COMP NEWS –  A restaurant in Portland is offering a new system for its employee wages, eliminating the industry’s usual tip-based, pay-for-performance model and charging a flat service rate instead. The new compensation model is a shot at improving wage equity in a food service industry that is struggling to retain staff through the great resignation.

As the hospitality industry struggles with staffing, one Portland restaurant is starting to do things differently. Kachka eliminated tipping this week, replacing that model with a 22% service fee. The owner said this creates a base wage of $25 an hour for all employees, and they’re also able to provide healthcare.

This may come as a surprise to many Americans who are very used to tipping a server based on how they feel they performed their service to the table. But the owner of this restaurant and its staff argue that this traditional model does not account for other workers such as kitchen staff or cleaners who do a lot of unseen or normally unrewarded work.

Caitlin Midkiff is a server who said this was the right call.

“I started in kitchens too and I know what it’s like to see front of the house making a ton of money and not working as much and the kitchen always pulls in a lot of the weight, so I just think it’s awesome,” Midkiff said.

The boss went on to mention that the old system basically equates to an unfair and unjust pay-for-performance system that can hurt her staff when something might happen beyond their control. And this new system with the help of the 22% service fee will help increase equity and living wages across her restaurant staff.

“When you have a performance review at work your boss isn’t saying, “You know what, I’m going to cut your pay 20% today, this week because you aren’t doing so hot.” That doesn’t happen and that should not happen to any restaurant worker either,” Morales said.

This change may receive mixed reception from customers. Local KATU news correspondent Megan Allison took a Twitter poll asking, “Do you agree with adding a service fee and eliminating tips?”

56.4% answered “no” from the poll with over 1000 votes.

To read more about the transition from tip-based compensation models to flat service rates , click here.

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