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

The owners of a Portland restaurant swapped tips for a 22% service charge on all checks.
They have also increased the lowest wage to $25 and are offering health insurance for all employees.
The owners of a nationally recognized gourmet Russian restaurant in Portland, Oregon have eliminated optional gratuities on their guest checks in favor of a 22% service charge on all orders.

In a statement on his website explaining the policy, Kachka says that “tipping, in its most innocent form, creates inequity between ‘front of the house’ and ‘behind the house’ workers, and in 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 measure softens the normally variable income of traditional tips and helps provide a $25 minimum wage and health insurance to all employees.

“With inflation with staff shortages, with more challenges with guests,” she said. “This started to be less and less of a ‘nice to have’ and became a ‘we need to have’.”

While critics have commented that they would like to reserve the right to tip less than 22% to express their displeasure with poor service, Morales told Insider that those diners aren’t really your typical Kachka clientele.

“Our clients on average leave 22%, which is how we got to that number, so in fact your bill will be exactly the same as before,” she said.

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

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

If anyone falls short of this arrangement, it’s front desk staff, who can sometimes earn more than owners or chefs in some restaurants. Meanwhile, the big winners here are the administrative staff, who typically receive little to no additional income from tips.

Morales said that Kachka’s servants have had several months to consider the situation and look for higher-paying positions elsewhere, but so far no one has resigned.

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

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

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

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