DENVER — It's hard to beat a nice day in Denver, with hundreds of activities dispersed throughout the city. When the COVID-19 pandemic brought that to a screeching halt, many customers used tipping as a way to show their gratitude for those who worked while so many stayed home. The pandemic also gave businesses the chance to re-evaluate their tipping model.
Now, many consumers find themselves asking what the added charges are at the bottom of their receipts. Denver7 has a 360 perspective explaining a handful of methods businesses have implemented.
The Traditional Tip
The Bindery is a restaurant, bakery and market rolled into one location in the Lower Highlands. Owner and Chef Linda Hampsten Fox said they opened five years ago, and their layout puts all of their hard work on display in an open kitchen concept.
“We make everything by hand, and it takes a lot of time and dedication... Kind of like Santa’s workshop, you just see all the craft of cooking," said Hampsten Fox.
As a restaurant that prides themselves on exceptional service, the traditional tipping option for their wait staff is standard.
“We have open tipping for our front of house staff," said Hampsten Fox. "What I'm seeing is most people are still tipping very well, like 20%, 25%, based on great service.”
When The Bindery was able to reopen to the public after the height of the COVID-19 pandemic, Hampsten Fox said they implemented a 3.5% service fee charge. With so many increases in costs and labor shortages, Hampsten Fox said they changed it to 5% about six months later to help facilitate hiring across the board and stay competitive within the industry.
Originally, they called the charge a service fee, but then changed the name to a kitchen fee.
“For guests, it's very confusing," said Hampsten Fox, hoping changing the name of the fee would help clarify it's use. “Everyone is very familiar now with some kind of service fee at a restaurant. And it helps the entire restaurant, as inflation has hit. Also the wage levels going up in the city of Denver, cost of goods, various things... We want to try and keep our pricing and our portioning what it was before the pandemic, and that service fee helps us do that.”
Hampsten Fox still does not think the term kitchen fee is sufficient, and wants to find an appropriate way to describe what the charge is to ensure her guests do not feel as though they are tipping twice on a bill.
“We went from the pandemic into a very extreme labor shortage where we didn't have enough staff. Now we're at this point where the cost of goods has really skyrocketed," said Hampsten Fox. “Even though we're getting hit with various hidden costs, cost of goods increases, we've been trying to maintain our level of pricing on our menu and just focusing on giving a really great experience.”
The Service Charge Instead of a Tip
Bierstadt Lagerhaus is basically an adult playground capable of holding 650 people that has been open for almost seven years.
“COVID was interesting because it provided us all with a reset to allow us to really examine what we had been doing," said one of the owners, Chris Rippe, who explained why they switched to a service charge model coming out of the COVID-19 pandemic.
“I think table service is going to be a thing you only see in fine dining in the future," Rippe said from the brewery inside the building. “For better or worse, we thought the tip model was broken. We had huge pay inequities between bartenders and kitchen staff... We thought taking that out of people's thought process, for one was going to be good for us, and it was going to be good for them. There would be less confusion.”
Bierstadt offers counter service or customers can order through their phones at tables. However, there's never an option to tip, and instead there's an instant 20% service charge.
“Service charges can be shared amongst your entire staff, as long as you pay your entire staff full minimum wage... Tips are owned by the staff. Service Charges are owned by the house," Rippe explained. “We distribute 100% of our service charge back to our staff, and it's important to make that distinction. But when you get to the level of diners, that's a lot for them to sift through. They shouldn't have to know the laws to hope that people are doing the right thing.”
As a business owner, Rippe said he does question establishments that have both a 20% service charge and the option for a 20% standard tip. That's when he begins to wonder where the service charge is being allocated.
Still, he believes the service charge model at Bierstadt is the way of the future.
“Should they [the staff] be punished because your beer took a little longer than you wanted it to take? So now you're going to take money against somebody who's clearly getting their butt kicked all day and is working, going as fast as they can... I just took your ability away to punish the staff who is still working hard, even though they're understaffed," Rippe said. “I, as a business owner, think I should get to decide how much my staff gets paid. Not you as the customer.”
