No tipping: Why a Toronto chef says banning tips means better pay for restaurant workers

Toronto restaurant owner explains why he got rid of tipping Carl Heinrich says he made the decision in order to give employees a steadier income and ensure better employment insurance.

TORONTO — While restaurants continue to struggle amid the COVID-19 pandemic, one Toronto restaurant has made a significant change to its business: doing away with tipping.

Carl Heinrich, chef and owner of Richmond Station in downtown Toronto, told CTV's Your Morning that the restaurant got rid of tipping at the end of July, in a move to provide steady income for its employees.

"We've always tried to be a best-in-class employer and getting rid of tipping allows us to have a much better pay quality amongst our staff. The onset of the pandemic [has] really highlighted the difference between staff that has insured earnings and staff that don’t have insured earnings," Heinrich said in an interview on Monday.

He explained that, since tips are received in cash, they are considered uninsured earnings and are typically unreported on taxes. This causes those working in the hospitality industry to receive significantly less than what they qualify for when filing for unemployment benefits.

"When people leave money on the table and that goes to our team, that makes up for a lot of our staff the bulk majority of what they take home," Heinrich said. "What we have now is a situation where a lot of our team are looking at, you know, possible unemployment in the future and not entitled to the full benefits that they should have because of it."

By doing away with tipping, Heinrich said he aims to make the service industry more equitable by providing his employees with access to the social safety nets afforded to other professions.

Heinrich said he has been discussing the change with his staff over the past four years and felt the uncertainty of the pandemic was the right time to make the change.

"We decided, after we closed for about three months there, that now it's just the time to do it,” he said, adding that his staff are "on board" with the change.

"We were already sharing those tips amongst our staff, and so it's not just our servers that were affected by the pandemic and... the loss of the benefits because of the tips, our cooks were as well, our management were as well, our dishwashers, our hosts, everybody," Heinrich said.

Now, rather than expecting diners to voluntarily leave a tip, Richmond Station has instead adopted a 'hospitality included' approach. Heinrich says average menu prices have been raised by 18 per cent, across the board, as part of the restaurant's new 'hospitality included' policy.

"Say you came in for dinner pre-pandemic, and your bill for two people is $100, and you leave an $18 tip," Heinrich said. "For us, our cost of goods -- costs for food, costs for wine -- is about $30 bucks at 30 per cent and labour should be about 30 per cent as well," he explained.

"So dinner for two now is going to cost $118, labour is going to be at $48, there's no tipping… and our cost of goods stays about the same," he said, explaining that the price increase will be distributed to employees in their wages.

While the switch may seem strange to some, other Toronto-area restaurants are following suit with Ten and Burdock Brewery having publicly committed to get rid of tipping too.

Since doing away with the practice, Heinrich said the response to the 'hospitality included' fee from staff and guests has been "overwhelmingly very positive."

"I'll be honest with you, most people don't notice until they go to leave a tip at the end of their meal and they say 'How come I can't leave a tip?' and we say 'We don't take tips, the cost of service is included in the meal'," Heinrich explained.

"Some people ask a lot of questions and we are really happy to take the time to answer those questions but from the customer's point of view, this has been a really positive change."