Eliminating Tips Brings Consistent Prosperity to West Side Restaurant
Your 3rd Spot evens the playing field for the entire team and increases revenue as a result
By Lara Creasy
As America’s hospitality industry continues to struggle with the practice of tipping, one Georgia business is finding ways to solve the dilemma. The practice of tipping, which some believe originated in Tudor England as a way for travelers to pay back the use of a host’s house servants, spread to the United States following the Civil War, when businesses hired formerly enslaved people, paid them low wages, and encouraged customers to leave tips to compensate. The practice does not have a heart-warming origin story, and many long to see it go away.
Your 3rd Spot, a social dining venue on Chattahoochee Row in Atlanta, has operated without tipping since opening its doors in November 2022. Instead of accepting guest tips, they include a 20% service charge across all food and beverage purchases, which is then distributed equitably between front and back of house—everyone from bartenders to dishwashers to game technicians.
This bold move—one that most operators shy away from due to the payroll complexities—has paid off for Your 3rd Spot, according to Josh Rossmeisl, the company’s founder, who reports that the restaurant is generating more than double its projected revenue. Rossmeisl directly credits that success to a happy team that delivers fantastic guest experiences.
How does adopting a model like this work for the management team? “The service charge from a legal, accounting and tax perspective becomes revenue to the business,” Rossmeisl explains. “Because of this classification, the company takes on several more administrative and compliance responsibilities, such as distributing it to employees, and additional tax reporting. It’s also more costly, as the company absorbs higher payroll benefit costs. It’s not cheap, but it’s right.”
Your 3rd Spot uses Tip Share through Posi-Touch, their POS system, to track and divide the service charge amongst the team. Multiple other such systems exist in the market to help operators track tips in this way, including TipHaus and kickfin.
“The biggest difference is compliance and control. In a tipping model, the guest pays the employee directly, and it is up to the employee to report those earnings, especially cash tips, which are not automatically tracked by the POS system,” Rossmeisl explains. “With a service charge, every dollar is accounted for. The business receives the funds, pays payroll taxes on them, and distributes them through regular wages. This means employee W-2 income is 100 percent accurate. Nothing is off the books. It ensures that the right amount of taxes are paid and that team members are building accurate earnings history that supports things like credit applications, loans, and benefits eligibility,” he adds.
While tipping norms across the city fluctuate wildly, team members at Your 3rd Spot consistently earn between $29 and $38 per hour, equating to $60,000 to $80,000 annually for full-time employees, according to the company. This places them among the top 10% of hospitality wage earners in Atlanta and has created a culture where staff can focus on genuine service instead of tip chasing.
“In traditional models, only a few team members get tipped. That creates an ‘us versus them’ vibe in the building,” Rossmeisl says. “Here, it’s different. Everyone sees sales as commission now. Everyone understands that great service leads to great results. That mindset is a culture shift.”
Rossmeisl shared several examples of great service his staff has generated, including making pancakes for a couple celebrating their 30th Anniversary, who had met for a first date years ago at a pancake restaurant. He also mused about the team making gift baskets for baby showers and signing cards for guests as a team. “That level of thought and care came completely from the team. It wasn’t management-driven. It is what happens when people are empowered and encouraged to listen, find out what matters to guests, and make them feel seen,” he says.
This service charge model might make some traditional operators skeptical of things like staff disagreements over scheduling or members of the team not pulling their weight. But Rossmeisl brushes those concerns aside. “There is a built-in accountability mechanism that doesn’t rely on micromanagement,” he says. “People hold themselves and each other to a high standard because their success is connected. We also take scheduling seriously,” he adds. “If our leaders forecast accurately and make timely cuts, we avoid overstaffing. People aren’t just standing around collecting from the pool. They’re working in sync, and that builds trust.”
Bartender Acacia Witherspoon shared that the system helps staff feel more secure in their earnings throughout the year. “In other restaurants, in slower seasons, it can be very inconsistent, and that fluctuation adds anxiety,” she says. “This system eliminates the anxiety so we can perform better. Even during our ‘slower times’, there is consistency.”
What advice does Rossmeisl have for operators considering the system? “First, commit to it fully. Don’t dabble. Don’t test it on the side. This isn’t a gimmick. It’s a philosophy. If you don’t believe in it, it won’t work,” he says. “Be prepared to carry more of the weight. You will pay higher payroll taxes and benefit costs. You’ll have to build strong systems around scheduling and forecasting, and you’ll need to give it time. It does take a few months to normalize, especially during opening. But if you build it right, it becomes a flywheel for culture, retention, and guest experience.”
As a result of their dedication to the system, Your 3rd Spot has received numerous accolades, including being honored as a Top Employer by Newsweek and the Best Practice Institute. They also won Best Hospitality Training Program in the country, chosen by a panel of judges from Johnson & Wales.
But the most meaningful results are internal, says Rossmeisl. “Our team stays. Our team grows. And our team shows up with pride. We’re not building a brand. We’re building a movement!!”
Lara Creasy is Beverage Director for Rocket Farm Restaurants, overseeing eleven Superica locations in five states. She loves all things beverage from tea to tequila, coffee to cocktails, whiskey to wine, and gets to make a living at it.
