A husband and wife say they have no regrets after opening up a restaurant with a no tipping policy.
Vinod Kalathil and his wife, Margaret Pak, opened Thattu in Chicago earlier this year - serving up food from Kerala, in southern India, where Vinod is originally from.
However, unlike most other restaurants, Thattu has no service charge and customers are not expected to tip.
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The lack of service charge means that prices are a little bit higher, but Vinod says the prices ‘reflect the true cost of dining out’.
In an interview with Business Insider, Vinod explained: “We don't charge our customers a service fee or expect them to leave tips. So, our prices are about 15 to 20 percent higher than they'd be if we were adding those charges onto the bill.”
The increase in prices help go towards paying staff a decent wage and more than half of the restaurant's running costs go on labor.
“We pay them about $19 an hour,” Vinod said.
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“On top of that, we distribute about eight percent of all our sales — whether they're from the restaurant, the bar, any catering we do, or our small retail section — between all of our employees. So our waiters take home between $24 or $25 an hour on average.”
In Chicago, workers who can earn tips can be paid a 'subminimum wage' of $9 to $9.48 depending on how many employees work there.
Vinod and his wife first thought of the idea back in 2019, and ran a series of popups before going on to open up their bricks and mortar restaurant.
He explains that, while running their popups, the card readers they used would suggest a tip amount to customers - something Vinod believes puts too much pressure on customers.
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He said: “We noticed that when a server was standing in front of a customer with a handheld device, they seemed to feel a lot of pressure to tip. It's a little confrontational to put something in front of them – there's a lot of friction there.”
Thattu manages to avoid all of that - but Vinod revealed that some customers insist on tipping and will happily hand over some cash to thank staff for good service.
However, Vinod points out that these tips are ‘an expression of customer goodwill’ rather than something his staff need to rely on.
The couple asked staff what they wanted to do with any tips they received and it was decided that they would pool them to purchase coffee, beers or soft drinks for employees.
Topics: US News, Money, Food and Drink