Daniella Hougentogler’s first job in the restaurant industry was being a hostess when she was 16.
The Stanton resident became a server when she was 21, then started bartending. She tried life as a pastry chef before returning to bartending, which is what she does now at Eggspectation in Newark.
During Hougentogler’s 16 years in the industry, she supported herself, paying her way through the University of Delaware, earning a bachelor’s degree in dietetics and now working on a master’s in human nutrition there. She buys herself a new car every few years.
But now she’s worried that a bill introduced in the Delaware General Assembly would put paid to the life she’s been able to build on tips.
If signed into law, the bill would dramatically raise the base wage paid to people who earn tips. That could have a ripple effect that would actually destroy income for servers and bartenders; raise the cost of menu items; and put some restaurants out of business. It also will dramatically raise costs for employers who not only will have to pay nearly four times as much to servers, but must pay higher costs for things such workman’s comp insurance and unemployment benefits, which are based on payroll costs.
And everybody in the restaurant industry continues to point out: Restaurants still haven’t returned to full strength either in sales or employment and continue to struggle under COVID-19 restrictions. Changes like the a rise in the minimum wage or the tip wage will cause more and perhaps unsurmountable financial turmoil, they say.
Restaurants will advocate in full force against any effort that blocks their recovery, said Carrie Leishman, CEO of the Delaware Restaurant Association.
“We need the state to help do whatever it can to make restaurants healthy and whole so we can keep these people employed,” she said.
Right now, restaurants pay people who can earn tips $2.23 an hour. House Bill 94, introduced by Rep. Kim Williams, D-Newport, would raise that to 65 percent of the state’s minimum wage.
Repeated efforts were unsuccessful in the last few weeks to contact Williams for comment.
The tip wages bill is a companion piece of sorts to another bill that would raise the state’s minimum wage in increments to $15 by Jan. 1, 2026 — or automatically adopt the federal minimum wage, if it is higher. Under Williams’ bill, the amount paid to servers, bartenders and other would rise with it. If minimum wage rises to $15 an hour, that would be $9.75.
Williams makes the point in her bill synopsis that the tipped minimum wage hasn’t changed since 1983, when a state law put it at 66.67% of the state minimum wage, which then was $3.35. But that bill did not tie the tipped rate to any rise in minimum wage, which now is $9.25 an hour.
“Therefore, this bill ensures that employees who receive tips or gratuities also receive a minimum wage increase when other employees in the state receive a minimum wage increase,” the synopsis says.
Carl Georigi, president and CEO of Platinum Dining Group, says he believes Williams is basing the bill on her experience as a server in the 1980s, which he says she often has talked about.
“The basic premise she’s working off is that tips employees have not received a pay increase since 1983,” Georigi said. “She’s wrong about that. They have. The amount of their checks have increased.”
He has servers who have bought homes, have put their kids through private schools such as St. Mark’s, and have full-blown careers.
“To suggest otherwise is just silly,” Georigi said.
Forty years ago, a cheeseburger was $3, he said. A 20% tip on that was just 60 cents. Now cheeseburger plate can be $15. If a server is earning 20% of that, the tip is $3. That doesn’t include other items that might be on the order, or other tips from other customers.
Georigi said the average dinner check at his six restaurants — Eclipse Bistro, Redfire Grill & Steakhouse, Capers & Lemons, Taverna Newark, El Camino Mexican Kitchen and Taverna Wilmington — is $75. A 20% tip on that is $11, and servers will service multiple tables and parties in a night.
Leishman said the average server in northern Delaware earns $15 to $22 an hour. A the Delaware beaches, which has year-round traffic, a server earns up to $35 an hour, she said.