Service charge

Portland restaurant Kachka swaps tips for automatic service charge in new employee equity plan

Kachka, a southeast Portland restaurant featuring Russian cuisine, co-owned by Bonnie Morales and Israel Morales, Jan. 14, 2022. Starting in January, the restaurant replaced tipping with a 22% service charge and will pay guests employees a minimum wage of $25 per hour and provide free health care.

Kristyna Wentz-Graff/OPB

Since opening in 2014, Kachka has been a popular spot for Portland foodies. It has received a lot of success over the years.

Now Kachka is getting attention again, but not for its food this time. The restaurant announced a pay equity plan. This includes charging diners a 22% service charge instead of tips, offering full medical coverage to its employees, and introducing a profit-sharing model.

Bonnie Morales, executive chef of Kachka, who owns the restaurant with her husband, spoke to Think Out Loud about the decision and why it was made now.

The potential future of tipping

Americans have a habit of adding a tip to their checks at food establishments. With its new action plan, Kachka is shaking things up, and at a very tense time for restaurants.

The coronavirus pandemic has hit some industries harder than others, and the food industry has been particularly hard hit. A mix of protracted supply chain issues, inflation and understaffing – all exacerbated by COVID-19 – has led to food shortages, higher food costs and lower sales for restaurants as customers stay at home.

Despite all of these factors, Kachka is pushing ahead with his equity plan, seeking to tackle an industry Morales calls broken.

“We’ve reached a kind of critical mass of staffing shortages,” Morales said. “The pandemic stressors, inflation and the things that really make it something that would be ‘nice to have’ and make it a ‘need to have’.”

Bonnie Morales, chef and owner of Kachka

Bonnie Morales, chef and owner of Kachka.

Kayo Lackey

“The restaurant industry has gotten a lot of attention for being a tough industry to work in, [with] very thin margins, poor working conditions, etc., for decades,” she said.

“For too long, the restaurant industry has propagated a system of inequality, racism and discrimination,” says Kachka’s Equity Plan webpage. “It’s time to break with the dysfunctional status quo.”

Morales argues that restaurant owners are the ones with the power to effect change, so fairness in their industry is their responsibility. “It’s hard for us to sleep at night when we don’t feel like we’re trying to make things better,” she said.

Regarding payment, Morales said, “No one should have to be an indentured servant for the rest of their life just because they like to cook.”

How tipping tips the balance of income

There are clear winners in the tipping system: servers and bartenders.

Unless employees share tips, tips go directly to a restaurant’s servers or those tending the bar. Although this means higher incomes for these front-of-house positions, many are left behind: cooks, dishwashers, managers, etc.

Morales noted this disparity when addressing Kachka’s equity plan. She knew that ending tipping would reduce the pay of those in these indoor positions, but the equity plan was put in place to benefit all restaurant staff.

“We haven’t lost a single employee. We started talking about it [equity plan] in September, so we gave a lot of lead and a lot of opportunities to go somewhere else if that wasn’t something they wanted,” Morales said. “We were really transparent about what it would look like, how much they were earning and how much they would be earning and all those things and not a single person put their opinion down and left because of it.”

Not the first no-tip rodeo in Portland

Kachka isn’t the only Portland restaurant trying to move away from tipping, and it likely won’t be the last. To date, most others have failed to sustainably adopt permanent changes.

A case study from 2016: Le Pigeon went “free” and chose to increase the prices of its menus. About a year later, the tips came back.

Morales thinks Kachka’s approach will work better.

“They tried to bend [equity] in pricing and… there’s just a psychological shift there that as a society I don’t think we’re ready for,” Morales said.

“I wish we could just move on to raising our prices and really, really deal with all the details of what that means on the backend as a business. But, there’s kind of a societal norm of payment for the service separately from the cost of the goods that has been ingrained, and it’s going to take a lot more effort and work and working with other like-minded businesses to do it kind of at the same time. don’t see that happening anytime soon.

Morales thinks separation is key: showing that the money is specifically for staff, instead of just driving up menu costs.

“[At Kachka], we put that money towards a certain thing. It is very clear that we are not only increasing our prices because [of] inflation or the cost of certain ingredients have gone up. We are very aware of the value of this money and we communicate it, so that customers who want to support companies that treat their employees fairly can know where their money is being spent.

Morales said the start of 2022 was a tough time for her restaurant and others as coronavirus cases surged of the omicron variant, but she and her co-owner husband determined change couldn’t wait.