A Portland restaurant eliminated tipping, added a 22% service fee, and raised its lowest wage to $25

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  • The owners of a restaurant in Portland have swapped tips for a 22% service charge on all checks.
  • They also increased the lowest wage to $25 and are offering health insurance for all employees.
  • Co-owner Bonnie Morales said the new policy is more equitable for kitchen and dining room workers.

The owners of a nationally recognized Russian gourmet restaurant in Portland, Oregon, have ended optional tips on their guest checks in favor of a 22% service charge on all orders.

In a statement on its website explaining the policy, Kachka says “tipping, at its most innocent, creates inequity between ‘front-of-house’ and ‘back-of-house’ workers, and at its most sinister, continues a tradition of racism.”

The new policy began last week after several months of planning, co-owner and head chef Bonnie Morales told Insider.

The move smooths out the ordinarily variable revenue from traditional tipping, and helps her provide a minimum wage of $25 and health insurance to all employees.

“With inflation with staffing shortages, with more challenges with guests,” she said. “This started to become less and less of a ‘would be nice to have’ and kind of turned into a ‘we need to have.'”

While critics have commented that they would like to reserve the right to tip less than 22% to express dissatisfaction with poor service, Morales told Insider that those diners are not really Kachka’s typical clientele.

“Our customers on average leave 22%, which is how we arrived at that number, so in fact, your bill will be exactly the same as it was beforehand,” she said.

Other critics of mandatory service charges have also said that restaurants should instead raise the prices of specific menu items, but Morales argues that diners in the US have a hard time digesting those increases, even when the final bill comes out even in the end.

In other words, years of culinary tradition have psychologically conditioned most people to have a particular attachment to paying for service separately.

If anyone is getting shorted in this arrangement, it’s the front-of-house staff, who can sometimes earn more than the owners or head chefs at some restaurants. Meanwhile the big winners here are the back-of-house staff, who typically receive little to no extra income from tips.

Morales said Kachka’s servers have had several months to consider the situation and look for higher-paying positions elsewhere, but so far nobody has quit.

“Not a single person said that I deserve to make more than the folks in the kitchen or that my job is harder. Everyone recognizes the inequity, and it’s something that’s sort of an unspoken truth of the industry,” she said.

Although the actual policy has only been in place for a week, Morales is optimistic, having run parallel payrolls since September in order to model the effects on Kachka’s finances.

“The only thing that wasn’t involved in that math is Omicron,” she said of the coronavirus variant, which is again disrupting businesses across the US and around the world.