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The Changing Tipping Culture

PDF California Hotel & Lodging Association
June 2, 2015

Rana Nader gave a webinar on The Changing Tipping Culture for the California Hotel & Lodging Association on June 2, 2015. This presentation focused on tipping at various restaurants in SF and other cities. San Francisco restaurants including Bar Agricole and Tru Normand, along with East Bay restaurants Camino, Comal, and Duende, are abolishing tips in favor of a mandatory 20 percent service charge. Aster is opting to eliminate tips and a service charge altogether, with a plan to raise meal prices. Alimento, a Silver Lake restaurant, is likely the first in the nation to institute a separate line on all checks for discretionary gratuity for the back-of-the-house (kitchen) staff.

California is one of the few states without a tip credit, and perhaps it is no coincidence that the timing of this change is occurring on the announcement that San Francisco plans to raise its current minimum wage of $10.74 to $15 by 2018, the second highest minimum wage increase in the nation (next to Seattle). Some restaurant owners are unhappy about the prospective change because an increase in wages will impact profitability. The Golden Gate Restaurant Association and the San Francisco Bar Owners Alliance have stated that the increased minimum wage could mean $30-40 hourly wages for front-of-house staff, while back-of-house staff won’t see much of a change in their take-home pay ($15/hour works out to $31,000 per year). One thing that remains to be seen is whether San Francisco patrons will prefer service charges or higher meal prices in lieu of tipping. Only time will tell.

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