Tracy Allen’s latest Cashbox column, as published in the August/September 2015 issue of Barista Magazine:
To Tip or Not to Tip
The emerging U.S. trend toward eliminating tipping while paying baristas a higher hourly wage is gaining traction.
Andrew and Amanda Kopplin opened Kopplin’s Coffee in St. Paul, Minnesota eight years ago. As sole owners, they make all decisions on menu planning, pricing, inventory, wages and scheduling — the works. They juggle a lot of priorities to keep their business running smoothly. Last year, they decided one factor in particular was complicating their operations: tipping.
”Tipping rewards employees who work in the mornings because that’s when we’re busy,” Andrew explains. “But it doesn’t reward employees who clean the whole shop afterwards because that’s not ‘tippable’ work.” Which meant the Kopplins had some trouble covering closing shifts.
Andrew adds that the unpredictable income provided by tipping can be stressful and distracting. “If you show up for work, you shouldn’t have to worry beyond that. I don’t want employees worried about money the entire time they’re here.”
So in January, after talking with their staff, Andrew and Amanda swapped the tip jar for a living wage. “We wouldn’t have done it if everyone wasn’t on board,” says Andrew. Amanda spearheaded the effort and worked out the nuts and bolts. Now every employee starts at $12.50, which required a 20 percent increase in menu prices, on average. Most coffee drinks rose about $0.75 in price. — nothing that will break the bank for regular patrons — amounting to their regular tip (or likely, even less).
Before the switch, the Kopplins looked at wages in other industries that are typically staffed by 20 somethings, and talked to their employees about what’s livable and what’s not. They also checked out a recent MIT study on living wages, which listed St. Paul at $9.67 per hour. “Employees were already making $10, and we wanted to make it more livable than the minimum.”
On the other hand, Andrew adds, “We could sit all day and say, ’Wouldn’t it be cool to make $45,000 as barista. But long careers in food service are not yet common in the U.S. At this point, we think it’s cool to be able to do something sustainable, to move the needle in the ‘career’ direction, whether that’s ever possible or not. Right now it’s a great, flexible job for students and those who are in a transitionary place in their lives.”
His employees not only agreed, they were downright relieved. Some even got a little teary eyed. “Tipping is kind of weird when you think about it,” says Andrew. “Outside of foodservice, no one pays more than what something costs. Tipping means I’m asking customers to help me pay my employees, which is awkward even though it’s the current norm. There’s a little bit of guilt in there for me and the customer, no matter how you slice it. And my employees are getting paid on a whim with each transaction. It’s really refreshing for all of us to eliminate competition for the busy shifts and the gray areas, and the price is just the price, you know?”
But Andrew admits he was worried about raising prices. “People don’t like change, and we’re not in a big, fast city where people don’t pay attention to prices. People are thrifty here. We are high end, but we don’t ever want to be out of reach.”
The Kopplins also did a few informal focus groups with regular customers before making the change, and the idea of raising prices to raise wages was readily embraced. It worked because people on both sides of the counter came together to do something logical and doable. “It’s been really fun to make this change, but we couldn’t have done it without the community,” says Andrew. “Ultimately, the customers and employees did it. We didn’t impose it, we just suggested it. It’s a great feeling when your customers trust you to do the right thing.”
If a customer tries to tip, the person at the register might say, “You’re already paying for good coffee and good milk, and a good wage. It’s taken care of. It’s covered in the price of your drinks and pastries.” Andrew and his wife are at the shop every morning in case anyone wants to talk about the new setup. But when an employee tells a customer it’s working for them — that’s a powerful message.
If a customer remains adamant about tipping at Kopplin’s Coffee, they are informed that the money will go toward a fund for local charities, to stop the cycle of obligation. And Amanda has put out a guest book, appropriately titled: “You Can Be Grateful Without Money,” for anyone who wants to express gratitude beyond patronizing the shop. It gets regular use from customers. “People remember what you say more than what you tipped on a given day,” says Andrew. And without an implied obligation of monetary thanks, a written “thank you,” is even more genuine.
Other cafes and restaurants are also exploring solutions that don’t put the onus for paying staff on customers. The Packhouse Meats restaurant opened in Newport, KY in January with “no tipping” signs posted prominently in the restaurant and on the menu, and no line for a tip on credit card receipts. Owner Bob Conway said in an article on cincinnatti.com that he got “pummeled” for it on Yelp by people accusing him of taking advantage of employees. But Conway says: “We did it to protect the servers. I’ve heard the horror stories – $3 left on a $100 tab,” he said. “How much a server makes has nothing to do with how hard they work. Servers quit because they can’t make ends meet.”
A new beer hall in Portland, Ore., the Loyal Legion, made national news in June when it announced it will offer 99 different Oregon beers, dishwashers who make $15 an hour and servers who make $18. Beers will be $6. In addition to trying to be more fair to all staff members and pay higher, more consistent wages, owner Kurt Huffman said in an article on kgw.com that one of his goals in eliminating tips is to recruit high-quality servers who aren’t forever chasing the next tip. “We want to have the best-trained, most-informed beer hall staff in the country in America,” he said. “To do that, we have to have people who want some real stability and who are looking to stay around for a while.”
The National Restaurant Association opposes any raise in the minimum wage, defends tipping as “engrained in our American culture,” and a maintains that, if restaurant owners are forced to pay workers more, the cost of dining out will rise and restaurants will close or hire fewer workers. But if menu prices increase to pay employees roughly what they would lose in tips, there is no increase in cost to the business or the customer. Customers are instead putting the same money toward a more stable income for employees by essentially transferring tips to the cost of the meal. Dozens of countries (dare I say, most countries?) outside the U.S. that do not rely on tipping to pay workers are proof that this model works.
As Andrew Kopplin puts it: “If it costs more, charge more. If our shop were only sustainable with tips, it would be a ridiculous business model.” And the proof is in the (coffee) pudding. Six months in, the Kopplin’s Coffee no-tipping model feels normal. The shop’s regulars are still around, and new customers are coming in as well.