Administrative Fee & Tipping

What is the New Fee?

In January 2024, Butternut Bakehouse transitioned away from accepting credit card tips to an administrative fee of 12% applied to all transactions. The fee is applied during checkout for both in-store and online purchases. The revenue from this fee is used exclusively for employee wages and benefits and will not be paid as compensation to the owners.

Why Not Accept Tips?

Massachusetts State law is very restrictive regarding tip distribution to waitstaff in food service businesses. While the law’s intention may be to protect employees, some workers benefit while others are disadvantaged. Tips can only be distributed to waitstaff without any supervisory roles who directly serve patrons or clear tables. Kitchen and dishwashing staff who work hard to prepare our products and clean our space cannot receive tips. A counter staff who spends an hour in the morning planning out schedules or training a new team member cannot receive tips on that day.

For a small café without table service, these restrictions often misalign with customer expectations on whom they are tipping and do not allow us to compensate our full team based on their contribution to our high standards for our customers’ experience.

How Will This Affect Our Staff?

After making this transition, wages were adjusted so that all staff would earn at least as much as before the new policy. For previously tipped workers, their fixed hourly wage was immediately increased to be equal to or greater than their prior hourly rate plus the average tip rate. Our employees also benefit from increased predictability in their wages. With a fixed wage, they no longer have to bear the risk associated with variability in daily sales.

Why Not Raise Prices?

Eliminating credit card tips and raising prices would be an alternative approach to address these issues. However, most patrons are accustomed to comparing menu prices between establishments with the expectation that they will pay a tip on top of the listed prices. By separating the menu price and an additional administrative fee, we believe this makes for the most transparent comparison for those wishing to do so. In addition, by accounting separately for the administrative fee, we can ensure that this revenue is only used for employee wages and benefits, which would not be possible by raising prices.

For any questions, please contact info@butternutbakehouse.com.