Tipping the Scales

by

Community

Local restaurants employ new models of gratuity to stay on top of rising food costs and general inflation

Between a worldwide pandemic, supply chain and inflation issues, and a reckoning from service industry workers clamoring for better pay, restaurants big and small have had to quickly adapt to retain staff and stay competitive in an industry turned upside down. For many of Lexington’s local eateries, this has led to not only better hourly wages but more efficient methods of tipping as well.

Among those on the forefront of these changes is the North Limestone eatery Pearl’s, which has operated with a 20% gratuity charge on all receipts. According to owner Colleen Mahan, this charge was implemented in the spring of 2020 and applies to both dine-in and carryout orders. Signage explaining the policy is prevalent throughout the restaurant, in addition to being printed on receipts and regularly mentioned by staff, which pools and splits the tips. Per Mahan, 99% of customers and all staff have supported the change.

“Even knowing the policy, a lot of people will still tip on top of that,” says Mahan. “We first started the policy early in the pandemic, when we were offering carryout service only, as a way of guaranteeing tips for our staff. It’s been received well by both them and our customers, so we’ve stuck with it ever since.”

The Jefferson Street restaurant County Club is also operating with a 20% gratuity charge on all receipts, a change co-owner Johnny Shipley made in April 2020. Other than the occasional unhappy customer, he says everyone has supported the change, including long-time regulars and employees.

“Even before the pandemic, this is something we were considering,” Shipley said, referring to the tipped minimum wage system as “archaic.” “Kentucky is one of only a few states still holding it down at $2.13 per hour – and even with that you’re only able to distribute tips to the front of the house. Switching to a service charge and dropping all tips allows us to distribute that money evenly among our entire staff, who all get the same base pay of $15 as well.”

While establishments like Pearl’s and County Club are implementing their gratuity as a separate charge on all receipts, other places are instead adding that same percentage into the cost of their menu items. One such business doing the latter is Rise Up Pizza, located inside of Greyline Station. Opened in March 2017 as a food truck by Matthew Lyons-Evans, Rise Up launched a brick-and-mortar space in Greyline Station last summer after a successful Kickstarter campaign raised nearly $11,000 to purchase the equipment necessary for the expansion.

After receiving customer pushback from a 20% gratuity charge similar to Pearl’s, Lyons-Evans moved Rise Up to build the 20% gratuity into the cost of its pizzas, after noticing that many customers take their pizza to Greyline Station’s common eating areas or other bars or businesses to eat, rather than sitting at one of his six barstools. For example, a cheese pizza that was $10 before implementing the policy was $12.50 with the separate service charge, but by building the charge into the product cost, they’re able to bring the cost down further to $12.

“Rather than a gratuity or service charge, we handle it more like a profit share,” says Lyons-Evans. “I do the math every week in a spreadsheet with payroll to figure out how many pizzas we sold before splitting it among all the employees based on how many hours they worked.”

According to Lyons-Evans, the profit sharing allows tips to be spread more evenly among employees based on their time worked rather than if they had more high or low volume hours on the clock. He went on to say that this method results in shares between $5 and $10 per hour on top of the already base wage he offers all workers.

“As someone who has come up as a server and worked [just] about everywhere in a restaurant, the guesswork behind what it takes to be in the service industry is so frustrating to me,” says Lyons-Evans. “It’s why the industry is known for having so many toxic and ugly work environments. That’s why I’m a very good tipper when I go out, even though I’m mostly against it. It’s just a way for restaurant owners to pass the cost of labor on to their customers.

“We’ve fooled ourselves into thinking we tip based on the level of service, but what does service really mean? Here at Rise Up, service is the act of making the pizza, which in itself is a difficult and skilled job. My employees have to stand for a long time in front of a hot oven and have to monitor every detail. It’s something I couldn’t imagine paying less for. Labor is easily my biggest expense, but the second I’m able to pay more, I will.”

Per Lyons-Evans, customers have been more receptive to the new policy and often try to tip more even though the restaurant’s policy is to turn it down. His employees appear to appreciate it, too. As recently as December, Lyons-Evans polled his workers on their support of a 20% gratuity policy, and the results were a unanimous “yes.”

Despite struggling with his brick-and-mortar space in its first year, Lyons-Evans takes pride in being able to offer a living wage for his hard-working employees. He also remains hopeful that Greyline Station, which opened in November 2020 to lots of buzz that quickly fizzled out to less foot traffic than expected, will start picking up steam as more people discover the open-air market on the city’s north side and all it has to offer – pizza pies included.

“I spent a lot of time talking with different restaurant industry folks throughout the pandemic, and we all agreed that something needs to be inherently changed from the ground up to better the workers who make these restaurants run,” says Lyons-Evans. “This is my small attempt to change how restaurant workers are treated and compensated.”