In case you’re among the lucky/wise locals who don’t spend much time on Facebook, here’s what you’re missing locally: Virtually everyone, it seems, is talking about Sushi Spot.
The popular local restaurant, which offers sashimi, sushi and other Japanese cuisine in Arcata, McKinleyville and Eureka, recently announced that it will no longer accept gratuities – aka tips – at any of its locations, starting this week.
Instead, as the restaurant explained on its website and on printed handbills placed at each table, a service fee, or “employee equity charge,” will be automatically added to all orders at a fixed rate: 18 percent for dine-in customers, 10 percent for take-out.
Reached by the Outpost on Monday, owner Eric Stark said that he and his managers have been considering this change for a long time. The goal of this new system is to improve pay equity among employees, eliminating the gap between servers and chefs while making the business more sustainable in the long run.
“We’ve been thinking about doing this since COVID,” Stark said. During the months-long shutdown of the pandemic, when restaurants were only offering food to go, Sushi Spot pooled its tips and distributed them among the staff equally – though, of course, servers weren’t waiting tables. Once restaurants reopened for table service, though, Sushi Spot went back to the old system, in which customers typically tip waitstaff but not sushi chefs or other kitchen workers – at least, not directly.
To Stark and many of his employees, this just felt wrong. “We have a lot of really experienced chefs, and there needs to be fair treatment,” he said. “We view those [positions], server and chef, as equally qualified, but because of tips they can’t make the same.”
Sushi Spot is by no means the first restaurant to implement such a system. In fact, the online Chef’s Store, which markets to restaurants across the country, wrote about “the no-tipping movement” back in 2022, and the San Francisco Chronicle recently covered the growing popularity of “gratuity-free models” in the Bay Area, where newly opened establishments have adopted the practice alongside some long-established eateries and Michelin-starred fine-dining restaurants.
However, as Chef’s Store cautions, not everyone in the public likes or understands this system: “Tipping culture in the U.S. is second nature, so some consumers might find the switch confusing,” the publication says. “Plus, patrons are accustomed to tipping based on merit, so requiring them to pay a predetermined percentage might feel uncomfortable.”
As it turns out, many Humboldt County residents feel more than just confusion and discomfort. On Sunday afternoon, someone posted a photo of Sushi Spot’s “equity charge” announcement to an opinionated Facebook forum called Humboldt County on Alert, and the response has been robust.
In the first 24 hours the post racked up more than 1,000 comments, most of them negative, with the majority falling somewhere between indignant and outraged.
“Have fun going out of business,” one user remarked.
“Yeah you lost my business … ,” another agreed, adding, “It’s in our culture to tip.”
One comment garnered more than 250 likes with this interpretation: “Lemme translate: ‘We don’t want to have to pay our employees a livable wage so we’re just going to make the customer do it.’”
Stark said the social media response caught him a bit off guard. “We knew there’d be people who are not happy, but we didn’t think it would be like that,” he said.
In an effort to quell the uprising, Sushi Spot posted a follow-up statement to the Humboldt County on Alert page yesterday, offering a more thorough explanation of the reasoning behind the change. In speaking with the Outpost on Monday, Stark said a lot of factors played into the decision.
For one thing, he said, inflation, distribution woes and rising labor costs are making an already challenging industry even more precarious. Restaurants here in Humboldt County have been going out of business left and right, and nationally, few businesses have been hit as hard by the economic headwinds as sushi restaurants.
“It’s been a whole mess,” Stark said. The Bay Area trucking company that Sushi Spot used for distribution for the past 20 years recently went out of business. Meanwhile, record-breaking inflation in Japan has drastically raised costs for many items the restaurant imports. (One Sushi Spot employee said red tuna from Japan that cost $11 per pound before the pandemic now runs $21 per pound.) And California’s minimum wage increases mean that even the entry-level servers get paid $5 more per hour than they did just five years ago.
Why not just pay the kitchen staff higher wages, as many Facebook commenters have suggested? Stark said it’s not that simple. While tips are generally viewed as a reward for exceptional service, the fact is that nearly every customer who dines at Sushi Spot leaves a gratuity, and Stark said a tip to the server alone fails to account for the chain of labor that makes good service possible – a chain that includes chefs, prep cooks, hosts, dishwashers, bussers and bartenders.
