Sushi Spot's Tipping Point 

The social media response to Sushi Spot posting its new policy regarding gratuities was swift and nuclear, with Facebook posters and commenters largely deriding the announcement, some even swearing off patronizing the business for good. But the plan itself, the automatic addition of an 18-percent "equity fee" for dine-in and 10 percent for takeout to be shared among all staff in lieu of traditional tipping, had been in the works for some time.

"Other restaurants around California have started doing this a few years ago [coming] out of COVID ... that's kind of where the idea came from," says Sushi Spot owner Eric Stark, who also liked the sound of "equity fee" as used by some of those businesses. During the early part of the pandemic, he says, "We didn't have servers, we were 100-percent takeout and the tips that came in were split between our staff." Reopening to dine-in service brought back the old system of tips for servers, from which they would routinely and voluntarily tip out the kitchen staff. This, he notes, effectively left cooks and chefs with a paycut, their shares having gone down in percentage from the takeout-only system.

Stark says an experienced "sashimi chef and server are equally valuable," and even a 40/60 split doesn't reflect that. "We want to have a fair distribution of this 18 percent." Some 75 to 80 percent of the staff at Sushi Spot's three locations, he says, work back of house, including seven chefs with 10 years of experience each. "We're trying to create a system where it doesn't matter if you're in the front or the back."

The American tipping system can, Stark says, undermine teamwork, motivating servers to guard their sections rather than helping each other out during a rush or with a large party, while kitchen staff can be less invested in helping servers with diners' experiences. Hosts, he notes, also make fewer tips than servers, which can make it difficult to find someone willing to perform an important role in a full-service restaurant. This, he says, is not to paint a bad picture of waitstaff or suggest they aren't deserving, noting the servers on staff are "incredible," but the system could be more equitable. He says he's also seen customers harassing servers, doing or saying inappropriate things because "maybe they think they're entitled because they're tipping." (See the Journal's previous reporting on server harassment, "We've All Got Stories," Feb. 29, 2023.)

Still, Stark says he knows this gain for the back of the house will require a bite out of earnings from the front of the house. After a year of talking with managers about the idea, they held a 30-day advance meeting with the whole staff, followed by individual meetings with front-of-house staff. "When we first introduced the idea, I didn't know if I was gonna lose our whole waitstaff," he says.

Manager and lead server David Bush says Sushi Spot's equity program isn't so different from the tip pooling system at his old job at a sushi restaurant in Temecula. He thinks it's more common in sushi restaurants since "the chefs have to train for 10 years to master sushi," and keeping them around can be a challenge. But a sushi chef's skill "really makes or breaks the job for a server," he adds. "Sushi is art and if it's not beautiful ... it's embarrassing" and doesn't keep customers happy. Speed matters, too, especially when a single table might need a dozen rolls at once and that can impact tips. "Every second counts with fish as the temperature changes the taste."

But while the back of the house is helped by splitting the automatic gratuity of the equity fee, Bush admits servers take a hit. "This has been a huge sacrifice for us. On our busiest nights, we would make $250 a night" in tips. On a six-hour shift that's a $40 to $60 per hour pay rate," depending on base pay. However, "It was always difficult to leave at the end of the night with $250 in your pocket while the chef has $40," he says.

Not everyone is or has been on board. "A lot of the servers didn't like this change at first and a lot of us fought against it," says Bush. "I've personally come around to it. This is the system I used to work with." But he says three staffers have quit so far and he's heard of others looking elsewhere, though the slow season and what he sees as a dip in restaurant traffic generally make that harder to do right now.

Front of house work, Bush says, can be a stressful job between customer complaints and "relying on a lot of things out of our control to give good service." A number of front of house workers, he says, "feel like they've been looked over and underappreciated with this change." Bearing the brunt of angry customer responses hasn't helped.

Still, Bush says, "This is the most supportive restaurant environment I've been in. [Stark] expressed a lot of sorrow and grief over us losing some of our pay," and he's felt good working at Sushi Spot. For now, he's staying. Recently married, he notes that he needs a steady income. "I really do like the people I work with and I hope they stick it out but I completely understand if they won't be able to."

The equity approach, as Stark explains it, requires pulling 18 percent of each restaurant's sales each day and dividing it — with percentages varying based on job and experience — between the more experienced lead servers and sashimi chefs, other chefs, hosts and newer servers and sushi rollers, and entry-level workers like dishwashers. "We're trying to make sure we're being absolutely transparent," he stresses, adding that daily reports will be shared with employees and none of the 18 percent equity charge will go to restaurant owners.

"The equity charge is a sales-based thing. If we have a really great night, it's good for everyone," says Stark, who thinks service for customers, and hopefully sales, will improve with a system that reinforces teamwork. "I think that we're gonna have better service because we're going to be working together."

Asked why Sushi Spot doesn't just increase wages in the back of the house, as many have suggested online, Stark points to the increasing cost of overhead. With 76 employees between Arcata, McKinleyville and Eureka, the coming rise in minimum wage is substantial. "We always give raises every year and we have people who've been with us for over a decade," he says. "I'd love to pay them as much as I can." But given the rise in costs, from ingredients (particularly Japanese foods) to utilities, that would require a price hike on the menu. That, he worries, could price out customers. "If our prices aren't competitive with Tomo, why would anybody want to eat here?"

Sushi Spot is also aiming for transparency with customers, with signs and flyers offering an explanation of the Employee Equity Program, as well as the elimination of the tip line in credit card processing. Starting Feb. 5, "Instead of traditional gratuities," reads the page that set off a hailstorm of comments, the 18- and 10-percent charges will be added automatically, and "100 percent of the equity fee will go to our exceptional staff."

Surveying the backlash in posts and comments, along with those who think the restaurant should simply raise wages, there are those who are concerned the restaurant will be taking a cut of tips (again, Stark says this is not the case), or that the system will hurt servers' earnings by the division or limiting of tips. There are also those diners who are loathe to relinquish their power to reward or punish the server by determining the tip, and the improved service they feel it buys them. Of all these issues, the latter seems the least possible to resolve under Sushi Spot's equity program, which may be indicative of shifting ideas about dining in general.

In response to the online blowback and some angry emails hoping for the restaurant to shutter or burn down, a somewhat rattled Stark posted a more detailed breakdown of the plan on Facebook earlier this week. "Because learning how to make sushi takes longer and is more involved than other types of restaurant cuisine, we feel it is justified to define servers and chefs as equally qualified — therefore the serving shifts should not make three to six times more," it reads. He goes on to explain his attempt, with management, to make the sharing of tips fairer across the restaurants under the existing American tipping system. "We acknowledged that we cannot please everyone and expected some negative reactions to our new policy, but it is time to move in a new direction and away from a tipping system and into a shared equity program that benefits everyone in the restaurant fairly."

Despite the controversy, Stark says, "At the end of the day, we hope the numbers work out," and that customers will support the new system. How those numbers work for the staff will likely be as strong a determinant as to the success or failure of the program.

"I really believe strongly that this is the right thing to do. I know that it's different," says Stark. "We want to be a better model of how a restaurant can be, as a team."

Do you work at Sushi Spot? The Journal wants to hear from employees, anonymously if preferred, as we continue to cover this story. Staffers can contact arts and features editor Jennifer Fumiko Cahill (she/her) via Facebook, by email at [email protected] or on Instagram @JFumikoCahill.