Parasole restaurants dipping into tip jar, taking 2% of wait staff's credit card tips

Categories: Investigations
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Kip Clayton, Parasole bigwig, declined to answer questions about the company's new policy.
Servers at Parasole restaurants received word last Tuesday that they'll have to give up 2% of their credit card tips to the house.

A server at Good Earth Roseville tells City Pages that higher-ups explained the move as being necessary due to rising credit card use amongst customers and higher fees from banks. The excised 2% on their tips will make up for rising fees.

The workers are in a quasi-revolt because they're making minimum wage already.

"People aren't tipping as much because the economy is bad," the server said. "Now they're asking us to take a 2% cut in income."

Parasole Restaurants.jpg
Parasole
Parasole restaurants: good policy on server tips or not?
City Pages called Good Earth to ask about the issue but was directed to Parasole's corporate offices.

Vice President of Business Development Kip Clayton declined to comment.

Why not?

"Whatever we end up doing in terms of compensation for employees is between us and the employees," Clayton says. "So there's no reason for us to share it with the rest of the world."

The waitstaffer City Pages spoke with says an official announcement was posted in the kitchen explaining that this change would affect servers at all Parasole restaurants, including Chino Latino, Uptown Cafeteria and Sky Bar, Il Gatto and Manny's Steakhouse.

UPDATE: Parasole tipping policy may be unpopular, but it's perfectly legal

UPDATE 2: Parasole finally responds to tip-dip controversy

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So frustrated
So frustrated

I am a server in Kailua Kona and I get only 10%on of my tips. They will not give me a w2 form to fill out. Makes me made. I feel for these servers.

Rational Customer
Rational Customer

I'll start off by saying that I was a regular customer to some of these restaurants in Minnesota.  After hearing this, however, I will be rethinking that decision.  I believe that this will be the trade off unfortunately for Parasole. 

I strongly believe that this is exploiting low level workers.  As for the argument that if the employees don't like it they can always choose to leave, that is just an ignorant notion.  Employee in these types of jobs often have very little choice in jobs.  Of course, they could find another restaurant where they can make minimum wage again plus tips, but the fact of the matter is that among the employees ranks are those supporting families.  Perhaps young mothers with a few babies to feed and provide shelter for.  Being so young, i am assuming that the average education level is high school.  Choice, therefore, is limited to sucking it up or starting over fighting for hours at another place as I've talked to more than a few servers about in my time.  That is Parosole's internal rational.  Yes, cost may have increased (even as the federal government limited credit swipe fees to 21 cents?), and more customers use cards.  But, as a business weighing your right to profit over your social and ethical responsibilities can, over time, damage your image.  Yet, like many other businesses profit wins over people every time....we remember though.

This may be a trickle down from banks being limited in those swipe fees; traditionally restaurants receive lowered fees as a rider attached to their processing agreement and this may have been eliminated as a result of big banks having to chase profits elsewhere (can you say monthly debit card fees).  However, credit cards eliminate all the problems of getting paid, they pay fast, unlike checks, and their guaranteed (same reason some bars/restaurants take your card to start a tab)  Exploitation of lower level workers, in my mind, is not the answer.  Business should consider these swipe fees a convenience charge for themselves.  To contrast the 25% higher tab argument in Parasole's tweet, SEE! you make more money by accepting them!  Don't exploit your workers to pay for that convenience.

I, for one, will make a conscious effort to steer clear of Parasole's family or restaurants in the future.  That's the only way we, as American consumers, can speak....with our wallets, or refusal to open them.

Db13813
Db13813

This is disgusting!  I can't beleive a succusful company is sucking 2% off their servers to fullfill an endless corparate greed for more money.  

Anokan
Anokan

Parasole is sitting on huge sums of cash. That's how they are able to continually open new restaurants all the time.  CORPORATION. People. Yes even in little ol' Minneapolis you can act like and be protected by the same rules of a big bank.     They are not bleeding anything, this is just an excuse to scrape more money into Kip Clayton's Republican warchest.

Eclecticshaman
Eclecticshaman

As a chef, I can say that I hope those of you who are saying "Oh, it's only a few cents, big deal. If they don't like it, get another job." , here in Texas, minumum wage for a wait person is $2.13 an hour. Let me spell it out, TWO DOLLARS AND THIRTEEN CENTS AH HOUR! And NO ONE is getting an average of $20 a table. The higher priced restaurant, usually the worse tippers. So yea, the places here that do this are screwing the wait staff big time. And all you jerks saying 'boohoo', you might want to watch the movie Waiting before you start mouthing off about this in real life, instead of hiding behind a computer screen.