Rippe wishes more businesses would consider adopting a service charge model, one reason being that the customer will pay for an increase in the cost of goods in some way or another.
“Reality is, even if we took the service charge line off at 20%, and put it into the beer line, all of a sudden, even though you're not paying a tip, we're the most expensive beer in the city," said Rippe. “It's the same however you slice it, it just depends how you like your receipt itemized. And ultimately, I think the amounts end up really similar.”
A Tax for Employee Health Care
Pet owners can spend hours sifting through the selection of goods at Luke & Company Fine Pet Supply & Outfitter, which also offers grooming services.
Valerie Brandner has been grooming pets for 18 years, and said a 20% tip is standard for the service.
“I have always gotten tips. It doesn't affect what I do, or how much I care for the dog because I get paid well also, but it is nice to be appreciated," Brandner said while blow-drying a poodle.
The owner of the store, Luke Johnson, said their credit card machines automatically prompt a tip option because it cannot distinguish between a good and a service.
"We've labeled all of the credit card machines 'tipping for grooming only' so that people don't feel obligated to tip on purchasing a product," said Johnson. “People still tip when they purchase probably half a dozen times a day. And we usually ask them 'are you sure you wanted to tip?' You're just buying a bag of dog food.”
If a customer does decide to tip on a retail sale, Johnson said that money ends up as a bonus twice a year to his employees.
Johnson said the store has resisted adding a 3% credit card charge or service charge seen at many other establishments. If customers were not tipping the groomers, he would consider a fee, but said fortunately tipping is common from their customers.
“We actually levy what is the equivalent of a service charge in our sales tax and it's 1.25%. It pays for employee health care. It doesn't pay for all of employee health care, it pays for a portion of it," Johnson explained. “Tip your service employee or the person who's helped you, absolutely. But beyond that, I think you need to build a business model that encompasses all of your expenses, and figure out what that costs and be honest and upfront with your customers about that. Don't expect an extra service charge on top of everything else that customers are dealing with.”
Johnson does wonder what the future of tipping in general will look like, if minimum wage continues to rise in Denver.
“We might see some hesitation on tipping as that minimum wage continues to go up in coming years," said Johnson. “There's going to be pushback from consumers at some point. And I think when the incoming recession hits, whenever that may be, I think that'll put the brakes on it.”
The Classic Tip Jar
Brenda Rodriguez uses her job as a "budtender" at Peak Dispensary to help educate consumers about cannabis.
The shop has specific tip jars for each budtender at their registers. Rodriguez said normally, the tips received are the change from a customer's purchase.
“It is appreciated when they do and anything is appreciated," said Rodriguez. “I don't like to anticipate because I don't like that feeling of greediness.”
The tipping can vary depending on whether or not the customer is a local or a tourist.
Rodriguez said some tourists leave tips that are considered huge for budtenders, as a way to express their gratitude for the educational experience provided.
“But then there are those that are from states that already have it [legal cannabis] implemented and they don't tip," said Rodriguez.
The Chair of the Economics Department at Metropolitan State University of Denver, Alexandre Padilla, said tipping is obviously strained by the increase in inflation experienced last summer.
“Business owners wants to make a profit. If they want to make a profit, they are going to have to transfer part of that increasing cost to the consumers," said Padilla. “If everybody is paying their workers more money, because we don't want to have a tipping system, the cost increases are going to be transferred to the consumers.”
The Bottom Line
Every business must decide how to pay their employees, and how to cover the cost of increasing goods. Whether that comes in the form of added fees or more expensive menu items, traditionally, tipping will always correlate with an increased bill. However, Denver7 learned in this 360 perspective there are ways around tipping that some businesses believe are the way of the future.
Editor's Note: Denver7 360 | In-Depth explores multiple sides of the topics that matter most to Coloradans, bringing in different perspectives so you can make up your own mind about the issues. To comment on this or other 360 In-Depth stories, email us at 360@TheDenverChannel.com or use this form. See more 360 | In-Depth stories here.