Zuni Cafe Cut Tips and Risked Losing Servers, Reigniting the No-Tipping Debate - Eater SF

It’s hard to say what Zuni Cafe, the groundbreaking Californian restaurant on Market Street, is better known for: its iconic wood-fired roast chicken or its award-winning service. Since the start of the pandemic, the dining room has remained dark for more than a year, its legendary lifetime servers sent home. At the end of April, those servers received that long-awaited call: Zuni planned to reopen for indoor dining in the upcoming weeks. But there was a change: After 42 years, the restaurant had decided to cut tips and introduce a service fee. Zuni’s servers, shocked at the prospect of a dramatic pay cut — even in the service of greater equity for back-of-house employees — balked at the initial offer and reached out to multiple media outlets, as first reported by SFGATE.

From an outside perspective, the no-tipping model could make sense for Zuni, a restaurant with a reputation for being environmentally and socially conscious. It partners with regenerative farms, uses reusable takeout containers, and hosts bake sales to support women and fight racism. Owner Gilbert Pilgram and chef Nate Norris say the restaurant is trying to redress not only the imbalance in wages between front- and back-of-house workers but also the racism and sexism inherent in tipping. The problem, Zuni servers say, is that this progress was coming at their expense. They say the initial offer would have meant a significant pay cut — in the tens of thousands of dollars annually. It also came at a time when many in the service industry were unemployed for more than a year, restaurants across the city and country were in the middle of a staffing crisis, and businesses were struggling to hire back employees.

In moving to a gratuity-free model, Zuni joins the ranks of many restaurants that have attempted to do the same over the past seven years and more. But the no-tipping movement has been defined by idealistic starts and dramatic stops, none so disruptive as the pandemic; last year, Danny Meyer of the Union Square Hospitality Group in New York returned to tipping when the crisis hit. Most recently, Comal in Berkeley reversed course after being one of the leading voices for the no-tipping movement in the Bay Area. Zuni is a prominent example of how the no-tipping debate has shifted over the past seven years, moving beyond money arguments and diner reactions to increasingly urgent social justice issues. But what Zuni’s story demonstrated as it ricocheted through the local news cycle is that the loudest resistance is now from front-of-house staff.

As a groundbreaking Californian restaurant, Zuni might have every intention to be on the right side of restaurant history. But if it loses its legendary lifetime servers in the wake of the pandemic, the risk may offset the reward.

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News of Zuni’s tipping structure change broke at the beginning of May, when one of those lifetime servers, who has worked at Zuni for more than 20 years, reached out to Eater SF and multiple other media outlets. He wished to remain anonymous because — although upset about the change — he still hoped to return to work at Zuni. Even after being laid off for more than a year, this server never doubted that his longtime employer would pull through the pandemic and offer him his job back: Zuni owns its building and has wealthy clients who have been ordering takeout chicken and donating generously. So when he finally received a call from management in April, he was relieved. But that relief shifted to shock when a new manager offered him a flat hourly fee of $24.

“I was on a hike, and I had to step off the trail and collect myself,” he says. “I was doing the math in my head and it just wasn’t adding up, with my rent, utilities, and food. I don’t even have a car or kids. I don’t have student loans or anything. I’m debt-free, but [without tips] I couldn’t make the ends meet. It would be going into debt working for them again.”

While $24 an hour is above the current minimum wage of $16.07 in San Francisco, the rate would have still meant significantly less take-home pay for him. The server says he worked 30 to 35 hours a week before the pandemic, averaging $200 a night in tips. That means when he worked around 32 hours a week, he had the potential to earn upwards of $70,000 a year. With the new hourly rate, he would be making about $40,000 — a $30,000 pay cut. Another server, Scott Chrush, who worked at Zuni for a year prior to the pandemic, also says he made about $70,000 a year back then. (To put those numbers into perspective, the poverty threshold in San Francisco is $82,200 per year for an individual, as defined by the U.S. Department of Housing and Urban Development.)

Both servers say no one they knew accepted the initial offer of $24. Negotiations ensued: After a few days, Chrush says, management reached out again and offered him $30 an hour (about $50,000 annually). At that time, Zuni made a statement to several outlets: “The offer of $24 hourly starting wage for some service staff members is not representative of all offers. Wage negotiations with currently laid off workers are ongoing,” it said. But this past week, Zuni confirmed for Eater SF that non-management employees will earn $19 to $35 per hour. So at the highest end, servers would make about $58,000 a year.

