Walk into Fitz and Starts—a restaurant, bakery, and bar on South 4th Street—and take a look at its menu. Don’t panic when you see the prices. A cheeseburger, which would barely cost $2 at the McDonald’s on 40th and Walnut, is $17 at Fitz and Starts. Fresh, higher–quality ingredients make up one part of the story around the major price difference. The other part? The service, the experience, and the relationship that Fitz and Starts wants to build with its staff and its community.
Fitz and Starts owner and head baker Pat O’Malley is one of several Philadelphia restaurant owners who have eliminated tipping and implemented a 20% service fee on all purchases. Other restaurants instituting a 20% service charge are Martha, a cozy neighborhood bar in Kensington, and all seven CookNSolo restaurants (20% for sit–down dining, 10% for takeout)—including popular on–campus destination Goldie.
Money from the additional service fees goes towards supporting fair hourly wages for hospitality workers. That means the price of a burger and fries at Fitz and Starts isn’t just how much each ingredient costs—it’s the price of sourcing local, high–quality ingredients and having each dish made fresh daily. It's also the price of reasonable wages and health benefits for the people who prepare and bring you the meal, who wipe the tables and clean the bathrooms before and after you leave, and who spend hours working in a high–risk environment during the pandemic.
O’Malley likes to explain the service fees to curious customers with an analogy.
“If you go to a mechanic or a doctor, you're paying for someone to do 15 minutes of work because you can't do it to yourself. Customers claim, ‘[I] could just make this hamburger [myself].’ But you didn't do that! You came in, you had somebody else do it, so you have to pay for it. If you randomly asked someone, ‘How much would I have to pay you to stop what you’re doing right now and go make me a grilled cheese?’ They probably wouldn’t say less than $20.”
Indeed, choosing to adopt a visible, upfront service fee rather than silently raising menu prices allows restaurant owners like O'Malley to combat false narratives about the restaurant industry and re–educate the public about the cost of a meal.
For instance, Martha in Kensington has a page on its website dedicated to explaining its transition to a service charge. In it, the bar details the many drawbacks of tipping—including its deep roots in institutional racism.
The practice of tipping rose in popularity after the Civil War, when companies sought ways to avoid paying their formerly enslaved workers. Instead of being paid a stable salary, former slaves were forced to please their white customers and employers in order to earn money.
These unfair power dynamics continue to exist in the restaurant industry today. A study from Cornell University found that customers consistently tip more to white servers than black servers. Hospitality workers are also at high risk of facing verbal abuse and harassment from customers. As many as 90% of female hospitality workers report experiencing sexual harassment. The accommodation and food service industry accounts for more sexual harassment filings with the Equal Employment Opportunity Commission than any other industry.
Tipping perpetuates both social and economic inequality. Typically, front–of–the–house restaurant workers like servers, bartenders, and bussers are paid a “tipped wage” far below state minimum wage. In Philadelphia, this minimum tipped wage is $2.83 per hour. If tipped employees make less than Philadelphia's standard minimum wage—$7.25 per hour—by the end of the night, their employer is required to supplement the difference. In one eight–hour shift, these Philly servers are paid about $23 by their employer and make the rest of their income in tips. Cooks, dishwashers, and other back–of–the–house workers only make $7.25. For undocumented immigrants working in kitchens, that number is even lower.
With this pattern of underpayment, it almost comes as no surprise that the poverty rate in the restaurant industry is triple that of the total workforce. One in six hospitality workers lives below the poverty line; this rate is highest for female workers and workers of color.
As Martha explains in the letter on the bar's website, “The practice of tipping has certainly evolved over the years, but many modern employers continue to see tipping as an opportunity to avoid paying workers real wages by relying on customers to tip their workers instead.”
O’Malley agrees that restaurant owners need to recognize their responsibility in valuing and properly compensating their employees.
The pastry chef, who was a 2018 semi–finalist for the prestigious James Beard food award, says, “I've had my own personal revelations about the challenges of the industry—just going through it myself, and having employees that have had really hard life situations, and having to layoff people that have been with me for a while or just genuinely did their best because we have to just keep limping along.”
"Limping along" is the right way to describe it.
More than 110,000 restaurants in the United States closed over the course of 2020. That number climbed to greater heights over the winter months, when outdoor seating became less desirable. Overall, the restaurant industry has lost more revenue and jobs than any other industry during the COVID–19 pandemic. To make matters worse, the field already suffers from astronomical turnover rates, lack of sick leave and health insurance, and great financial uncertainty.
The pandemic underscores the need for a service fee. It also presents restaurants with the chance to positively transform their finances, operations, and culture in a way that would normally be nearly impossible due to the fast–paced and competitive nature of the industry.
As CookNSolo co–owner Steve Cook explained in a December interview with The Philadelphia Inquirer, “I’ll never have another opportunity to remake our business in the way we have during the pandemic. There's more sensitivity now (among the public) to what the cost of a meal is.”
At the end of the day, it’s up to consumers to recognize the value of the food and service that restaurant workers provide them. Service fees and the education that comes with them are one important step towards bringing dignity and fair pay to workers in an industry that has long devalued them.