Service Charge FAQ
Why do you charge a service charge in lieu of tips?
Long overdue increases to the minimum wage on both state and local levels have prompted us to move to a new model of compensation that will be sustainable and fair in the long run for our entire staff, especially as minimum wage continues to rise. Our previous compensation structure (which was similar to virtually every other restaurant in the Bay Area and beyond) was such that the only people seeing raises from minimum wage increases were service staff who were already at the top of our pay scale when tips were factored in.
Across the Bay Area and beyond, compensation for kitchen staff lags far behind their service staff counterparts. Further increases to the minimum wage will only exacerbate this imbalance unless a new approach is taken.
How does compensation for service staff compare to when they made minimum wage plus tips?
On average, our service staff make the same amount per hour in total compensation as they did when they were paid minimum wage plus tips. When we switched to a service charge model, we devised a new compensation model for service staff that consists of a hourly wage along with a revenue share system that allows employees to share directly in each night’s revenue. The hourly wage portion of their compensation varies depending on the quality of their work. By creating a sliding scale, we create the opportunity for growth and advancement, and motivation to excel.
Why did you remove the tip line from the credit card slip?
To eliminate any confusion as to whether a further tip is expected.
Won’t the quality of service suffer?
We certainly hope not. Numerous studies have concluded that there is little to no correlation between quality of service and amount of tip (http://tippingresearch.com/uploads/managing_tips.pdf). Studies have also found that women are tipped better than men, that white servers are tipped better than black servers, and that servers who draw smiley faces on the check or touch their customers’ shoulders during service get better tips (unless they are male servers, in which case the opposite is true) (http://tippingresearch.com/uploads/customer_racial_discrimination10-30-06.pdf).
Every staff member, from dishwasher to cook, bartender to server, is involved in serving our guests. If the dish or cocktail you order comes to the table carefully prepared and in timely fashion, that’s good service, service that results from the efforts of the entire staff.
We believe in what Danny Meyer calls “enlightened hospitality” – that providing good service is its own reward. We want our staff to provide the best possible service, but we want the motivation to provide this great service to come not from the hope of a big tip but rather from pride in a job well done.
It’s worth noting that our neighbors at Chez Panisse, who are known for their excellent service, have employed this model for years.
Why did you choose to charge 20% instead of some other amount?
The service charge percentage is based on the average gratuity at Comal leading up to the switch to a service charge based model. It’s long been common practice at Comal and most restaurants in general to charge a fixed service charge (usually 20%) for parties of six or more – we are simply extending this policy to cover groups of all sizes.
How is the service charge money used?
Service charge monies are used exclusively for employee wages and benefits. Ultimately, this new system costs Comal more in labor costs than the previous one, as we are paying our service staff at a similar level and increasing the pay for our kitchen staff. We feel good about these additional costs because we believe the new compensation system will create a better staff culture with less turnover.
Why don’t you just raise your prices and eliminate the service charge?
We considered doing so, and still hope to do so sooner than later. But it’s a difficult thing to do in a competitive marketplace where the vast majority of restaurants price their menus based on the assumption that their service staff will make a significant portion of their compensation from tips. As more restaurants move to a service charge in lieu of tip (which we believe will happen in the coming months and years), the circumstances will be more favorable to taking this additional step.
In some countries (like Japan), tipping is not allowed. If you leave a tip at a restaurant in Japan, a staffer will likely run after you to return your money. But this system exists across the entire country. Since we are doing something new in a price-sensitive market, we need to keep our overall menu pricing structure similar to the many restaurants in Berkeley and beyond.
It’s important to remember that, regardless of whether we accept tips, charge a service charge or move to “all-in pricing”, the ultimate average cost to the customer will remain roughly the same.