Iron Bay adds labor fee in effort to pay tipped workers more

MARQUETTE, Mich. (WLUC) - More fees are increasing daily expenses, and consumers are now seeing the impact at a Marquette restaurant.

When you pay your bill at the Iron Bay Restaurant in Marquette, you will now see a 4% labor fee on your check. The restaurant is calling it a “transparency fee.”

General manager and owner Andrew Hilary says this will help the restaurant combat rising costs.

“The entire 4% is going to labor fees. The goal is to increase our wages, partially to get ahead of what will happen, which is eliminate tipped wage,” Hilary said.

Hilary said he wants to ensure tipped employees receive a livable wage, as many new servers start at only $5 an hour. This is lower than the standard $10.33 Michigan minimum wage because tips are included in their total earnings.

“Our goal is to always give someone a dollar raise if they stayed for a year, and once they are here for a year and a half or two years, we try and bump that significantly as a ‘thanks for staying so long’,” Hilary said.

The general manager says in March, labor costs made up 55% of the restaurant’s operating budget, which is exceptionally high. He said this will only increase as more staff members are added for the summer.

“When you live in a spot like this, you can go from making hundreds of dollars a day to nothing some days,” Hilary said.

Staffing will dramatically increase from about 35 staff to 55 for summer operations. Hilary said questions and concerns about the new fee began pouring in after a community member posted to social media about the new fee over the weekend.

Among the most common questions: why didn’t the restaurant just increase menu prices? Hilary said it came down to wanting to save customers as much as possible.

“There are a couple of issues with just raising the menu price. If you are tipping based off percentages, that percentage is higher because I put more money on the menu,” Hilary said. “The other piece is tax. We all pay 6% tax when we go to a restaurant. So, if I increase the menu for that purpose, you are also getting taxed on that.”

Hilary said a fee like this is not uncommon in restaurants, but it may be new for customers in the U.P. New signs explaining the fee and what it will be used for are placed around the restaurant. Hilary said the average bill may see less than a $1 change.

“I realize this is new and different than what a lot of people are doing,” Hilary said. “Change is hard, and it may be challenging for a lot of people.”

For example, on a $12 breakfast burrito meal, the 4% fee is 48 cents. Hilary said staff have appreciated the change so far, while reviews from customers have remained mixed.

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