What is our Fair Wage Surcharge?

We politely decline tips at The Snug and instead include a 20% Fair Wage Surcharge on each check so that we can ensure all our staff earn a stable, livable, and equitable wage — no matter their position at the restaurant.

This type of policy has been the subject of much discussion across the entire restaurant industry for a number of years, as many high-profile restaurant operators have begun to advocate for it. We strongly believe in it and want to tell you why.

We are aware and appreciative of the fact that the vast majority of our guests since 2017 have approached tipping in good faith, tipped our staff generously, and taken great pride in doing so. However, tipping is fundamentally a very problematic practice. Its origins are challenging, its economics are antiquated, and its ultimate impact on employees is counterintuitive.

Unbeknownst to many, the custom of tipping in America today is actually a legacy of slavery and its aftermath. When slavery was amended out of the Constitution in the wake of the Civil War, restaurant work was one of the few jobs offered to former slaves. However, many employers at the time refused to pay any wages to former slaves, with the expectation that guests would provide small tips for their service. This practice of tipping somehow became ingrained in our society and has continued to this day.

This model of compensation can create a troubling dynamic between servers and guests, whereby servers instinctively hesitate to push back on inappropriate or disrespectful behavior from guests for fear of losing income. Secondly, the seasonal nature of restaurant revenue leaves staff living with wild and unpredictable swings in their tipped income. Finally, tipping has also created an unjustifiable gulf between what “Back of House” kitchen staff can earn compared to their tipped “Front of House” counterparts.

Another consequence of tipping is that it has kept menu prices artificially low for generations, as labor continued to be a minimal cost to restaurants (especially in tip-credited minimum wage states) which was mostly passed through to the guests via tipping. Furthermore, as new employee benefits (such as healthcare, paid sick leave, etc.) became the norm across different industries during the latter half of the twentieth century, those industries built the costs of these new employee benefits into their business models. Yet most restaurants did not provide these employee benefits until recently, and many across the country still don't. As a result, the economic models of restaurants and the menu prices they could charge have never been a function of the true costs to operate a fair workplace.

San Francisco has been at the forefront of pushing for a better way. In 2014, SF voters passed a new initiative to increase the local minimum wage to $15.00 per hour by July 1, 2018, and to adjust the wage rate each July 1 thereafter based on the annual increase in the Consumer Price Index. The current minimum wage is $16.99. San Francisco has also implemented health care security, paid sick leave, lactation in the workplace, and other progressive employees' rights policies.

These policies, which The Snug wholeheartedly supports, have created significant new expenses for restaurants yet still fall short of providing restaurant workers with the livable wage and stability that they deserve. Like all SF restaurants, we have had no choice but to periodically raise prices to keep up with these new policies and maintain a viable business. What guests don't see is that there is an entire supply chain to get products and ingredients from the farm to their plate, and these policies increase costs at all levels of that supply chain -- not just our labor cost at our restaurant.

COVID exposed many of the structural inequalities in our country and demonstrated the value restaurants and their employees bring to society. We believe it is now providing the opportunity to restructure the restaurant labor compensation model, which is long overdue. Thus, in order to pay our full-time staff a livable wage with full benefits, we have implemented a 20% Fair Wage Surcharge on all checks at The Snug. While we would prefer to build our full labor cost into our prices instead, we believe this long overdue reconciliation would create too much “sticker shock” for guests. Splitting it out as a surcharge, while using it as an opportunity to inform guests, is the best path forward, for now.

It is going to take some time for us all to adjust to the new reality of the true cost to dine out at a bar or restaurant. The Snug will probably lose some customers by implementing this surcharge. But for us, it's the only way forward to operate a restaurant in San Francisco that treats and compensates its workers with the respect they deserve, and we believe it is the future of the industry.

Thank you for spending a few minutes to learn about these issues, and thank you for your support of The Snug. Cheers.