“Without everyone working as a team, the tips for great service would not be possible,” he said. “In a sushi restaurant it is even more important to account for everyone in the chain of service because it takes more labor and staff to operate than other types of restaurants.”
David Bush is a lead server at the McKinleyville Sushi Spot who was recently promoted to a management position. He admitted to having mixed feelings about the new system, especially since it will inevitably mean less money in his pocket.
“This is a big pay cut for the servers,” he said. “It’s a bit stressful for us. We understand the public doesn’t want to pay an 18 percent price increase, and to be the ones breaking that [news] and get pay cut as well has been hard to swallow.”
Bush said that about one in every 10 customers who called or came in to the restaurant yesterday and learned about the new “equity charge” decided not to eat there.
“So it’s been quite a big hit already,” he said.
But he does see pros to the new system. While Sushi Spot employees have historically tipped out the kitchen staff, giving them a 40 percent cut of their take on any given night, Bush said back-of-the-house workers still got a raw deal. While the server would pocket 60 percent of any given tip, the rest of that money would be divvied up among several people working in the back, including multiple chefs, prep cooks, dishwashers, etc. On a busy night, a server might take home $250 or $300 in tips while kitchen workers pocketed just $40 or $50 apiece.
Under the new system, he explained, employees will split the 18 percent gratuity (or 10 percent for take-out orders) based on a tiered formula, with new employees getting half as much as their Level 2 colleagues, who, in turn, get half as much as workers in Level 3, a tier reserved for the most experienced sushi chefs and longest-employed servers.
Bush said this system rewards loyalty from sushi chefs in particular, which is important when you consider that it can take a decade or more to become truly proficient at the art.
“We want to keep them in Humboldt County, because otherwise they might move to San Francisco or go to fast food since they pay a $20 minimum wage at this point,” Bush said.
He anticipated that as much as 20 percent of Sushi Spot’s waitstaff would quit once the new system was implemented, but so far he said only three servers have left. He’s not sure what to expect over the coming weeks.
“We just started this system,” he said, adding that the public rollout could probably have been handled better.
“I guess we kind of regret how we worded [the announcement],” Bush said. “What this really is, when we get rid of semantics, is an 18 percent increase in price to the customer,” albeit with the elimination of tipping. “I think a lot of servers make a 20 percent tip on average, so this is a bit of a decrease. But we decided to call it an ‘employee equity’ charge so the community knows that 100 percent goes to paying staff. It doesn’t go to the owner.”
Bush said that when customers balk at being charged a “mandatory tip,” he tries to reframe the fee as a means of paying staff a higher wage.
Fellow Sushi Spot employee Jaime Osorio, who rolls sushi at both the Arcata and McKinleyville Sushi Spot locations and waits tables when needed, said this model is not unheard of.
“It’s something that’s happening across the country, though it’s somewhat new in Humboldt County,” he said. Like Bush, he thinks the new method will improve loyalty and job satisfaction – not to mention pay – for people working in the kitchens.
”There are nights where we get absolutely murdered in the back,” he said, referring to the busiest evenings. “At end of the shift you think, ‘Yeah, we made it as a team,’ but then you see the server hand out tips,” with kitchen workers who’ve been there for 20 years getting a small fraction of the $300-$400 that servers collect.
He believes those employees should be treated as equals, and he thinks people who work in the service industry work hard because they value their job and enjoy serving people, not to convince customers to tip them.
Stark said he think working for tips can actually be demeaning, taking away from what he called the “dignity of service.”
“We want our staff to feel good about serving our community without expecting a tip afterwards,” he told the Outpost. “That is why we feel it is better to include the charge and account for the whole team rather than accept tips that go mostly to one person.”
He added that customers who tip won’t wind up paying any more than they did before – in fact, those who tip 20 percent or more will wind up paying less. And since all service charges are taxable income, Sushi Spot will pay more in payroll taxes toward Social Security, Medicare and disability.
Stark said he hopes Sushi Spot can set a good example of changes in the restaurant industry that are long overdue.
“I still think this is a great place to work,” he said, “so I hope customers will still come to Sushi Spot to support a company that wants to go away from America’s tipping culture a bit.”
Business at Sushi Spot’s three locations over the next month or so should reveal whether or not this experiment in employee equity will work here in Humboldt County.