February 23, 2020
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Why this Maine restaurant is betting its business on banning tips

PORTLAND, Maine — When grab-and-go cafe Baristas and Bites opens in the Old Port in mid-October, customers will notice a new item on their bill: a cost-of-living surcharge.

“This is risky and different,” said Amy Alward, owner of Love Kupcakes Inc., who will open her new establishment serving breakfast, lunch and dinner, with the goal of paying full-time employees $15 per hour.

By offering reasonably priced rotisserie chicken meals and discounts through a loyalty program, Alward expects high-volume sales to reduce the markup on goods like organic produce that gets passed onto customers. She intends to tack on an 11.2 percent charge, based on the bill’s total, to pay employees a living wage.

“The dynamic that we are working on is bringing equitable pay from the kitchen, into the front of the house and visa versa, which means that we are a no-tipping zone,” said Alward, who is also a financial adviser and works in insurance.

She plans to offer employees a retirement package, paid time off and health insurance — sweeteners restaurant gigs can often lack. “We’re hoping our loyal patrons will understand that it’s expensive to be in Portland, to live in Portland, but we need and want to be here,” said Alward, who says she has sunk seven figures into the rebrand of her cupcake business and the new concept she is building at 469 Fore St.

“I have my fingers crossed. I don’t know if it’s going to work.”

Baristas and Bites, which includes Love Kupcakes, will open just weeks before Mainers go to the polls on Nov. 8 to vote on Question 4, deciding whether to raise the minimum wage to $12 per hour by 2020. The referendum includes a section on phasing out a tip credit.

“What the restaurant industry is facing statewide, if the referendum passes, is a restructuring of entire pay,” Julie Rabinowitz, a spokesperson for the Maine Department of Labor, said. Paying $15 per hour and not using the tip credit “could give her a cutting edge in the labor market, because it’s a tight labor market. In this market, employers need to pay a competitive wage.”

Restaurateurs in Maine and across the country recently have struggled to find kitchen help. But Baristas and Bites has hired 20 employees and has a waiting list.

“I’m getting some good talent,” said Alward, who has worked in the restaurant business for 20 years in New Hampshire and Florida. She plans to mentor and coach neophytes for a sustained career in culinary arts.

“I want people to understand in order for me to take care of patrons, I need to take care of my staff,” she said.

And because a large part of her business includes early hours, keeping employees local is key. Affording Portland’s rising rents is not easy for those making minimum wage.

“We need our staff to live near where they work, since we have to get people in the door baking by 3 a.m. to get our fresh-baked goods in the ovens,” Alward said. “To do that we need them to be able to support themselves.”

The radical idea, which, according to Maine Restaurant Association president Steve Hewins, hasn’t been attempted before in Maine, is gaining traction across the country.

Cities including Seattle, where the minimum wage rose to $15 last year, has experimented with a tipless restaurant economy, and big-time New York restaurant owner Danny Meyer did the same in his establishments to level the playing field. In both cases, menu prices increased.

By encouraging customers to come in regularly, installing a self checkout, curbside pickup, a new ordering app and offering a rewards program, Alward intends to keep prices affordable, despite the tacked-on gratuity.

“It’s a chance to explore a new model because it’s a new restaurant,” said Hewins, who wishes her luck. “An existing restaurant might not be as bold. It’s a tough business to be.”

Will eaters vote with their wallets?

“I like the idea of thinking more innovative about the issue,” Jacob Meade, a freelance finance writer in Portland who eats out several days per week, said. “You really need to know your audience demographic. Are people willing to pay more knowing it’s going toward affordable wages? It seems like a better idea for a sit-down restaurant.”

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