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Highlands Today

Higher Tips

Kathy Waters/Highlands Today

Waitress Heidi French takes a food order for customers on Tuesday at Ruby Tuesday in Sebring. The direct wage for restaurant servers before tips is going to increase Jan. 1.

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By Bill Rogers | Highlands Today

Published: December 16, 2007

SEBRING – The refrain is the same from restaurant owners – regardless of the size of the eatery – when asked about a pay increase for employees who receive tips: it's part of the cost of doing business.

Florida restaurateurs face another increase on Jan. 1, 2008 when the direct wage for "tipped employees" goes up to $3.77 an hour.

According to the Agency for Workforce Innovation, the employer must pay tipped employees a direct wage. The direct wage is calculated as equal to the minimum wage ($6.79) minus the 2003 tip credit ($3.02) or a direct hourly wage of $3.77.

Florida's minimum wage will increase to $6.79 per hour on Jan. 1, which is up from $6.67 this year. The majority of local businesses are now paying employees above the minimum wage.

In November 2004, Florida voters approved a constitutional amendment which created the state's minimum wage. State law requires the agency to calculate a new minimum wage each year.

It is a difficult situation for restaurant owners who have been hit with higher costs for meat and commodities as well as other things, but they don't want to raise prices.

"The pressure is on us," said Luke Griffith, proprietor of the Outback Steakhouse in Sebring. "You run more efficiently and save every penny."

Griffith said the average extra cost per Outback in Florida following this year's wage increase ranged between $4,000 and $5,000 a month. Griffith said he has 50 employees picking up tips.

As far as raising prices, Griffith said it would be "the last thing" he would want to do considering how the economy is.

"We understand people deserve to make a good wage," said Mike Roder, vice president of operations for Ruby Tuesday, who noted the company plans for wage hikes when it works on its business models.

"We see it coming down the road," said Stephen Kelly, manager of the Bob Evans restaurant in Sebring.

Kelly added that he has 30 employees who get tips.

Kelly said his approach is if a restaurant keeps driving sales it will make money.

He added that Bob Evans has various pricing tiers so the eatery can stay competitive in different markets.

John Hill, the co-owner with John Devany of The Depot Restaurant and Catering in Avon Park, said "insurance is the big killer and food is next." The restaurant has seven tipped employees.

"We're just dealing with it," Hill said.

Hill said Highlands County has supported his restaurant for 21 years, and he wants to keep his clientele coming in.

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