Working in the service industry can be a notoriously thankless job. With many industry professionals like waiters and waitresses dependent on customer tips to earn a livable wage, an added layer of stress is often brought into the precarious dynamic of work-life balance. Rather than incorporating the cost of labor into their expenses, the majority of restaurants in America transfer that cost onto customers in the form of tips—leaving their hard-working employees dangling haplessly in the mix with no safety net. But the owners of one San Francisco restaurant have been bucking the status quo for years with an innovative “tip-free” model that offers all their staff a living wage, full benefits, and even a share of the eatery’s profits.
The popular San Francisco brunch spot, Zazie, went tip-free back in 2015 under the leadership of its second owner, Jennifer Piallat. And in order to accommodate her ambitious new venture, menu prices had to increase by 20 percent across the board. But despite the pushback she might have expected, customers were actually satisfied with the changes overall. “In fact, one customer said she expected sticker shock, but that the menu still looks reasonable,” Piallat remarked after implementing the new system.
And even more so than the customers, her employees are the ones who have truly embraced the change with open arms. When the “no-tip” model was first established, all of Piallat’s employees received a raise and were earning anywhere from $15 to $20 per hour. In all, servers got a 3% to 7% boost in their wages, while the back of house staff enjoyed a whopping 35% increase. Now, Zazie’s staff makes anywhere from $30 to $65 per hour. In addition, 25% of every menu item is paid out directly to staff as revenue share.
“Our staff are treated like adults, with ‘real jobs,’” Piallat explains. “Our labor costs are much higher than most restaurants, but our food cost/loss is much lower, so our profits end up higher. More mature, long-term staff waste less food, make less mistakes, are less likely to steal, and can handle bigger sections. Taking tips out of the equation was also a huge benefit, equalizing the front-of-house and back-of-house pay and turning the tables on an industry where the guest pays the server instead of the restaurant paying the server.”
The model also allows Piallat to offer all full and part-time employees paid sick leave and vacation, fully funded health and dental insurance, paid maternity or paternity leave, and a 401(k) with a four percent employer match. And, after years with those benefits in place, the restaurant’s 38 employees recently celebrated reaching over $2 million in retirement savings collectively. In addition to that incredible milestone, over the years these changes have allowed three of Zazie’s longtime staff to become part-owners of the popular French restaurant.
Piallat sold Zazie in January 2020 to three employees with 50 years of cumulative experience at the restaurant, while remaining on as 25 percent owner. “I always knew I wanted to sell to my staff,” she explains. “I couldn't imagine putting 17 years into building this community to have some stranger come along and treat them like disposable idiots. The hard part was choosing who to sell it to…I doubt they thought they'd ever own the place.”
Now, Zazie’s new owners are carrying Piallat's “no-tipping” model and legacy on into the next decade. What’s more, the popular eatery seems to be doing better than ever—even in the aftermath of the pandemic’s worst repercussions for restaurants everywhere. Now, only time will tell if their pioneering example and lasting success can spur on much-needed change for struggling workers throughout the industry.