Restaurants have started using 'living wage' surcharges to raise servers' incomes

Amid the push for restaurants to pay their employees a fair wage, certain restaurants are trying out a unique idea: Tack on a fee to customers.

Restaurants Unlimited, Inc., a national franchiser with 20 restaurants in 44 locations, recently started charging customers a 1% “living wage” surcharge.

And in New Hampshire, Hermit Woods Winery has started adding a 3.5% surcharge in addition to its $12/hour minimum wage.

The trend suggests a departure from the traditional conversation surrounding wages.

While restaurant owners have felt compelled in recent years to hike up servers’ wages, which normally are well below the hourly minimum because the difference gets made up in tips, some locations are seeing surcharges as another option for just compensation.

“Some of our employees are in school or just out of school and have college debt to pay off while others have families to support, two of whom are single mums,” Bob Manley, co-owner of Hermit Woods, recently told Fosters. “If they’re going to work hard to help us grow our business, we want to make sure they have the resources to afford to live.”

But the group that has the most to gain from the strategy might not be as enthusiastic as hoped.

One employee at Henry’s Tavern in Portland, Oregon, who chose to remain anonymous, told their local Fox station that the policy creates an uncomfortable interaction with their guests.

“We’re the frontlines and having to talk to the customers and explain what the charge is, even if we don’t agree with it,” she said. “Yeah, I’d like them to come down here and talk to the customers themselves.”

Restaurant billKPTVA bill with the added surcharge from Henry’s Tavern, in Portland, Oregon.

In 2013, a sushi restaurant in New York City made headlines for its radical departure from the typical restaurant business model.

Instead of paying workers well below minimum wage and expecting diners to make up the difference in tips, staff at Sushi Yasuda were brought on to the regular-wage payroll. Diners were told not to tip.

“Following the custom in Japan, Sushi Yasuda’s service staff are fully compensated by their salary. Therefore gratuities are not accepted,” the restaurant started printing on its bills.

Restaurants Unlimited didn’t immediately respond to Business Insider for comment, so it’s unclear how many of its 44 locations have brought on the living wage surcharge, or whether it is an ongoing plan or just a temporary experiment.

Even if servers may reap the benefits of a living wage surcharge, customers may think they’re essentially tipping twice — not an easy conversation to have during what they’d like to be a pleasant meal.

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