CALGARY - A decision by Earls Restaurants Ltd. to eliminate tipping at a downtown Calgary restaurant and replace it with a mandatory 16 per cent "hospitality charge" is stirring controversy.
The Vancouver-based restaurant chain rolled out the concept this week at its newly opened 10,000 square-foot Earls.67 and opinions were split among diners who waded through Calgary Stampede crowds to go out for lunch on Tuesday.
"I usually tip more, so this actually was cheaper," said Nicole Dyck as she exited the packed eatery. "The service was good, the food was good, so no problems, no complaints."
But Adam Haynes disagreed, saying the charge could take away the incentive to deliver good service.
"You know when you go to a restaurant and you get a table for 12 or more and they have an auto-grat? Generally the service is worse than if you have discretionary gratuities," Haynes said. "I'm against it."
Many restaurants across Canada have fixed gratuities for large parties or during certain events, but Earls deserves congratulations for "breaking new ground" in testing the idea for all servings at all times, said Mark von Schellwitz, Western Canada vice-president for Restaurants Canada.
"I'm certain there's going to be some resistance from some guests who want to keep control over how much they tip or not tip," he said. "And certainly, there's maybe going to be some push back from some servers who may be taking home less gratuity income as a result."
On the other hand, he said, the charge will allow Earls to better control differences in compensation between servers who get tips and the rest of the staff who generally don't.
He said the initiative is also timely because of the Alberta government's plan to raise the hourly minimum wage, which is now $11.20, to $15 by 2018. That plan includes the elimination of the lower minimum wage paid to servers of alcohol based on the assumption that they will make up the difference in tips.
Craig Blize, vice-president of operations for Earls, said the company came up with the experiment about two years ago as a way to make pay levels more fair. He said about 100 of the 280 staff at Earls.67 are considered back-of-the-house staff who would normally miss out on tips but who will share equally under the new model.
"Under a normal tipping model, 80 to 90 per cent of the tip goes to the server, which creates a disparity," he said.
"The average tip out in the industry is 16 to 18 per cent. At Earls Bankers Hall (a predecessor restaurant to Earls.67), before we shut it down to build the prototype, our average tip there was 16.5 per cent. So we settled on 16 per cent because we wanted to give value for the experience that every guest is getting and the 16 per cent also compensates all of our hourly partners — our cooks to our servers — with that higher consistent wage."
He said guests are asked not to tip but, if they insist, the extra money goes into the fund to be split among all staff.
In April, Earls provoked an outcry from Canadian beef producers after announcing it would get all of its beef from a U.S. supplier that had a "Certified Humane" designation. Two months later, it backtracked on that decision and brought back Canadian beef.
Blize said Earls learned from that experience to fully research every new idea before putting it in place. He said the company will study the results of its no-tipping experiment for at least six months before deciding whether to replicate it in any of its 66 other outlets.