ST. PETE, Fla. — In an effort to offset minimum-wage increases and rising food costs, a St. Pete restaurant group is doing away with traditional tips and instead adding a 20% service charge to every bill.

The commission-based pay model for servers was rolled out at Teak on the St. Pete Pier as well as Birch & Vine and the Canopy, which are all operated by The Birchwood.

Renee Sutherland, Director of Operations for the restaurants, says they decided to move to the commission-based model after being faced with tough financial decisions following the pandemic.

“We have been struggling since the pandemic with labor costs and trying to give everybody what they needed,” she said. “With minimum wage going up, we didn’t want to raise our prices, so it’s not just the elite that can go out to dinner.”

Under the new structure, instead of taking home tips, servers receive a flat commission from every table. Positions that would traditionally be “tipped out” by the servers, like hosts or bussers, now receive a higher hourly rate. If the customer decides to add an additional tip of over 20%, that goes directly to the server.

Sutherland says this takes the unpredictability out of a server’s job and doesn’t penalize them for things that might be out of their control, like an overcooked steak, for example.

“There’s always the people that don’t tip,” Sutherland said. “There’s also the people that think you shouldn’t have to tip.”

Each server or bartender is trained to explain the 20% service charge to each customer. The customer is then prompted to reach out to Sutherland directly if they have any issues with service. She says since the launch, she’s received only a few complaints and heard of one customer who decided to leave instead of agreeing to the service charge.

“I can count on one hand the amount of times we’ve had to deal with something really negative,” she said.

The 20% service charge is tacked on regardless of how a customer feels about the service they received. Sutherland says that means they’re holding their employees to the highest standard, and if a customer is not happy, they want the chance to make it right.

“We don’t allow for people to not be on their ‘A game’ when they’re working because they should be and people are paying for that,” she explained.

Sutherland says The Birchwood’s owners helped implement the change under the guidance of Zach Feinstein, who owns The Living Room, Sonder Social Club and The Black Pearl in Dunedin. Feinstein first enacted the commission-based structure at his restaurants a couple of years ago.

“If you get a cold burger, a customer is going to be like, ‘I’m going to leave 10%,’” Feinstein explained. “But the server had nothing to do with that. The business dropped the ball. They should pay for that, it should cost them the money, not the server.”

Feinstein says his decision to make the switch was data focused. While he received pushback at first, he says his servers are taking home more.

“We take historical pay information like cash tips, credit card tips, and an hourly rate and do an analysis,” he said. “In our case, 100% of our employees are making more money.”

Feinstein helped The Birchwood roll out their service charge structure and says he’s willing to speak with and assist other restaurant owners looking to do the same. He says the change has helped him be able to keep his menu prices steady despite the rising labor and food costs.

“It’s an old system, and it’s really outdated, but I truly believe this is the future for restaurants if we’re going to keep humans involved,” he said.

Minimum wage in Florida will reach $15 an hour by 2026.