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I’ve waited tables during a number of seasons in life. The take home pay for a waitress at IHOP is different from that of a waitress at a Ruth’s Chris. That’s not inequity — the minimum wage for waitstaff in both establishments is the same. When I was waiting tables, it was $2.13.
Let’s explore the job of waitstaff in each kind of establishment.
At IHOP, the menu has pictures, and the food is hot, plentiful, and consistent. Predictable. If you want a grand slam, you get a grand slam, and it tastes like every grand slam you’ve ever had. The kids can run around, and crayons and coloring sheets are brought with your high chairs. Your waiter is juggling nine tables, pouring coffee, and telling you what substitutions are permissible. He writes down your order on a notepad. You expect speed and accuracy, and you tip consistently unless he took too long or forgot about you, or your order was wrong or the food was inconsistent. You feel good dropping a $9.20 tip for your $46 pancake breakfast. You didn’t bother to get your waiter’s name.
In a Ruth’s Chris or other fine dining establishment, waitstaff show up before the dining room opens and learn the specials. They learn where the ingredients come and the curated description — the correct words — to sell the dishes to restaurant guests. They already know this as core knowledge for the menu proper; when menu items are new, the waitstaff will often watch the chef prepare the dish and taste every element, memorizing the methods. Your server builds rapport with you, and they tailor their interactions with you based on your vibe and nonverbals — invisible when necessary and present in an instant when required. Your glasses will be full. Recommendations will be made, with great specificity on ingredients’ flavor profiles and regions of origin. Crumbs on your table cloth are quickly whisked away. You feel like the only table in the dining room. Knowledge, skill, acumen, appearance, and more are employed to ensure that you have an memorable experience. You happily drop an $209 gratuity on an $836 dollar bill. You request your server the next time you make a reservation.
They both make $2.13 from their employer. The take home pay variance is a matter of gratuity — a calculation of knowledge and skill, clientele, menu prices, hustle, rapport, and more.
From a business standpoint, this model rewards hard work and success while shifting the lion’s share of waitstaff labor costs onto the customer, with their discretion fully intact. Because I waited tables (in both kinds of restaurant) I exercise this discretion based on my expectations of the job and the dining experience delivered.
At some point, Denverites decided this was unfair — that customer discretion in compensation for job performance is inequitable. That IHOP and Ruth’s Chris waitstaff are indistinguishable and the government must intervene to ensure they can afford the same lifestyle.
This came to a head in November 2019. From a Slow Boring article published today:
“Denver City Council unanimously passed a minimum wage increase in November 2019 — just four months before the pandemic hit — and it was fully implemented citywide by 2022. Today, the base minimum wage is $18.81 an hour and the tipped wage is $15.79 — increases of about 70 percent and 95 percent, respectively. The city allows a $3.02 per hour tip credit, meaning employers can count that amount toward the standard wage. If an employee’s total earnings fall short, employers are legally required to cover the difference. That credit, until recent legislation passed, had remained static.”
The IHOP and Ruth’s Chris waitstaff are now both making a $15.79 minimum wage in Denver — paid by the employer, with the customer discretion on performance being neutralized by statutory wage minimums.
How does that radical increase in the cost of labor impact the cost of doing business? How does it impact the guests’ experience cost? The article continues:
“‘You raise the tipped wage, and I have to raise menu prices to cover it,’ said Troy Guard, the owner and executive chef of TAG Restaurant Group. Mr. Guard moved to Denver 25 years ago and, by 2020, was operating 18 restaurants. After relocating to Houston last year, he left twelve of his Denver locations in place, though he now plans to shutter up to four and is looking to exit the rest.
‘I want nothing to do with it anymore,’ Mr. Guard said. ‘I don’t live in Denver anymore. I don’t want to open in Denver anymore. It’s not my favorite place to do business. I have more opportunities in Houston.’”
In Houston, the regular minimum wage follows the (unnecessary and unconstitutional) federal minimum wage of $7.25/hour. Tipped employees receive direct wages of $2.13/hour, and the employer may then apply a tip credit of up to $5.12/hour, provided that the combination of the cash wage plus tips equals at least $7.25/hour.
It’s a similar concept as what Denver did, but Denver places an additional $10.64 burden, per hour, per employee, onto each dining establishment — while eliminating the incentive for performance (and reward) through customer discretion.
The government arbitrarily increasing the labor costs of restaurants is infuriating, because it’s driving businesses out of Colorado.
Both kinds of businesses.
Before the pandemic of bad ideas birthed Colorado’s totalitarian nightmare, TAG was expanding and Troy Guard was the hottest thing in town. Client meetings, new employee welcome lunches, office celebrations, date nights, anniversaries packed out his restaurants.
Two years after the minimum wage increase, his flagship store in Larimer closed:
Note that he’s opening a new Guard & Grace in Charlotte, NC in 2026. He isn’t fleeing the restaurant business, he’s fleeing a hostile business environment — and he can just leave.
I hope Charlotte appreciates the gift they’re getting. I hope Colorado realizes the trend.
Unfortunately but predictably— because economics is science — IHOPs are closing, too:
Equitable wages. Equal misery.
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