Idaho hasn’t tipped over into the gratuity-free restaurant model — but the conversation is ongoing

Story by Megan Guido | Illustration by Ethan Kimberling 

This story is the first in a series about fair wage issues in the Idaho restaurant and beverage industry. Check out Part 2: The Psychology of Tipping

Fair wages for employees in the food industry—whether it’s working on a farm or working at a restaurant—is a hot topic in Idaho and across the country. Workers are leaving service industries, particularly restaurants, as seen by Help Wanted signs on every other restaurant door. 

Some of those who stay working at restaurants are pushing back on long held norms like sub-par wages. 

Some of these norms are actual laws under the federal or Idaho Department of Labor, and others have been around a long time (like tipping, long hours or pay inequities). Many Idaho restaurants continue to pay below minimum wage hourly, supplementing with tips. 

However, some restaurateurs in the state are practicing what they believe is a more equitable compensation model, called gratuity-free. Not everyone embraces this somewhat controversial model, but these managers and owners say they are working to “even the playing field” for employee wages at their restaurants.

New to stories about restaurant wages? Read the Guide to Tipping Terminology at the bottom of this story.

How the gratuity-free model works

Alex Barham, co-owner of Lodgepole, a high-end restaurant in Moscow, said he and his wife/co-owner, Melissa Barham, moved to the gratuity-free model five years ago. Alex said he doesn’t think they will ever go back to a tipping model. 

“It’s a commitment,” he said. “You have to go all in.”

For Lodgepole’s first year of operation, Alex said they used the typical “front of the house tips out the back of the house,” model. But then they started talking to George Skandalos and Carly Lilly, co-owners of Maialina Pizzeria Napoletana and Sangria Grille in Moscow. Skandalos and Lilly are proponents of the gratuity-free model and use it at their restaurants.

Melissa and Alex Barham, co-owners of Lodgepole in Moscow, decided to use a gratuity-free model in their second year of operation. | Photo courtesy of Lodgepole

“Carly and George reached out to us to start a conversation on pay equity for restaurant workers and the disparity between front of the house and back of the house,” Alex said. “Melissa, my wife, had a realization that we could have an influence on how this industry works locally.” 

Alex and Melissa have worked in the restaurant industry in the kitchen and as servers since their teens and spent time in Seattle, where they saw pay inequity between the front and back of the house workers first-hand. 

“We saw people (in Seattle) who only worked half the hours we did but made twice as much as us,” Alex said.

Alex said he believes the no-tip model is more transparent and reflects the overall cost of bringing the food and experience to the customer. Those costs can include overhead and back-of-house labor, such as the chef, dishwasher or janitor.

It also means their approximately 20 Lodgepole employees receive what the Barhams consider a living wage. No one is being paid less than minimum wage — training wages start at $15/hour and go up from there. The set wage is not made variable by tipping. 

“We are taking some of the variability out of it for staff,” Alex explained. “(Staff) don’t have to worry about whether they got the Monday shift versus the Friday shift, the bigger section or the smaller section, or whether they will get tipped out.”

Alex finds that once customers understand that they are paying for the real price it costs to have the entire experience at the restaurant, they embrace gratuity-free. 

“There’s no gratuity line (on the bill), there’s no math, but they feel good about supporting their server and staff,” he said.“The thing it really does is put pressure on us to make sure the product and the experience, from start to finish, is the highest quality possible.”

He said he believes the fact Lodgepole is located in a college town and employs mostly college students helps the model work. 

“I love this model because you can rely on your paycheck being the same … You are not relying on the attitudes of your customers in your section that night. You can work on Mondays and get the same amount as someone who works Saturdays.” -Alexa Van Enkevort, pastry chef

Alexa Van Enkevort, pastry chef at Lodgepole for the last three years, is a fan of the model. 

“I love this model because you can rely on your paycheck being the same,” Van Enkevort said. “You are not relying on the attitudes of your customers in your section that night. You can work on Mondays and get the same amount as someone who works Saturdays. You are not working less. You are still working and doing a lot of cleaning on less busy days.”

Lodgepole manager Michael Lewis agrees. 

“As the manager, I have a very high bar (for my employees),” he said. “I think it’s the inverse of the myth that if they don’t get tipped, they won’t work that hard.” 

Lewis sees the benefit of the gratuity-free model for his employees because it takes chance out of the equation. 

“You can work your ass off (at a tipping restaurant) and give your table incredible hospitality with a capital H and (the customers) might have a fight at the table and stiff you or only give you 10 percent,” he said. “Or a server could be in a bad mood and just luck out getting a big table with 20 people and get a fantastic tip.”

Drawbacks of the gratuity-free model

Moscow appears to be the only town in Idaho where restaurateurs are publicly advocating for the model. 

“I think some cities (in Idaho) would think it is a communist plot,” said George Skandalos of Maialina in Moscow. “But we live in a progressive, academic town with an eye toward economic justice. We have a supportive community; we are lucky.” 

