LOGAN SQUARE — Middle Brow Bungalow is the latest Chicago restaurant to eliminate tipping.
The taproom and pizza restaurant at 2840 W. Armitage Ave. recently banned tipping and instead started tacking service charges onto every check.
The change allows the restaurant to pay full-time and part-time employees more, said co-owner Pete Ternes. It also allows the restaurant to help pay for employees’ health insurance.
Ternes said they’ve received “virtually no pushback” on the change, which was implemented about a month ago.
“We’re excited about this new system,” Ternes said in an email. “We hope that customers who tend not to tip understand that the cost of their food and service hasn’t changed. But, instead, that we’re now distributing it fairly and evenly across all customers.”
Last year, before the coronavirus pandemic, Middle Brow customers tipped 21.7 percent on average, Ternes said. After Middle Brow shifted to selling groceries and meal kits due to the pandemic, customers were tipping 20.3 percent on average.
Ternes blames a broken tipping system — not customers — for the dip.
He said while some have been conditioned to believe carryout service doesn’t warrant the same level of tipping as dine-in service, that belief isn’t rooted in reality.
“It’s still expensive to get those ingredients, it’s expensive to pay for the labor to make it beautiful and make it taste great and get it into packaging and get it to someone. It costs us almost the same amount of money,” Ternes said of carryout service.
“You might have one or two fewer service people on staff. But they’re working for a longer stretch. And other takeout-related costs make up for any reduction in wage costs.”
Many in the restaurant and bar industry have long called for an overhaul of the tipping system, saying it’s outdated and unequal. Last year, some Chicago lawmakers proposed eliminating the “sub-minimum wage” for tipped workers.
Ternes looked to Honey Butter Fried Chicken and other Chicago restaurants that have eliminated tipping for guidance before taking the plunge.
It was risky to make such a big change in the middle of the pandemic, Ternes said. Middle Brow isn’t operating at full service and sales have become harder to predict.
But the pandemic created a new sense of urgency because it has laid bare systemic inequalities in the workplace.
“It just feels like [an] opportunity for fixing things. We’re able to reinvent ourselves constantly on the product side, and we finally thought: Why not reinvent ourselves on the business side entirely?” he said. “We think there really is a movement afoot.
“It’s been afoot for a long time, but it’s gaining new steam in this moment as people are taking a fresh look at the right way to organize their businesses.”
Since eliminating tipping, Middle Brow has charged service fees on all orders: 10 percent for grocery purchases and 15 percent for takeout orders. When Middle Brow reopens for patio and dine-in service, an 18 percent charge will be tacked onto full service bills.
With the fees, Middle Brow is paying all employees a wage that’s 10-20 percent above market, which is meant to account for the risks associated with working during the pandemic, Ternes said.
The restaurant is also now contributing $120 a month to all employees’ health insurance bills, an amount that accounts for 40-100 percent of their bills, Ternes said.
“We’re trying to give [our employees] a proper job with good benefits and make this more permanent and real for them as opposed to something temporary,” Ternes said.
The way Ternes sees it, all restaurants should do away with tipping.
It’s a “massively unfair, unethical pay structure … and for no good reason,” he said.
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