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In a conversation that covered a variety of restaurant-industry issues, we asked Chef Stone about one of the most controversial topics for owners and diners alike: tipping. The Australia-born American restaurateur didn’t shy away from an answer.

“Tipping sucks, let me just put that out there,” he said. “It’s a horrible, stupid system that we’ve had for years and we have to try to figure it out.”

Spoiler alert: At his restaurants Maude and Gwen, Chef Stone has implemented a no-tipping policy. Instead, an 18 percent service charge is included on each check to compensate front and back of house.

“You guys are training to be chefs and chefs make a pretty conservative salary,” he told students. “You come in as an operator thinking you want to change that, but it’s going to be really difficult. As much as you want to pay your cooks way more money, if you do, you become non-competitive with the other people in the marketplace and you’ll go out of business.”

In March, amendments to the Fair Labor Standards Act affected dining room and kitchen employees. According to Eater, tipped front-of-house staff can now share tips with back-of-house employees when the restaurant pays minimum wage.

“Tips mean that somebody working on the floor receives a whole bunch of money, especially in a busy restaurant that has a big turnover,” said Chef Stone. “I find it hard to justify why cooks should take home $150 while servers take home $350. We’re all working together and it’s all very even in terms of work, but that’s what tipping causes.”

Often, servers tip out a set percentage and the pool is divided among non-tipped staff. The alternative is a set percentage of sales compensating non-tipped and potentially underpaid staff, which is where the concept of a service charge (long used on cruise ships and with food delivery) becomes an option.

“If you include a service charge on the check then as an operator, you’re more in control of that money, so you can distribute it in a more even way. It’s still not totally even, but it’s up to your discretion.”

In addition to adding service charges, restaurants have converted to counter service or implemented sales and performance commissions in response to raises in minimum wage. The Economic Policy Institute reported that 18 states increased minimum wage in January 2018, including California (a 50-cent increase to $11) and New York (a 70-cent increase to $10.40).

“Most people that operate restaurants hate the fact that minimum wage goes up because it makes it even harder to stay in business and restaurants are a hard thing to make money out of,” said Chef Stone. “They take a long time. If you invest a million bucks in a little restaurant and you do really well and you’re really busy and you charge lots of money and you pay it off, you get to year five and you’re like great, I’ll pay back the million bucks. But you haven’t made a dollar. You worked for five years to get back to even.”

Owners face the challenge of designing a business model that attracts employees and customers in a profitable proportion.

“I’m not scared to have an opinion on it because I think that’s what creates conversation,” said Chef Stone. “It’s complex, but I think a service charge is a good start to getting us closer to where we need to be.”

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