Portland restaurant Kachka swaps tipping for automatic service charge in new employee equity plan

By Meagan Cuthill (OPB) and Julie Sabatier (OPB)
Jan. 15, 2022 2 p.m.
Kachka, a Southeast Portland restaurant featuring Russian cuisine, co-owned by Bonnie Morales and Israel Morales, Jan. 14, 2022. Beginning in January, the restaurant replaced tipping with a 22% service fee, will pay employees a minimum wage of $25 per hour and offer free health care.

Kachka, a Southeast Portland restaurant featuring Russian cuisine, co-owned by Bonnie Morales and Israel Morales, Jan. 14, 2022. Beginning in January, the restaurant replaced tipping with a 22% service fee, will pay employees a minimum wage of $25 per hour and offer free health care.

Kristyna Wentz-Graff / OPB

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Since opening in 2014, Kachka has been a popular spot for Portland foodies. It has received plenty of acclaim over the years.

Now, Kachka is gaining attention again — but not for its food this time. The restaurant has announced a wage equity plan. It involves charging diners a 22% service charge in lieu of tips, offering full healthcare coverage for its employees and introducing a profit-sharing model.

Bonnie Morales, Kachka’s executive chef, who owns the restaurant with her husband, spoke to Think Out Loud about the decision and why it was made now.

The potential future of tipping

Americans are accustomed to adding a tip to their checks at food establishments. With its new equity plan, Kachka is shaking that up, and at a very strained time for restaurants.

The coronavirus pandemic has hit some business sectors harder than others, and the food industry has been especially hard hit. A mix of prolonged supply chain issues, inflation and low staffing — all exacerbated by COVID-19 — has led to food shortages, rising food costs and fewer sales for restaurants as customers stay home.

Despite all those factors, Kachka is going forward with its equity plan, seeking to address an industry that Morales calls broken.

“We’ve gotten to a sort of a critical mass of staffing shortages,” Morales said. “Pandemic related stressors and inflation and things that are just really making this something that would be a ‘nice to have’ and turn it into a ‘need to have.’”

Bonnie Morales, chef and owner of Kachka

Bonnie Morales, chef and owner of Kachka.

Kayo Lackey

“The restaurant industry has gotten plenty of attention for being a difficult industry to work in, [with] razor-thin margins, poor working conditions, etcetera, for decades,” she said.

“For too long the restaurant industry has propagated a system of inequality, racism, and discrimination,” Kachka’s equity plan webpage states. “It’s time to break from the dysfunctional status quo.”

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Morales argues that restaurant owners are the ones with the power to make changes, so equity in their industry is their responsibility. “It’s hard for us to sleep at night when we don’t feel like we’re trying to make things better,” she said.

When it comes to pay, Morales said, “No one should have to basically be an indentured servant for the rest of their life just because they love to cook.”

How tipping tips the scales of income

There are clear winners in the tipping system: servers and bartenders.

Unless employees share tips, tips go directly to a restaurant’s wait staff or those who tend the bar. While this means higher incomes for those front-of-the-house positions, many are left out: cooks, dishwashers, managers, etc.

Morales noted this disparity when approaching Kachka’s equity plan. She knew an end to tipping would decrease pay for people in those front-of-house roles, but the equity plan was put in place to benefit the whole restaurant staff.

“We have not lost a single employee. We started talking about this [equity plan] in September, so we gave plenty of runway and plenty of opportunity to go elsewhere if this was not something that they wanted,” Morales said. “We were really transparent with what it would look like, how much they were making and how much they would be making and all those things and not a single person has put in their notice and is leaving because of this.”

Not the first tip-free rodeo in Portland

Kachka is not the only Portland restaurant to attempt to move away from tipping, and it likely won’t be the last. To date, most others have failed to sustainably enact permanent changes.

A case study from 2016: Le Pigeon went “gratuity free” and opted to raise its menu prices. About a year later, tipping returned.

Morales believes Kachka’s approach will fare better.

“They tried folding [equity] into the prices and … there’s just a psychological shift there that as a society, I don’t think that we’re ready for,” Morales said.

“I wish that we could just switch over to increasing our prices and really, truly just take care of all of the nuts and bolts of what that means on the backend as a business. But, there is some sort of a societal norm of paying for service separately from the cost of goods that has been ingrained, and it’s going to take a lot more effort and work and collaboration with other like-minded businesses to kind of do this at the same time. I don’t see that happening anytime soon.”

Morales thinks separation is key: showing that the money is specifically for the staff, instead of just increasing the menu costs.

“[At Kachka], we’re allocating this money for a certain thing. It makes it really clear that we’re not just raising our prices because [of] inflation or the cost of some ingredients went up. We’re being very conscious of what this money is for and communicating that, so that customers who want to support businesses that are treating their employees fairly can know where their money is being spent.”

Morales said early 2022 is a tough time for her restaurant and others as coronavirus cases surge from the omicron variant, but she and her co-owner husband determined that change couldn’t wait.

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