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Minnesota restaurant pros offer tips for navigating the new world of tipping

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In 2020, Gavin Kaisen added a 21% hospitality fee to the bill at Spoon and Stable, an upscale Minneapolis restaurant he owns and where he is the chef, to boost employee pay parity.

It includes an explanation and a pie chart where the average is paid: 73% for housekeeping staff, 12% for chefs and other staff, and 15% for commercial expenses.

So far, Chef James Beard’s waiters have not quit, and he only occasionally asks questions about the move away from the traditional 15% to 20% tip practice.

“What the hospitality fee does for us is that it takes the guest out of control,” Kaisen said. “I know that 21 percent of what we received, we can distribute among our team.”

All of a sudden, new fees, called hospitality or hospitality fees, are added to the check as restaurateurs look for ways to increase pay for cooks and dishwashers, who often earn less than waiters. Some institutions may charge a “health” percentage to cover rising health care costs.

“When it comes to calculating your bill and tips, it’s going to take a little more math than before,” said Robin DiPietro, director of the University of South Carolina’s School of Hotel, Restaurant and Tourism Management.

These costs add new complexity for visitors. To understand how to tip in this new environment, we turned to several hospitality industry insiders for advice.

What is Minnesota tipping law?

One of the reasons some restaurants choose hospitality fees is because owners can’t legally ask waiters to share their advice.

Under Minnesota law, a tip or reward is a transaction between a client and a server. Waiters can choose to tip other employees, but that is ultimately their decision.

A hospitality or service fee is a transaction between the customer and the restaurant, so the business has a say in how the money is directed, said Joe Schmitt, an attorney for Nelan Johnson Lewis.

He is working with more restaurants to introduce hospitality fees as businesses work on off-server tip sharing.

“This dramatically reduces the wage disparity of all those involved in food preparation,” Schmitt said.

To make matters even more confusing, customers may see wording that hospitality fees are not tips under Minnesota law, but the purpose of these responsible owner fees is to split the money among staff.

Can the owner pocket the money? It’s possible, but it’s unlikely they’ll keep servers in this competitive work environment.

“It’s a misconception that this hospitality fee goes straight into our pocket. I don’t get anything,” Kaisen said. “It’s a way to share and distribute money because I can’t do it with tips. You can’t do this with a tip as the owner.”

Do I need to tip in addition to paying for hospitality or service?

Not necessary.

“In general, I think the tip standard is 20%, but if an employer adds some of that, you can adjust accordingly,” DiPietro said. “But you have to pay attention to the score.”

If this is not clear, she advises asking the manager how the hospitality fee is distributed if you want to leave more than this as a direct reward for your server.

Spoon and Stable offers clear language on their bill: “Should I tip? It is not expected to leave a tip in addition to the Hospitality Fee. The tip line is provided as an opportunity to acknowledge an outstanding experience.”

“If the service exceeded your expectations and you want to keep 10, 20, 30 dollars, do it. This is great. It goes straight to the server,” Kaisen said.

Patrick “Jocko” Tierney, a 25-year-old bartender and waiter at Manny’s Steakhouse who receives tips, finds hospitality fees inconvenient for customers.

“You are in a real dilemma because the server can say that not everything is going to them,” Tierney said. “I don’t think it’s fair for someone to say, ‘That’s not my tip’ when that amount is added to the bill.”

How about a wellness fee? How can I tip then?

Many restaurants that have not replaced tipping have added a health charge, sometimes referred to as “health benefits” or “health and wellness.”

At Manny’s, Tierney sees some customers waiving the 5 percent health fee. He admits that these accusations sometimes affect his tips. “If you feel like it’s too much and you tip 15%, I’ll eat the remaining 5%,” he said.

Parasole restaurants, which own Manny’s, Pittsburgh Blue, Good Earth and Salut restaurants, introduced a wellness charge a few years ago to offset healthcare costs. The firm raised fees during the pandemic as sanitation costs soared.

But you won’t see hospitality fees at Parasole restaurants. “I think it works well for new concepts, but the restaurants we have are mature brands,” said Donna Fas, COO of Parasole.

Why don’t restaurants just offset the cost of doing business by charging more?

Many restaurants have raised prices but believe that’s not all, fearing customers won’t stop by for $50 burgers.

Owners have experienced unprecedented shutdowns during the pandemic, which has now sent costs skyrocketing. They are also struggling to attract workers, even as base wages exceed the $15 minimum wage in Minneapolis (for businesses with over 100 employees) and St. Paul.

“There is no one in my restaurants who makes less than $15 an hour,” said Troy Reading, who owns Rock Elm Tavern in Plymouth, Maple Grove and Holman’s Table in St. Paul. “The minimum wage in this state really doesn’t matter.”

Reading has piloted a fee-for-service model during the pandemic. Eventually, he stopped charging service fees, returned to traditional tips, and added a 3% health tip.

“Employees fought the service charge because the guests resisted them,” he said. “To put it simply, I’m tired of fighting this and we’re back to the standard tipping situation here.”

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