BLOOMINGTON, Ind. — The owner of a craft brewery in downtown Bloomington made the move to eliminate tipping at the beginning of August and, instead, pay his employees more money.
“It’s by far, been one of the best changes that we’ve ever made in the history of this business,” said Kurtis Cummings, founder and president of Switchyard Brewing Company.
Now, if you’re planning to head over for a cold beer on tap or a slice of pizza, you no longer need to leave a tip. In fact, you’re discouraged from leaving one, unless you’re adamant that it must be done.
Cummings said, “It takes 30 days to break a habit. Some people feel weird about it. Others are like, ‘this is awesome.’”
But why the change? Cummings says it’s for several reasons, with one of the most significant being the noticeable disparities in the way people were tipping their servers based on gender, age and race.
Cummings says brewery management analyzed payroll data back to when the establishment opened, and in breaking it down even further, they saw sizeable gaps in pay due to tipping disparities.
“A server’s pay is a direct result of their sex, of their sexual identity, of their gender identity, of their color, of their nationality, and we saw as much as a $4 per hour wage difference as they pertain to some of these protected classes,” said Cummings.
“That just didn’t sit very right for us,” he said, “because why would someone that is serving one section get paid less than someone that is serving in another section?”
Several approaches to fixing the problem, Cummings says led them back to the solution they reached in the end: to eliminate tipping altogether and increase pay and benefits for employees.
Rather than the $2.13 per hour servers were making, plus tips, they are now making $15 per hour to start, with an increase in pay after a 90-day probationary period, to $18 per hour.
Along with a pay increase, Cummings says all workers are provided with free urgent care and mental health visits, regardless of full or part-time status, along with other benefits. They include unlimited paid vacation time for full-time employees, one month of paid parental leave, and for part-time employees, 32 hours of front-loaded PTO are also offered. Those who choose to volunteer in the community can also receive volunteer paid time off.
“The benefits far outweigh. The no tipping system has way more benefits than the tipping system,” said Cummings.
Since the announcement, they have retained all employees, he shared.
Another one of the reasons for the move was the belief by Switchyard that businesses should be responsible for the wages of their workers, not the customers.
Cummings says about 75% of Switchyard’s staff are part-time employees from nurses to graduate students, full-time teachers, paramedics and more, so to guarantee them $18 an hour after the quick increase, is something their team is proud to do.
“The other day the taproom was slow. In the traditional tipping system, I would have been sending people home, so then they’re not getting paid regardless or according to state law I’d have to bring their pay up to $7.25 an hour,” said Cummings. “The minimum wage hasn’t changed since the nineties — $7.25 an hour. Who can live on that?”
With the new system, Cummings says on days like this, they’re able to keep staff on and help with other work around the brewery while ensuring they still make money.
“We’re a growing business. We’re growing fast and there’s always something to do around here so we’re guaranteeing that they’re leaving with a wage.”
He also says this new culture ensures that workers can make a livable wage without the worry that they will be harassed or whether they will be punished if something out of their control happens, like food that might take a little longer during a busy evening rush.
“Studies have shown better service does not result in better tips, better tips do not result in better service, and poor tips do not correct poor service,” said Cummings.
“The basic idea behind tipping is that service workers are getting rewarded for doing a great job, but the science simply is not there. There’s no science to back that up. You can get a table and have really great service, and they still may not tip you.”
On the brewery’s website, the team poses several questions for people reading about the new policy and helping them understand why they don’t believe good tips equal good service.
The write-up reads, “People in other professions perform their jobs well without being tipped by customers. Why is this industry any different?”
Molly Cooper, who was a guest at the brewery Monday afternoon on Labor Day, agrees.
“A lot of my family were waiters, waitresses, I was a hostess at one point,” said Cooper. “I’m just kind of familiar with how it works and it’s not always fair and in any other job you’re not given tips to do your job well, you’re just expected to do your job well.”
Cooper came to the brewery after seeing a relative share the post about the update in Switchyard’s tipping approach. She said she thinks this new move is great, and hopes more businesses will adopt the same system if it works well for the brewery.
“If you weren’t paying the bill, you wouldn’t know it was different than any other system,” she said, also crediting the attentive service they received and pizza, both which she called “fantastic.”
When a business is only paying its servers $2.13 an hour, Cummings says that’s how they keep their menu prices lower.
With that in mind, this raise in wages for employees at Switchyard does come with a small increase in menu prices, but he says it has been met with support from the community and their customers.
Although Cummings says he isn’t aware of any local businesses that have taken on the same approach just yet, he has heard from at least nine small businesses around the country looking to make the same change and asking the big question: how did you do it?
He credits a brewing company in Seattle, whose founder he said has assisted 12 other breweries across the country in kickstarting the same culture in their own businesses. He said all are still in business.
“It’s really powerful being able to do something really positive, not only for your staff, but also for your community,” said Cummings.
The pandemic proved difficult for many businesses, Switchyard Brewing Company included, and while you might call the move a leap of faith, Cummings says it was a change made with the entire team in mind and so far, “it’s been absolutely amazing.”
As for social media comments on a now-viral post by the company on Facebook, he said those have been almost all positive, with the exception of a few, who he hopes will read the stories and understand why they’re doing what they are, for their team.
Instead of a tip, they ask you do something like bring your glass up to the counter or leave a good review online.
“This is just the beginning and where we want it to go is to be able to provide revenue share for our staff, to be able to turn this company into an employee-owned company, that’s really where we want this to go in the future,” said Cummings.