anything in particular except culture and, in limited circumstances, ability to afford to tip.
Nonetheless, like for many restaurants, tips have felt like a 'necessary evil'. Tips are attractive to businesses for a few reasons: when customers tip, it partially shifts the burden of paying employees from the employer to the customer. In a competitive industry with razor thin margins, tips help offset payroll expense, which is typically the highest cost to run a restaurant. As a result, menu prices can stay lower with the expectation customers will contribute on top of the bill. In addition, payroll tax expense incentivizes tips, which are not taxed like wages. And specifically in Seattle, small businesses are able to meet the minimum wage of $19.97 an hour through a combination of a base wage ($17.25) plus tips earned by employees, or plus a contribution to the employees' health insurance coverage. This option, called "Total Compensation," goes away in January 2025, when businesses of all sizes will have to pay the same minimum wage regardless of tips or benefits provided. This change will bring about a steep increase to the minimum wage currently paid by small businesses in Seattle of ap
proximately 20%. There is a lot of discussion within the industry around what will result from this increase. A fellow small restaurant owner wrote this piece if you're interested in a deeper dive.
Tips have their cons as well. Tips create unpredictable paychecks for employees. Regardless of hours worked, tips always vary and therefore the paycheck will vary. Tipping in counter service also creates awkward customer interactions, since we frequently must call customers back to the register to complete the tipping screen. We cannot complete a transaction and charge a card until a tip has been entered. There is research showing that employees of color generate fewer tips, and that tipping culture promotes racism, misogyny and other forms of abuse. While Lassi & Spice works hard to remove these imbalances, participating in tipping feeds into a problematic system.
We've therefore opted to eliminate tips starting Saturday August 17! To smooth out our team's wages, we are increasing each team member's hourly pay by $2.50 per hour to make up for lost income from tips. Our team was surveyed and nearly unanimously opted for this option. The increased payroll cost resulting from these raises will be made up by some price increases on our menu. We've opted to balance out some of the price increases with price decreases for menu items where our costs have decreased since the pandemic (chais, coffee). And we're thrilled to be able to offer alternative milks at no additional cost, meaning our vegan and lactose intolerant friends won't face a penalty for visiting.
Bottom line: We are paying our employees a competitive wage so you don't have to. You will no longer be called back to the register for that final, awkward step. If you never tipped when you've visited us, your cost to visit will likely increase. If you tipped in the 15-25% range, your cost to visit will decrease. We are excited to balance everyone's experience out, and to remove the problematic unknown from our team's compensation, We appreciate your support as we make this change!
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