With the change in place, Zuni says, back-of-house employees (line cooks, prep cooks, and dishwashers) will earn 20 to 40 percent more than before the pandemic. The restaurant is also offering health insurance, sick days, and vacation to all full-time employees. And Zuni did ultimately decide to include a line on the bill that allows diners to tip above and beyond the service fee. (Zuni notes that the specific wording of the fee is still being discussed, along with whether it will be called a service fee, labor charge, or something else.) “All of these changes are in the interest of creating equity in the restaurant,” says Norris. “And removing any discretion or bias from the customer, based on who somebody is, what they look like, or what gender they are.”

Norris has become the restaurant’s spokesman over the past few years, but this decision ultimately rests with Gilbert Pilgram, the owner, who has largely remained behind the scenes. Pilgram worked for 19 years at Chez Panisse, another historic Californian restaurant that was famously tip-free for three decades, before joining Zuni as a partner in 2006. He took sole ownership when his friend Judy Rodgers died in 2013. In an interview with Eater SF, Pilgram said he was not surprised that servers were upset, and that he stood behind the decision. “We’re offering a very fair wage,” he said. “Some staff members were not happy with it. Yes, it’s a change. And it’s going to be growing pains. But in the long term, I hope that Zuni is proven right … and I don’t think Zuni is going to be alone in doing this.”

Zuni Cafe

Zuni isn’t the first restaurant to try to switch to a service fee, and it won’t be the last. California landmarks Chez Panisse in Berkeley and the French Laundry in Yountville have had service fees for decades. Around 2014, a wave of restaurants tried to eliminate tips; a few were successful, including Zazie in San Francisco and Dirt Candy in New York. Others attempted to make the switch and dramatically backpedaled, only to return to traditional tipping: Thad Vogler of Bar Agricole and Trou Normand in San Francisco reversed course after less than a year, saying he couldn’t keep servers. In 2020, Danny Meyer of the Union Square Hospitality Group in New York publicly stated that he lost 30 to 40 percent of his “legacy” front-of-house staff before returning to tipping during the pandemic. Recently, other restaurants, including Sons & Daughters, Cotogna, Spruce, and more, are trying to eliminate tips, hoping the strategy might play out differently than before the pandemic.

Surprisingly, only two weeks after Zuni cut tips, Comal in Berkeley returned to tips, after being one of the leading voices for the no-tipping movement in the Bay Area. Pre-pandemic, Comal had a 20 percent service fee; during the pandemic, it switched to service-inclusive pricing for takeout and delivery; and now for the reopening of indoor dining, it’s bringing back tip pooling within each of its three restaurants. Owner John Paluska says he doesn’t feel any better about the inequities in tipping, but that as Comal has grown from a single standalone restaurant to a larger group with two fast-casual spots, as well as takeout and delivery, the no-tipping model was no longer viable. “We ultimately concluded that a service charge for counter service doesn’t work,” he says.

Paluska also confirmed that he’s parting ways with longtime partner Andrew Hoffman, who’s no longer involved in Comal. In an interview with Eater last fall, Hoffman said he wasn’t quite optimistic about the post-pandemic future for no tipping, but that he certainly hoped more restaurants could make it work. “This is incrementalism. It’s gonna be slow evolution and change, based on the [restaurants] that survive,” he said in fall 2020, before the second surge of the virus. “It’s going to be the savvy ones that make it, and let’s hope they have their heads on straight with respect to the biggest issue in restaurants, which is the relationship between pay and work.” Now, moving into reopening, sole owner John Paluska tells Eater SF that he and Hoffman were always in agreement on this issue but never completely drilled down on the new service model, especially at their newest location in Oakland. “The situation changed going into reopening.”

