Dunedin restaurants face pushback over new server pay model

A Dunedin restaurant’s shift away from tips was supposed to be about “data over drama,” but former employees say it’s definitely been both.

The Black Pearl introduced a new pay model for servers. Instead of taking home tips, waiters will receive a flat 20% commission and $1-an-hour wage. Ahead of the change, the restaurant fired some staff, employees told the Tampa Bay Times. Since then, criticism from hospitality workers and patrons pushed the review website Yelp to disable reviews on the restaurant’s page.

Owners Zachary and Christina Feinstein, under the company called The Feinstein Group, said they restructured tipping protocols to offer better pay for support staffers like bussers and food runners. The Feinstein Group implemented the pay structure months ago in their two other Dunedin restaurants: the Living Room and Sonder Social Club.

Instead of guests choosing the tip amount on receipts, every customer will have a 20% service fee added onto the bill. A server keeps 15% while support staff get the remaining 5%, Zachary Feinstein said. Guests can still add a tip on top of the fee, which would only go to servers.

They lowered hourly wages from $8 to $1 an hour for servers to raise kitchen staff pay to at least $15 an hour, Feinstein said.

Under the new structure, servers at the Feinstein Group’s restaurants are no longer considered tipped employees under Florida law. Their wages will primarily come from a percentage of sales, making them commission-based workers, like real estate agents and car salespeople.

But before switching to the new pay model on Aug. 26, the Black Pearl fired two servers and two hosts, the Feinsteins confirmed. They said they made the changes as part of a larger restructuring to make room for new positions like sommeliers. Some were fired for creating a “hostile work environment,” the Feinsteins said.

But Tabitha Crewe and Zachary Benson said they believe they were fired because they had questions about the new pay structure. The Feinsteins denied those claims.

“We knew they were going to implement a commission model and it was never clearly defined what the structure was going to be specific to that restaurant,” said Crewe, who worked as a server at the Black Pearl for about a year and a half. “This isn’t a model that’s implemented in many of the restaurants that I’ve ever worked at, so I had no idea what to expect.”

Crewe said she got a phone call from a manager telling her she was fired because she wasn’t “a right fit anymore,” about a week before the commission structure went into effect.

Some former employees spoke against the model and posted on Reddit and Facebook claiming the owners lacked transparency about how the pay structure would affect them. Crewe and another fired employee protested outside the restaurant Aug. 26. They said $1 an hour is unfair.

The restaurant review site Yelp blocked adding new reviews on the Black Pearl’s page due to “unusual activity” and had an alert saying it was investigating posts.

The Feinsteins said there’s a misunderstanding on how commissions work and provided the payrolls of their staffers to the Tampa Bay Times from the other restaurants. The owners said the service fee increased servers’ wages over what they made from tips. At the Living Room, the average employee made about $41.75 an hour (including tips and hourly wages) during February before commissions went in place the next month. Living Room servers typically work 20 to 35 hours in a week. Once they switched to commissions, they made about $3.64 more each hour in March. The Feinsteins said servers working 35-hour weeks could see a $15,470 pay raise annually.

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The Feinsteins said every penny of the 20% service fee goes to wages and disputed claims that it goes to pay other restaurant expenses. They lowered servers’ wages to provide more for kitchen staff.

The Feinstein Group referred to the commission model as “data over drama” and said it’s a paradigm shift for the hospitality industry.

A common misconception is that tips go directly to the server, but support staff also get a percentage from the gratuity pot that can vary by restaurant. Zachary Feinstein said having a flat fee would give workers more stability in the amount of tips they get, which varies each day.

“It’s really looking into the future to advocate for higher wages,” he said. “And looking at the landscape of our industry as a whole, something will have to change moving forward.”

Others have tried no-tipping systems before, some without success.

“It’s an interesting debate that has been going on for quite a while,” said Brian Connors, a food and beverage consultant and professor at Florida International University’s Chaplin School of Hospitality and Tourism Management. “But it’s not for everybody.”

Most notably, the founder of Shake Shack and the Union Square Hospitality Group, David Meyer, introduced no tipping to his popular New York City restaurants in 2015. When the pandemic hit in 2020, he announced he was ending the policy after customers and servers struggled adjusting to the change, The New York Times reported. It led to higher menu prices and servers missing out on the surge of people tipping higher during the pandemic.

Part of the debate is over raising wages for support staff, though former Black Pearl staffers said they believed it was at the cost of servers.

Connors said it’s a noble experiment to switch to commissions for better wages, but many restaurants struggled with its practicality. Servers’ wages are more reliant on upselling the menu than focusing on creating a good experience for guests — which can hurt overall business.

But as Florida’s minimum wage slowly increases and inflation continues, Connors said more restaurants may be willing to explore a no-tipping model.

“We were first told that the commission model was going to take place roughly a year ago, around the time when minimum wage went up,” said Zachary Benson, who also was fired from the Black Pearl before the pay model switch. He worked there as a server for seven years. “We expressed concern because mathematically it seemed very questionable.”

The minimum wage in Florida will rise to $11 an hour on Sept. 30, part of an annual increase to get the state to reach $15 an hour by 2026. The Feinsteins said they would pay employees the minimum wage if sales commissions don’t meet it.

“I genuinely believe they created an excellent experience at the Black Pearl, one of the best you will find anywhere. I genuinely believe that,” Benson said. “My complaint is we feel that because all staff who were terminated from the Black Pearl had previously expressed concerns about the model. We think this business model is very unfair.”

The Feinsteins said they want to be transparent about the process since many people have questions.

“At the end of the day, we’re people. We have a family. We’re an open book,” Christina Feinstein said. “And before anybody can be judgmental, we just ask them to be curious and ask us as many questions as possible and we’re willing to share as much as we can.”