Cokermc
Cokermc

I have been a full-time server for many years. I have also worked for Parasole for almost 12 of those years as a server/bartender and even a manager/supervisor. My history with the company notwithstanding, this is my general perspective: A server, before implementing this new 2% 'service charge', is already passing down 25-33% of his/her tipped earnings to support staff. This is based off a full-service restaurant standard (food/full bar. much like most of Parasole's dining spots). Additionally, the overwhelming amount of cards used for business dinners/expense accounts/holiday parties is, pardon the pun, tipped. On any given day/night, the likelihood of receiving no immediate cash from a guest is more likely than receiving any at all. Tipped employees, especially those who make minimum wage with no chance for raises, are ultimately getting nickled and dimed. It also trickles down to the staff that gets compensated from these tips. Bartenders, barbacks, wait assists, food runners, and sushi chefs will all get a smaller piece of this proverbial pie. In the end, and after taxes, you would be surprised how much of that 18% credit card tip your server, from Burger Jones, is really going home with. Frankly, whats another two percent, right?

Narucptime
Narucptime

A friend of mine works at Baja Sol in Arden Hills and the employees don't get ANY of their tips. If they are lucky (and the manager remembers or feels that they deserve it), the employees get a $5 gift card to Target once a month.

I hate that hard working, food industry employees are getting robbed of their hard earned tips. But I am happy that it's getting acknowledged; maybe than it will come to an end!

career server
career server

If you don't like it quit. if you don't like it don't eat or drink there. There are still many places that don't do this. The banks and the credit card companies are the ones really making out.   I do think it's interesting that parasole responded to this article by twitter. I wonder if Steve Jobs would have addressed a controversy via twitter. fyi D'Amico doesen't take 2%, and it's great food.

Bob Cullem
Bob Cullem

I find it interesting that City Pages decided to pick on Parasole regarding the new tipping policy.   Other restaurants have been doing this for years!!!! 

Shannonmarple
Shannonmarple

To all of you, "If you don't like it go get a different job," I ask you...how many of you would be willing to go and do your jobs for one week for no pay? This is roughly how much servers/bartenders will be losing.

Mason Hamlin
Mason Hamlin

It's just another case of the haves dipping into the pockets of the have nots. Greedy employers.

MFunkibut
MFunkibut

Wish I were a labor lawyer and could comment intelligently but stealing from your employees seems to me to be a crime. As a customer, I tip the SERVER not the RESTAURANT. And as federal minimum wages guidelines are based on the concept of serers getting tips, I wonder what the Dept. of Labor would make of this - does the restaurant now have to pay employees minimum wage since they aren't really getting tips but 98% of tips????

linecook
linecook

The City Pages should do a hatchet job cover story on Parasole. They are the evil empire. They deserve it, much more than Big E did. The legal but morally questionable stuff they have been doing over the last several decades is appalling. It shouldn't be too hard to write a story like that, nearly every restaurant lifer in this town has worked for them at some point and most hated it.

interesting
interesting

Evil Empire? Haha, they aren't even the first to do this in this market. As people have stated here, some restaurants charge the servers 2% or more of the ENTIRE credit card sale, versus Parasole who is now passing along 2% fee on tipped money only...

NP
NP

The point is not how negligible the amount taken from the servers is, but rather that this is an absurd policy.  Gas stations don't change their employees wages daily based on the price of crude oil.  

interesting
interesting

What? Not sure I see the ling between your example and a restaurant deciding to pass on the CC fee on tips...

Steven Flamm
Steven Flamm

Just as the rules are limiting the amount banks can charge merchants down from 44 cents to some 22 cents, merchants decide they need to charge their employs a fee.  Where is the logic in this.  It's greed, plain and simple.  Boycott these restaurants.

interesting
interesting

They are not the ones charging the fee...the CC companies are. Explain to me how boycotting these restaurants to show your support for the servers makes any sense...now they will be getting even less tips, lol

DanJ
DanJ

The root of this issue lies in the Obama administration's 2010 Dodd-Frank law, which overhauled financial-industry regulations. the same reason for the debit card fees now being leveled on all of us. Wake up use you term limiting votes to get these regulations crazy tax and spend big government lifers out of there!!!!