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Years ago, the no-tipping debate focused on the imbalance of wages between front and back of house, as well as negative reactions from diners to higher prices — what we might call sticker shock. But now the conversation has shifted. The Black Lives Matter movement has brought urgency to social justice issues: Tipping as a practice in the United States dates back to the years following the Civil War, when former slaves started to rely on tips instead of low wages, and today the data still shows that tipping encourages racial profiling. The #MeToo movement also underscores the sexism in tipping, and staff across the country are experiencing a rise in sexual harassment, with diners demanding that servers pull down their masks to determine how much they want to tip. The COVID-19 crisis also pushed restaurants to think beyond pay and consider health insurance for workers risking exposure to a deadly virus, and unemployment rates, should those minimum-wage workers get laid off in another surge. And diners feel differently now, too: Many have been tipping at above-normal rates during the pandemic, and seem more receptive to price adjustments and service fees.

But increasingly, especially in this high-stress moment of post-pandemic reopenings, the strongest negative reactions against a no-tipping model are now from front-of-house staff. Servers have been unemployed and collecting unemployment checks for more than a year if they haven’t moved out of state or switched industries. And U.S. restaurants are in the middle of a staffing crisis, struggling to hire back employees who say they aren’t being offered wages that are worth the risk. Across the board, servers say they loved working for Zuni, that the chef and owner are kind people, and they respect that this was a business decision. They wholeheartedly agree that their teammates in back-of-house jobs deserve to earn a living wage in San Francisco. But they wish this step toward equity doesn’t have to come at their expense.

“It’s a business. I get it,” the anonymous server says. “But you don’t take out of the pocket of one employee to pay another employee.”

Before the pandemic, Zuni had about 100 employees, more than half of them in the front of the house. Specifically, the restaurant says 27 servers were on staff before the shutdown. At the time of writing, only seven servers have accepted offers to return. Thirteen had already moved on from the restaurant for unrelated reasons, before the pay change. Five more are still considering offers, and two did not respond. So while the most common reason servers aren’t coming back to Zuni is, put simply, pandemic circumstances, the service fee was also a clear consideration.

Zuni has started hiring new employees to staff up for its reopening of indoor dining, which, given the negotiations, is pushed back to early June. With many new hires starting at the same time, Norris acknowledges that there will “be hiccups and learning curves.” Chrush says that money aside, this new influx of employees is the reason he’s not returning to the restaurant. “The culture and the experience at Zuni would not be the same, at all, for me as a server,” he says. “That’s my trepidation … I’m personally not enthusiastic about returning back to work if those are the conditions.”

Zuni Cafe

Zuni Cafe

San Francisco might be in a unique position to see a second wave of service charges, due to a few variables. New York still has a tipped minimum wage, also known as a sub-minimum wage, so restaurants can offload labor costs onto customers. New York also restricts additional fees and tip pooling, so restaurants that cut tips have to raise prices. By contrast, California is one of only seven states to have One Fair Wage, so restaurants have to pay the full minimum wage, and California allows more surcharges and tip pooling, so restaurants can break down costs clearly for customers. But even if California has different laws, and even if San Francisco is a socially conscious city, the post-pandemic future for Zuni remains to be seen. It’s not just a question of how many of Zuni’s lifetime servers come back now, but also how many will stay. “Zuni is very privileged in having good standing in San Francisco, and with that standing comes responsibility,” Pilgram says. “We are taking a deep breath and we are going to do this.”

“At the end of the day, everyone has to live in San Francisco. Everyone has a right to health care. Those are wounds that were especially opened in the last two years in this country. And it’s the responsibility of businesses like Zuni to stop complaining about it and do something about it, ” he says.

Paluska, meanwhile, feels the first wave of no-tipping restaurants has “dissipated,” as many have either closed or returned to traditional tipping. Now he fears that this second wave of no-tipping restaurants may suffer the same fate. He suspects that many restaurants that played with 5 percent, 10 percent, or even 20 percent surcharges or fees during the pandemic never really did away with tips entirely, and will return to tips as the city and country reopen. But despite some skepticism, he has faith that if anyone can make it work, it’s Zuni Cafe. “If we had a single, standalone restaurant, if Comal was the only restaurant we had, we would probably still be going with a service charge,” he says. He believes it could make sense for Zuni. “They’re making a big change. It hurts. It’s going to provoke a lot of feelings. And there’s going to be some fallout. That’s inevitable.”

The anonymous server, who first reached out to local media, declined to comment any further on this story. He has accepted a higher offer to get back to the chicken business at Zuni Cafe, which reopens for indoor dining in early June.

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