At its sit-down restaurants, Ivar’s will boost menu prices and do away with tips as it adjusts to Seattle’s new minimum wage. Its quick-serve employees both in and outside the city will see wages bumped to $11 an hour.

Share story

There’s been plenty of back and forth about how Seattle’s minimum-wage law, which kicks in Wednesday, will affect restaurants.

Now an iconic Seattle restaurant is trying its own experiment, raising the pay of its lowest workers directly to $15 an hour, getting rid of tips, and raising the prices on its menu.

On Wednesday, Ivar’s will raise the wages of about 100 employees who make less than $15 at its sit-down restaurant Ivar’s Salmon House, at the north end of Lake Union.

Those servers, bussers, dishwashers and others will see an increase in their hourly pay to a flat $15. They will not, however, get any tips because the restaurant will now tell customers they do not need to tip. To make up for that, the restaurant will share its menu-price increases with the employees. Ivar’s management expects that, under the new system, its hourly staff’s annual pay will end up being the same as, or higher than, what they earned last year.​

The same system will go into effect at Ivar’s downtown Acres of Clams restaurant when it reopens in July. (Acres of Clams, on the waterfront, is temporarily closed for the Seattle seawall-replacement work.)

In addition, Ivar’s will increase the pay of minimum-wage workers at its more than 50 quick-service seafood bars and stadium locations to $11 — and not just in Seattle, where the law will require it.

“If the value of the work is this amount, it’s the same no matter if it’s in Seattle or Lynnwood,” said Ivar’s President Bob Donegan.

To offset that increase in labor cost, prices at the seafood bars will go up about 3 percent. Prices at the stadium locations will increase too, but only to cover product costs.

Here’s how the new pricing and wage system at the Salmon House and Acres of Clams restaurants is going to work:

Servers and bartenders at the Salmon House in 2014 made the state minimum wage of $9.32 an hour, along with $18 to $19 an hour in tips, on average, Donegan said, adding that the restaurant’s typical server or bartender made about $60,000 a year last year.

On average, customers paid a 17 percent tip for each bill last year.

Under the new system, the price for each menu item at the Salmon House will go up 21 percent. That 21 percent represents a combination of 17 percent to make up for the tips that customers will no longer be giving, and 4 percent to cover raising the minimum wage to $15 as well as increased food and operating costs.

The 21 percent price hike will be shared among restaurant hourly staff, with 8 percent going to servers and bartenders, and 13 percent to be divided among bussers, hostesses, dishwashers and others, Donegan said.

At the end of a year, workers should be making as much as or more than they did last year, he said.

“We will look at it every pay period,” he said. “We’ve said we’re going to hold your pay at the same level or higher than you earned in 2014 or 2013.”

But if the workers end up making less? “We’ll figure that out,” said Donegan, who served on the Seattle mayor’s advisory committee for the minimum-wage law.

For customers of the Salmon House and Acres of Clams, the average total cost will be about 4 percent above what they paid last year, since the typical 17 percent tip paid last year is now directly incorporated into the bill.

There will be no separate line for “tips” on customers’ bills, and the manager will come to each table to explain the new no-tipping policy, Donegan said.

Customers can still tip if they want to but the restaurant will not require or encourage it.

Under the city of Seattle’s minimum-wage law, large employers, such as Ivar’s, must raise their minimum wage to $11 this year. They must raise that wage each subsequent year until it reaches $15 in 2017, or in 2018 if they provide health-care benefits.

But Ivar’s decided to just go to a flat $15 now “in part because we want to determine if this new model works,” Donegan said, and in part because it’s just simpler that way.

Ivar’s has a history of taking steps to retain employees, including contributing to employees’ 401(k) plans with a match of 50 cents on the dollar.