Even though Skandalos said the gratuity-free model is working for his restaurant, he does not deny there are challenges. For instance, the price of their entrees at Maialina are higher with the built-in gratuity than the menu prices of restaurants down the block, so price-sensitive customers may choose not to go to his restaurant.

Additionally, he said, it is harder for him to attract experienced career servers under this model.  

“They would rather work for a traditional tipped model because they want the chance to make $27 an hour including tips, rather than a flat $15 an hour,” he said.  

The bottom line is a restaurant worker in Moscow making $15 an hour will still need to work a lot of shifts at a no-tip restaurant to make ends meet. According to the MIT Living Wage calculator, the living wage for one person with no children in Latah County is $14.11.

Most Idaho restaurants stick with tradition

Some restaurant managers in other Idaho cities said they are steadfast that the gratuity-free or no-tip model would not work for them. One even said their servers would be “furious” if they took away their chance to earn tips. These managers also said they believe a no-tip model inherently takes away the motivation of staff and can adversely affect service. 

One manager of a higher-end restaurant in Ketchum, who requested to remain anonymous, said she hasn’t had any of her workers asking to move to a gratuity-free model. She believes that is because they are satisfied with their traditional tip-pooling model. 

“Blaine County is affluent, so tips are good and servers are making enough.” - anonymous Ketchum restaurant manager

“Blaine County is affluent, so tips are good and servers are making enough,” she said. “Cooks have more stability, but servers, bartenders and bussers are affected by slack time or things out of their control.”

The manager said her restaurant’s owners make sure the cooks and kitchen staff are paid well and happy.

“They want to make sure it’s an even playing field between the back and front of the house,” she said.

The living wage for a single person with no children living in Blaine County is $15.24, according to the MIT Living Wage calculator,

In another case, a manager of an Ada County-area restaurant is doing it her own way.

She explained, on the condition of anonymity, that servers at her restaurant start at $6.50 an hour (below minimum wage) plus tips, yet back-of-the-house staff can still receive up to 1.5% of front of the house sales. She said the percentage is based on her subjective criteria.

“I will give it based on hours worked; who had a particularly hard night,” she said.

So a dishwasher being paid $16 an hour at her establishment may receive an extra $150 in their bi-weekly paycheck. That would give them $1,280 plus $150, for a total of $1,430 gross.

According to the MIT Living Wage calculator, a living wage for one person with no children in Ada County is $16.86 an hour. 

Servers are encouraged to sell wine with meals at this manager’s restaurant—the goal is to have 40 percent of the overall bill be in wine sales. This can add up to good tips for everyone when an average two-top meal including wine runs more than $200.  

“We had one server bring home $5,000 one month, including tips,” she said. 

She prefers to run the operation with a “skeletal crew” where everyone is cross-trained and employees are not working other jobs to make ends meet.

“We’d rather have fewer employees and pay overtime,” she said. “We built a model so there’s not much of a demarcation in terms of wages between the front and the back of the house.”

Guide to Tipping Terminology

Tipping:  A traditional and common form of compensation for servers, bartenders and other front-of-the-house workers in restaurants.

Front-of-the-house staff:  Examples include servers, bartenders, bussers. Under Idaho law, front of the house staff can be paid less than minimum wage because they are eligible for tips. 

Back-of-the-house staff: Examples include cooks, chefs, dishwashers. Under Idaho law, these are non-tipped workers and must be paid at least minimum wage. 

Idaho state minimum wage: $7.25 an hour, the same as the federal minimum wage. 

Tip Credit: Under the Idaho Department of Labor, employers can pay servers below minimum wage, for instance $3.35 an hour, by claiming a “tip credit.” In this case, the tip credit is $3.90 an hour—but if the employee’s wage and tips don’t add up to $7.25 an hour, the employer has to make up the difference. 

Tip-pooling:  A common employee compensation model used by restaurants. Tips are typically pooled between servers, bartenders and bussers. Non-tipped workers, or back-of-the-house staff, can sometimes receive a small percentage of that pool if the employer pays their servers the full minimum wage. 

Gratuity-free compensation model: A less common compensation model in Idaho. It has been implemented in higher-end restaurants, primarily located on the East and West Coasts of the United States, for the last decade or mor,e with varying degrees of success. This practice eliminates the customer tipping a server a percentage of the cost of their bill. Rather, the overall cost of serving the meal to the customer is reflected in the cost on the menu. Another way to look at it is a typical 20% tip a customer may give is already included in the cost of the meal.  The final bill is the final bill; no tip is expected. Paying employees a “living wage” often goes hand-in-hand with this model. 

Editor’s Note: George Skandalos is a board member of our sister nonprofit, FARE Idaho. Project FARE editorial decisions, including all decisions related to this story, are not influenced by FARE Idaho. To learn more about our editorial and ethics policy, visit our About page.

Clarification: This story was edited to include that Lodgepole wages beginning at $15/hour for training wages and go up from there.