William Oliver’s Publick House, a pub in Fort Collins, Colorado was already unusual compared to others in the food industry. Employees got health care from their employer, 401(k) retirement plans, paid time off, and profit-sharing bonuses every year.
“One of the things I’ve said since we opened is that I want to have a place that is for people who want to do this as a profession,” said Ryan Wallace, owner of William Oliver’s. When he opened it with his wife in 2013, they had both come from more typical 9-to-5 jobs with those kinds of benefits as the norm. “We wanted to start a company that had a lot of those same things,” he explained. Those kind of offerings attract a certain kind of person: the first employee they hired came with 37 years of experience. “I wanted to make sure I was creating a place where people of that level were like, ‘This is a place worth going.’”
But one thing still nagged at him: the tipping model. “I never liked the idea of tipping,” he said. “It shouldn’t be on a customer to decide whether or not my employee makes enough to pay the bills.” Not to mention that deciding whether a server is doing his or her job well is something he feels should be left to him or a manager, not the customer. “Customers just don’t have the knowledge at their fingertips to determine the worth of my staff,” he explained.
So he started doing some research into tipping. What he found is that how people tip isn’t really related to performance anyway. The quality of service only accounts for about a percentage point in tip size differences. Most Americans don’t even leave the standard 20 percent, while some typically leave nothing at all, making life difficult for servers whose minimum wage is often lower than everyone else’s based on the idea that they make up the difference in tips.
That research sealed the deal. At the beginning of the month, William Oliver’s became the first restaurant in Fort Collins to end tipping. Any tips that customers insist on leaving will go to a local charity.
Servers will now make at least $15 an hour and pay will go all the way up to $25 an hour. That pay has been adjusted to take the loss of tips into account. “Nobody will make less than they already made,” Wallace said. “I’m paying them the same, I’m just changing how they get it.” He looked at what servers got on top of wages in average tips and will absorb that into their base pay, which is determined by their years of experience, performance, and knowledge. He’ll also change the annual profit-sharing bonuses to quarterly ones to make it spread out across the year.
The change should benefit everyone. “It really gives me the ability to compensate my employees in a much better and more consistent manner than tipping,” he explained.
Prices at William Oliver’s will go up, but he said they won’t be very noticeable and, for generous tippers, might even constitute a decrease. For example, a $4 beer will now be $4.50 — but that’s less than it would have been before with a dollar in tip.
Critics often contend that tipping is an important way for customers to ensure good service, and without it customer service will decline. But Wallace balks at that notion. “That’s kind of a dig at my staff,” he said. “You think that your tip is the only reason they’re doing what they’re doing, so that you can give them few dollars? That’s kind of a dig at their skills and their value to me.”
By ending tipping, Wallace has become part of a growing trend that has cropped up in a variety of places, from restaurants in Philadelphia and Pittsburgh to bars in Portland, Oregon and Washington, D.C. to diners in Wisconsin to high-end restaurants in New York City to coffee shops in Minnesota and barbecue joints in Kentucky. “I think it’s something that probably everyone could do,” Wallace said.