'No tipping!': Restaurant creates tip-free model by paying workers a living wage, shares profits with workers

Editor's note: This article was originally published on January 6, 2022. It has since been updated.

The service industry is notorious for not paying a living wage and this, in turn, leads to workers depending on tips to make ends meet. With any product, its pricing accounts for the labor involved in making the product but a majority of restaurants in America transfer the cost of labor onto the customers in the form of tips. Some restaurants explicitly guilt trip customers to compensate for their low wages. One restaurant from San Francisco is shaking things up by declaring itself a 'tip-free' place. Zazie is a popular brunch spot in the city and is paying its staff a living wage with benefits, and a share of the profits as well. The restaurant has increased the cost of items on the menu by 25% but the response from customers has been very positive. "So far we haven’t had any complaints," said owner Jennifer Piallat, reported SF Eater. "In fact, one customer said she expected sticker shock, but that the menu still looks reasonable."

Piallat said the idea was to bring a sense of equality to the front and back of the house with a profit-sharing model. Piallat has also implemented a new system that sees all employees will get a raise with servers getting a three to seven percent increase and the back of the `house getting a 35% boost. All employees at the company will get a living wage ($15-20/hour), paid sick leave, fully funded health and dental insurance, paid maternity/paternity leave, and a 401(k) plan. Piallat believes the staff working at the restaurant deserve to be rewarded for their efforts. "The only person losing money is me," jokes Piallat laughs. "My accountant doesn’t like it, but I didn’t want to risk anyone being dissatisfied."

Piallat is aware that the rise in prices could see some customers could move away from Zazie on account of it being too expensive but she believes it works out for the best as the total wait time for brunch goes down. "Maybe they’re the kind of people who wouldn’t have tipped 20 percent in the first place," said Piallat. "Or maybe they’re just not doing the math. But hey, if that means the brunch wait on the weekends goes down to 45 minutes instead of an hour and a half, that’s okay with me."

One customer sent an email disagreeing with the new system, arguing that tips were a way of reflecting the quality of the service and that the new system meant the restaurant wouldn't understand if their service was good or poor. "The woman said I was taking away her control. She knew if her service was good, while I didn’t," said Piallat. Another difference is that day-to-day cash reserves are down because tipping isn't allowed. On the whole, it has been positive. Piallat says customers are happy and one of the main advantages is that they love just signing the bill and not having to think. Zazie has seen an increase in guests and the sales are up 28 percent.

Piallat believes complete transparency in what everyone earns has made it a very healthy workplace. As part of the new system, she posts a spreadsheet with all of the numbers. "Everyone sees what everyone else makes," she said. "There's no shadiness about it." Piallat's new system sees her profits fall, but she feels it's only fair. "Eventually I'll inch prices up, but if someone's going to hurt for a year or two, I want it to be me and not them." The place is currently closed for winter repairs and has given their workers a much-deserved paid vacation.