Jason Hanson
Jason Hanson

Just to clarify some of this.  The CC fee a company pays on tips charged to a CC are not really a "cost of business".  The company gains no financial benefit from that tip.  If you all really wanted to be fair in this then the company should be able to force servers to disclose the 2% the company pays credit card companies for the gratuity as compensation as they are paying that fee for the financial benefit of the employee and not the company.

With that said I fully agree with the sentiment of most people here in that this is insulting to servers. I think this was one of the worst moves I have ever seen from a company.  Parasole and many other organizations really would only need to adjust their prices by less than 1% to cover the costs of the credit card fees.  Raising prices by 0.5% is much more publicly acceptable than charging your employees 2%.  Horrible, horrible PR move on the part of the CFO/CEO/COO/Controller/Whoever made this decision; what an idiot.

Sweetstorm2902
Sweetstorm2902

Landrys restaurants do 1.5% of your credit card tips.

Isaacbro
Isaacbro

This can't even be legal. If a business has rising costs they can increase their prices, not steal from employees. I can't imagine this change sticking.

Mypopnstuff
Mypopnstuff

Way to screw over the "little guy" Parasole.  Your servers should organize a Strike!

Greg V
Greg V

Brilliant idea - have them strike, I'm sure it would take Parasole oh, about 7 minutes to fill their positions in this economy!

Mason Hamlin
Mason Hamlin

I will never set foot in any of your restaurants again!

Greg V
Greg V

Uh-oh Parasole, Mason's not coming in to your restaurants - better close the doors of all of your restaurants!

Anonnospam
Anonnospam

It's also perfectly legal for servers to give very generous portions, substitute steaks for toast, and forget to charge patrons for all of their drinks. Incompentent, perhaps, but what do you expect for minimum wage and a portion of gratuities?

Restaurant Lifer
Restaurant Lifer

I do not agree with what Parasole is doing here but to all the posters who say that Parasole is a terrible place to work, show me a local restaurant group that offers a benefit package that includes health care package and 401k matching? As a former employee who could take the time to nitpick about minor injustices, I choose not to. Look at the bigger picture. So you got fired for drinking at work or stealing a few dollars, that is self inflicted injustice and you basically fired yourselves. They aren't my favorite place I have worked but they did take pretty good care of me and my family for a long time.

linecook
linecook

I worked in the kitchen at Buca St Paul in the mid 90s when it was owned by Parasole. You expect hard work in a kitchen but Buca was over the top. You had to work at a dead run for almost every minute of your work week. Technically we were allowed breaks but were told that "your job depended" on getting all your prep done before service, but you would have so much prep to do that you could never get it done if you took a break. You would end up working 11 or 12 hour shifts without a break. If you were 1 minute late you were docked 15 minutes of pay. Because of the family sized portions the kitchen used extra large saute pans and plates, the weight plus the pace of work gave everybody repeditive motion stress injuries, the managers didn't believe us and thought we were all just complainers. If they needed you to work a double or come in on your day off they wouldn't ask, they would just tell you that you had to do it. Our chef used to brag about the fact that the restaurant was running a 25% profit margin, I was one of only a handful of cooks to ever recieve a raise there. It was a horrible experience in every way imaginable. Eventually half the kitchen staff quit in two week period.

But yes, they did have a 401K, they were a sweatshop with a 401k plan. 

server
server

I'm sure it's different in every restaurant, but what the treatment I received from Parasole was horrible, demeaning and downright shady as far as legality. I have worked at low-end corporate restaurants, and I worked at a restaurant that actually adjusted my clockout times so they wouldn't have to pay me overtime, but I still consider Parasole hands down my worst employer. The job market was tough then and I couldn't quit, so went home every day feeling abused.

sucks to be a server
sucks to be a server

There are other restaurants in TC area that are doing the exact same thing. I used to work at Naviya's Thai Brasserie in Linden Hills. They actually took 3 or 3.5% from the servers' total credit card sale .. yep .. total credit card sale and not the credit card tip. Outrageous!

garpo
garpo

This is just wrong.  If I was working for this restaurant, server or not, I would walk out. These people work their butts off for minimum wage and a lot of them below minimum wage because they get tips, and now some restaurant wants to take more away from them.  Boo!! Bad company, walk out, make them close and lose money!

interesting
interesting

It is funny how this story doesn't include how much this will cost this particular server annually. Then we could do the math and see how much they make in tips and I bet then people wouldn't be jumping on the poor server bandwagon! Stop letting biased misinformation that doesn't really include many facts determine your opinion or reaction

garpo
garpo

I agree with you.  I think we need more information. However, I do think what they are doing is just wrong.  I am not familar with this chain either, and woudl there be a difference if this was an TFI Friday's kind of place vs. a more expensive alternative..  something to think about.

