In 2015, the owners of Tres Gatos and Casa Verde in Jamaica Plain decided to implement a 3 percent “hospitality administrative fee” — a surcharge meant mainly to boost pay for the dishwashers, line cooks, and other back-of-house workers who often earn significantly less than their tipped counterparts.
“We think that within five years the majority of restaurants will have adopted some measure to address this critical issue,” the owners wrote, explaining the decision.
It turns out, they were right.
These surcharges, once an anomaly, have begun popping up on bills at dozens of eateries across Boston, from a walk-up bagel joint in Roslindale to a sit-down Italian-inspired restaurant in Cambridge to a downtown brewery. And unlike similar COVID-era fees meant to defray the costs of protective equipment or supply chain snarls, these back-of-house surcharges seem to be here to stay.
“That was always our goal, was not to be alone in the woods doing this,” said David Doyle, co-owner of Tres Gatos and Casa Verde, where the fees are now 5 percent. “All those concerns about the wellness of our crews are really front and center now — and really inextricably tied to the financial success of the restaurant.”
When the fees began appearing at Tres Gatos and elsewhere, they were a way to close the long-standing gap between the take-home pay for those who serve food and those who prepare it. Now, they are a sign of the challenging economy facing restaurants as the pandemic crisis calms, proprietors say.
The cost of food is still sky high, with prices up 10.1 percent year over year in January, according to the Bureau of Labor Statistics. The widespread labor shortage has also hit the service industry particularly hard; an estimated 11.3 percent of available jobs in accommodation and food services were unfilled in December, according to the BLS, more than double the rate of three years ago.
The result? Restaurants, many of which already operated with razor-thin margins, have seen their bottom lines squeezed as the costs of finding and retaining labor soar. Passing along a portion of these costs to customers through kitchen fees, restaurateurs say, allows them to offer competitive pay without the financial strain that would come with raising wages outright.
Back-of-house employees can’t receive normal gratuities in Massachusetts because state law permits a “tip credit,” which reserves tips solely for the waitstaff who can be paid below the standard minimum wage if tips make up the difference. And they often do — in spades. At Democracy Brewing, a worker-owned pub downtown, servers were long able to earn “sometimes almost double” their hourly wage in tips after a busy shift, said CEO James Razsa, whereas kitchen workers were left behind.
“Historically, there’s always been a back-of-the-house, front-of-house divide,” said Steve Clark, president and CEO of the Massachusetts Restaurant Association. These fees, he said, are “an attempt to level the playing field” by adding a set percentage, usually 3 percent to 6 percent, to a customer’s bill, with the proceeds doled out to back-of-house employees, usually depending on how many hours they worked.
And, at least at Democracy Brewing, which now has a 3.5 percent kitchen appreciation fee, it’s making a difference.
Since implementing the fee a little over a year ago, kitchen employees have seen their paychecks grow by about $3-5 an hour, Razsa said, with most now taking home at least $20 an hour. Some workers have been able to quit second jobs, Razsa said, and he believes the fee has helped reduce turnover.
Waitstaff have always benefitted from a busy shift; now, the people preparing the house-smoked wings and short rib sandwiches downstairs can share in the spoils of a good night, too.
“When you’re slammed, people are pumped about it,” said Razsa.
But why, some customers ask, can’t these restaurants just raise their menu prices, and earmark a percentage of revenue for non-tipped employees? There are a few reasons — including that this would only widen the gap between tipped and non-tipped workers, since a higher bill usually comes with a higher gratuity. Other owners feel the fees are more transparent than simply jacking up prices. Some fret about sticker shock driving away clientele.
“People say, ‘Just charge what you have to charge,’” said Rachel Miller Munzer, the co-owner of State Park and Vincent’s in Cambridge. “But you do that, and nobody wants to buy a $22 sandwich.”
Other restaurants take a slightly different approach, making the fees, not conventional tips, standard practice. Brassica Kitchen + Cafe in Jamaica Plain charges a 20 percent fee that supplements the wages for both front- and back-of-house staff. An extra 3 percent fee helps cover benefits for employees.
“It’s the future of restaurants,” said co-owner Rebecca Kean.
At State Park and Vincent’s, a 20 percent “fair wage surcharge” helps ensure that every employee is paid at least $17 an hour. Like at Brassica, an additional tip, the menus declare, is “appreciated but is not necessary.” For Miller Munzer, the fees come amid a broader reckoning about working conditions in the service industry.
“It’s just an attempt to fix a broken system more than anything,” she said. “We’re all just figuring out how to make it be a viable career for people.”
Exodus Bagels, a walk-up spot in Roslindale, employs a similar model with the 13 percent “administrative fee” it launched last September. Of that, 11 percent goes toward padding wages for all workers, with the other 2 percent retained for operational costs — like fixing a recently broken dryer, said co-owner Priscilla Andrade.
How each establishment chooses to structure the fees, she said, is “a little Wild West.”
“Part of the customer service experience is making it really nice and easeful,” she said. “There’s a lot hidden behind the curtain, and we saw a lot of that be exposed over the past few years.”
From a legal standpoint, these fees are perfectly permissible under the Massachusetts tipping statute, as long as it’s made clear that the fee is not a gratuity or service charge that will go to waitstaff, lawyers say. But the do-it-yourself nature of the nascent fees has raised some concerns.
“It’s completely unregulated,” said Teófilo Reyes, the chief program officer of Restaurant Opportunities Centers United, a nonprofit advocacy group. “I think there can be some potential benefit, but I think people need to beware — it’s completely at the discretion of the employer what they do with that surcharge.”
Customers’ reactions to the fees, meanwhile, have been a mixed bag. Some see it as an honorable effort to improve working conditions, while others gripe about feeling nickel and dimed, especially in light of the broader phenomenon of “tipping fatigue.”
While some eateries will take off the fee if a customer objects, some establishments have rolled back the fees entirely following customer frustration. Highland Kitchen owner Mark Romano removed the 6 percent kitchen fee he implemented during the pandemic, choosing instead to increase base wages now that finances are more stable. Some customers, he said, left lower tips for waitstaff after seeing the fee.
“Someone comes in and has a couple of Budweisers and they wonder why they have to pay a kitchen fee,” he said. “I understand that.”
Back at Exodus Bagels, the fee is explained on a sign outside the order window. Sylvie Djian, who picked up some sandwiches on a recent Friday, tipped 7 percent on top of the admin fee, expressing some confusion over the etiquette.
“If I’m clear on what the expectation is, I like that it’s being met and that everybody’s being taken care of,” she said.
Customer Tim Weaver, however, was a bit more skeptical. “I support workers getting paid a decent wage, so if this is the way to do it, then that’s the way to do it,” he said. “It does push the responsibility for paying workers onto consumers rather than to business owners, which I think raises some issues.”
For many workers, these fees represent “an extra layer of security,” as Exodus kitchen worker Colin McElearney put it while whipping egg whites for coffee cakes. A friend is getting married later this year, and the extra $3 or $4 an hour will help him afford to be in the wedding party.
At Pammy’s, a sit-down spot in Cambridge, sous chef Joseph Schwartz estimates that the 6 percent fee boosts his income by more than $20,000 a year. This has given the 28-year-old the financial freedom to book a trip to France, adopt a dog, and start thinking about retirement.
“It’s not just scraping by anymore,” he said. “It’s living comfortably, which is amazing.”