Service fees have upended D.C. restaurants. Here’s how workers really feel. (2024)

The law has left customers and owners at odds: Diners have expressed feeling perplexed and exhausted by the additional fees tacked on to their bills and the rising cost of eating out. Many say they don’t understand how the charges are being used and are unsure how to adjust their tips. Some restaurant and bar owners, meanwhile, have stressed that if they need to give workers a higher base wage, someone needs to pay for that — and it is usually going to be the customers.

A year after I-82’s implementation, The Washington Post asked restaurant workers and owners to weigh in on how the law has affected them. While anecdotal, their experiences shed light on how this change to the local restaurant and bar industry has at times shaken up the jobs of the people who make it run.

Here’s what they had to say.

Role: Bartender at Nick’s Riverside Grill, the Passenger and Duffy’s Irish Pub

In the industry since: 1994

For years, Valerie Torres worked part time in the restaurant industry, bartending after college and supplementing her income as a preschool teacher. When she realized how much more lucrative bartending was than teaching, she made the service industry her career.

Now, Torres is considering a return to teaching — partly because of Initiative 82, which she said has damaged D.C.’s restaurant scene and caused longtime industry professionals to migrate to Virginia or Maryland.

“From the ’90s till now … it was really exciting to see how things were trending and how it was exploding,” she said. “And now I’m worried for our city and the industry.”

Torres works at three bars and restaurants. One of the restaurants, Nick’s Riverside Grill, adds a 5 percent operational fee to all bills, a practice that is meant to offset high labor, rent and food costs. Her tips there have decreased since the initiative passed, and it has become more common for patrons to tip 5 to 10 percent rather than the customary 15 to 20 percent, she said. (Management at Nick’s Riverside Grill did not respond to calls and emails seeking comment.)

Torres also has had to explain the fee to several unhappy customers.

“I had one guest ask me if [the operational fee] was my tip, and I said, ‘No, it wasn’t.’ He was like, ‘Well, it’s going to be your tip now,’” Torres said. “And he left me nothing.”

Like many critics of Initiative 82, Torres worries the law will shrink restaurants’ already slim profit margins, forcing small-business owners to reduce staff or close their establishments. Although she understands the idea behind the legislation, she says it was already hard for independently owned restaurants to survive before its passage.

An hourly raise of a few dollars, she said, becomes a significant increase in labor costs when applied to dozens of employees.

“That’s unsustainable,” Torres said. “Anybody who tells you different doesn’t know how the business works.”

Role: Owner of Republic Cantina and co-owner of Hill East Burger

In the industry since: 2015

As the owner of two restaurants with different business models, Chris Svetlik, 36, has one foot in something resembling the pre-Initiative 82 world and the other outside it.

Republic Cantina, his Tex-Mex concept restaurant in Truxton Circle, has maintained the same structure since the law took effect: There’s no service fee, and tipping is expected. Svetlik decided to absorb the increased cost from I-82 for now. His profits have decreased slightly, but he felt it was worth it to avoid the potential backlash of instituting a service fee.

He’s trying a different approach at Hill East Burger, which opened a month before I-82 passed. The business charges a 20 percent service fee, half of which goes to front-of-house and kitchen staff and half of which goes to the business. Tips are not expected.

This system enables Svetlik to pay more than the tipped minimum wage and offer staff “take-home guarantees” of $25 or $30 per hour by contributing to their pay if tips, base pay and their share of the service fee don’t get them there, he said.

The biggest remaining problem, Svetlik said, is it’s hard to explain all this to customers.

“I think what we did is very well intentioned,” he said. He admits, though, that his solution is complicated and not easily understood by diners who are “pretty exhausted by the whole situation.”

Svetlik hasn’t closed the door on the possibility of eventually changing the model at either or both of his establishments. But for now, he hopes diners will understand that most restaurants’ margins are not big enough to permanently absorb I-82’s increased labor costs.

“If D.C. — as a voting public, as a society — decides that a class of workers deserves higher pay, I think that’s admirable, and we will certainly go along with it,” Svetlik said. “And my ask for said voters and customers is to understand that somebody has to foot the bill for that increase in pay, and, largely, it is going to be the public.”