Restaurant Lifer
Restaurant Lifer

So the tips servers get don't count as income? Factor min wage with tips and most servers are making between $15-$25 an hour. Again, I don't agree with this policy but stop saying "poor" servers. Not saying they are wealthy but if they are waiting tables and pulling less than $125 a day they need to find a new restaurant to work at or are horrible servers...

Tmcfran
Tmcfran

They are not the only restaurants in the Twin Cities to do this, and certainly not the first. I know the servers at Pyscho Suzi's have been loosing out on $$ for a long time. Tip in cash people and tip 20%!

Tyler Mccormack
Tyler Mccormack

Atta boy Kip.............screw the employees and pad your own pockets.  You're despicable. 

Kareem Ahmed
Kareem Ahmed

Why are you guys still talking about this?

terafied
terafied

You guys really need to include a dateline in your copy. The average visitor steered here by an external link has *no* clue where the story takes place.

Jonny Imperial
Jonny Imperial

I am sure the higher-ups in Parasole's corporate office are hurting. Perhaps they are going to get a smaller bonus and won't be able to afford the luxury items they are accustomed to. Besides, they make the rules, why would they take a pay reduction when they can make the hard working people that make their salaries and bonuses a reality pay? 

Greg V
Greg V

It's hilarious how misinformed most of you commenting here really are. First of all, Kip Clayton is not the only "big wig" of Parasole - SHAME on CityPages for not digging deeper into the issue! For those of you "brilliant" people who want to boycott Parasole - go right ahead, maybe Applebee's microwave cooking is more your style anyways! This credit card policy is in place in many restaurant concepts in CA, NY, IL and more - places like Crave, Champps and many more - boycott them too and when all restaurants go to this policy you can go to the local grocery store and make your own dinners (gasp!). Servers choose their profession just as anyone else, if they think it's unfair they are more than capable of going to college, getting a degree, and changing careers. Stop the irrational emotional responses to an issue many of you do not even understand!

Jennifer McKay
Jennifer McKay

Great advice, Greg. Pull yourself up by your bootstraps and assume tens of thousands of dollars of student loan debt so that you can graduate and then! Compete with others for the serving job you left behind, since that's what you're going to find available in this economy. That model of "improving" yourself has clearly worked so well for everyone!

Shame on YOU, Greg, for telling servers that they don't have a "real" job. Here's a clue, since you are so obviously clueless : anyone who gets up every day, goes to work, and does their best job at whatever it is may be that they're paid to do has a REAL job.

Greg V
Greg V

Oh Jennifer, those poor victim servers! We all have choices in life and choosing to have student loan debt and get a good job and pay off that debt just doesn't make sense to you? Hope you never have to see a doctor, use a lawyer, want your kids to be taught by teachers with advanced degrees, etc! Your logic is flawed; I never said serving wasn't a "real job," you did. Just as the rest of us Americans make choices, nobody pointed a gun at their head and told them to be servers for the rest of their lives, it's called free will! :-)

catastrophe waitress
catastrophe waitress

It's true you know. Blue collar, middle-class people are poor because they didn't work hard enough.

Millionaires are the hardest working people in the world!

interesting
interesting

I couldn't agree with you more and it begins with Gregory Platt. This is so biased, misleading, and full of half truths that it isn't even funny!

I wonder what those servers "already making minimum wage" made last year including tips...working a part time job?

Companies pay a % of every transaction paid with a credit card. I have a feeling Parasole may even pay more then 2%the especially on certain cards, but let's use 2%...if you leave a $20 tip on a credit card, the restaurant only gets $19.60 of that money and is paying the other $.40 themselves. That may not seem like a lot until you start adding up the numbers, I bet it is costing Parasole tens of thousands of dollars per restaurant only per year.

Sean Olsen
Sean Olsen

If you're leaving at $20 tip, you've got a total bill that is in excess of $100 ($133 if a 15% tip). Wouldn't it be smarter business to raise your prices 2%, so that $133 bill becomes $136 instead of angering your employees who you rely on to provide high levels of service AND creating a PR mess?

interesting
interesting

Ever stop to consider maybe they have already raised prices a few times? You just assume this was their 1st choice and action...

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