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How Restaurant No-Tip Policies Are Changing The Industry

The O-B House co-owner Rodney Ely dishes on this controversial policy.​

While listening to the drums pound in Washington, D.C., I have asked myself what I would do given the inevitability of minimum wage increases. I have always loved the restaurant business, first becoming passionate about it in my 20s working in a successful fish house on the New River in Fort Lauderdale and quickly earning my way into the proprietorship of my own establishments.

To most, the business seems glamorous and fun. But for those of us in it, we know it is hard work with thin margins. In order to survive, I knew I needed to adjust my business model. How can small restaurants stand minimum wage increases? Would consumers pay an elevated cost and adapt to a new system?

The no-tip concept was a strategy I was willing to try. I had read about the idea, and I designed a model that I believed would work for my establishment. Though prices were increased to affect the new model, the majority of customers were not fazed by it. The general consensus is that customers love not having to figure out a tip and they feel supportive of an establishment that takes responsibility for its employees.

Under the no-tip system, our traditional servers garner the same yearly earnings. However, they are now more able to budget themselves, receiving all of their income on bi-weekly checks rather than having a spendable daily cash income. The no-tip system has allowed us to give raises to the back-of-the house staff well in advance of any mandated minimum wage increase. Those staff members work long, hard hours to ensure the success of an independent community establishment such as mine.

Having a superior food product has been the key to my success, and having a happy staff is imperative to the customer experience. To those restaurateurs who can ensure good service through strong leadership, I encourage them to give the no-tip strategy a try. From my perspective, it's the way of the future.

(Photo courtesy O-B House)