Role: Bartender at Grand duch*ess

In the industry since: 2014

Max Hawla, 31, backed Initiative 82 before D.C. residents voted it into law. So far, he stands by his support.

He earned $5.35 per hour, then the tipped minimum wage, before I-82 raised his wages to $6 in May last year and then $8 in July. His bar has continued to use the auto-gratuity that was already in effect, so his tips haven’t changed.

The increased base wage, Hawla said, provides “a slightly higher baseline of security.”

Hawla’s only frustration with the results of I-82 is that many restaurants and bars — although not his own — have implemented service fees as a result. If businesses need to generate more income to offset rising labor costs, he said, they should raise menu prices. He said adding a service fee comes off as a dig at I-82.

“It seems to me that they’re trying to blame the policy for the service charge, rather than wanting to admit that they just don’t want to increase their labor costs through pricing like a normal business,” Hawla said, adding, “I want consumers to know that these service charges are not what workers wanted.”

Role: Part-time bartender at Madhatter

In the industry since: 2004

Jennifer Hitzke has bartended part time at Madhatter, a long-beloved Dupont Circle bar, for 14 years. Though the bar has never had an I-82-based service fee, she worries that the varying fees across D.C. restaurants will lead confused patrons to take their business elsewhere.

“I do think that because we’re such a transient city, it leads to more confusion, which ultimately affects the amount of money that the tipped workers are making,” she said.

Though Hitzke didn’t reference any changes in customer behavior at Madhatter specifically, she worries about the fate of the D.C. restaurant scene and its workers. She wants diners to understand that the increase in base wages may not make a notable difference on her bank statement.

“I’m not necessarily getting any more money in my pocket at the end of the day. If you’re making a couple of dollars more per hour, it’s just possibly a little bit less that we may have to pay in taxes at the end of the year,” she said.

She also worries that, without tips, workers would be less motivated to provide a stellar dining experience. Opponents of I-82 and parallel initiatives nationally have echoed this sentiment.

“Anyone who’s ever gone abroad and had service — it’s not the same level of service that you’re getting in the States, especially not in the District of Columbia. I think we have some of the best service workers in the country,” Hitzke said.

Eric Heidenberger, a partner and former bartender at Madhatter, told The Post that managers held a meeting to hear staff concerns about the initiative on March 25, and that they are still trying to “find a balance” among the interests of employees, customers and the business. The bar has discussed implementing a service charge if it sees a continued decline in tips. “Our primary focus has always been our staff,” Heidenberger said. “Whether you’re for or against Initiative 82, we think it’s important to understand that it is having a significant impact on restaurant operations across D.C.”

Role: Owner of 2Amys Neapolitan Pizzeria

In the industry since: 1981, first as a chef, then as an owner

2Amys Neapolitan Pizzeria had a service fee for one day in 2020: Peter Pastan remembers putting up a sign telling customers that they could ask the staff to remove the fee from their bill if they didn’t like it. Several customers did, he says. He removed it the next day, ultimately choosing to raise prices rather than implement more fees.

Although the day-long service charge was a test to see what service fees could look like for the restaurant, it resulted in more systemic changes. Shortly after, Pastan decided to increase his team’s pay to meet the standard D.C. minimum wage, with gratuity baked into the menu prices. He and his team reviewed a year of payroll data, raising wages to match the staff’s expected earnings, including tips. Now, there is no obligation to tip, though any tips will go into a pool for all staff members except managers.

Pastan explained these changes to staff members, who he said had some questions but seemed receptive — “no one quit,” he quipped. Diners were mostly receptive, too, if not slightly perplexed at first. “They spent a lot of time staring at their credit card receipts looking for a tip line.”

Pastan wasn’t fazed when Initiative 82 took effect, even though he had opposed Initiative 77 in 2018. Since then, he has followed the discourse around the initiative, including submitting ideas to D.C. Council members about “front-loading” service charges at the beginning of the meal or simply eliminating them.

“The meal costs what the meal costs. I think sneaking [a service charge] in at the end is a silly way to do things,” he said. “If you’re going to come and spend $200, it doesn’t matter if everything costs a buck and they have a 9,000 percent service charge. I mean, it’s all the same at the end, so why pretend otherwise?”