Andrea Borgen: The Badass Restaurateur Focused on Growth

Going no-tipping isn't easy. A restaurant risks scaring off walk-ins with higher prices. It risks service staff defections if waiter pay drops -€” which it sometimes does. And if customers end up eating or drinking less because everything's more expensive (which it often is), it risks lower revenue. Businesses don't like lower revenue.

Joe's Crab Shack, a national chain with deep pockets, couldn't make no-tipping work. David Chang, one of the country's most celebrated chefs, also rolled back the policy at Nishi in New York. But at Barcito, a 100-seat spot in downtown Los Angeles, no-tipping is working just fine.

It's not run by one of the country's most prominent hospitality impresarios: It's run by Andrea Borgen, a 27-year-old who launched her Argentinian-style, small-plates place with a small business loan. This is her first restaurant. This is someone to watch.

In 2012, Borgen moved on to work for someone who'd later become the modern father of the no-tipping movement: Danny Meyer.

Borgen, a Los Angeles native, studied business at the University of Santa Clara; she spent a semester abroad in Italy, which she said "reawakened" her passion for food and beverage. After graduation, Hillstone, the steakhouse and sticky ribs chain famous for its spinach and artichoke dip, recruited her into its management training program, giving her a crash course in all aspects of running a restaurant. Then, in 2012, Borgen moved on to work for someone who'd later become the modern father of the no-tipping movement: Danny Meyer. "I drank the Kool-Aid," Borgen says, adding that she loved how dedicated he was to the "employee experience." She rose to general manager at Blue Smoke in New York's Battery Park City, where she stayed for two years before moving back to the West Coast. "If I could have taken Blue Smoke out to Los Angeles I absolutely would have," she says.

Borgen opened Barcito last year as a homage to her Argentinian heritage — her mother was born in the South American country and she visits both of her grandparents there regularly. "We're not trying to recreate traditional Argentine cuisine," she says, adding that a more authentically minded establishment would grill a short rib rather than braise it like her kitchen does. But, as Borgen says, "what always appealed to me about bars and cafes in Buenos Aires is the cultural meaning that they have. Those classic corner bars are pillars of their communities." That's what Barcito is all about.

Part of being a community pillar, of course, is being a responsible employer. Dishwashers at Barcito make at least $11 an hour while cooks make at least $14. All her employees also receive health care, even though the size of her staff (currently 12) means she isn't required to by law. Borgen says she's able to do this due to her no-tipping policy, and if you want to understand why this is such a big deal, you need to know a little bit about labor law in California.

The state minimum wage is rising to $15 per hour by 2022 —€” and at an even faster pace in LA. Making that burden more challenging is the fact that, unlike in most states, California doesn't have a separate, lower wage for service employees, which means owners must pay waiters the full minimum, even if they earn tips. Obviously that's super expensive for owners, who have to pay more money to more people (duh), but what's less obvious is that it exacerbates the income disparity between waiters, who often do well for themselves because they can collect tips, and cooks, who often earn less because they cannot.

So to combat that disparity, more restaurateurs in Los Angeles are levying "mandatory tips" in the form of service or admin charges, which can be distributed throughout the house as the restaurant sees fit. On top of those charges, Los Angeles and San Francisco restaurants sometimes issue separate surcharges to offset the cost of providing health care, as well as additional lines on the check for optional, additional gratuity. This all means that the price on the menu is often much lower than what the diner ends up paying, and Borgen doesn't think it's a fair deal for consumers.

"It feels ludicrous," Borgen says of the health care charge. So she's taken a more challenging course of action: She's raised wages throughout her restaurant by baking the full cost of doing business — including health care and service — into the price of her a la carte items, so that whatever the diner sees on the menu is what the diner pays. Tipping is not accepted. This Danny Meyer-style "hospitality included" policy is increasingly normal in New York, where supplementary fees are illegal, but in California, it's quite rare, because it lets restaurants keep their prices artificially low.

"At the core, what's most important to me is the idea that a restaurant is a pillar of the community."

How she makes this work when so many of her seniors have failed is simple: "Our prices are so low we were able to do it in a more competitive way than anyone else," she says. Indeed. Her standard cocktails are $13 (cheaper than most drinks before tip in New York), while not a single dish, including the braised short rib, is over $16.

"My employees know that they'd be able to make money somewhere else," Borgen says. "But they choose not to because they enjoy working here, and they know I'm looking out for them, and looking to add benefits." She says she hasn't had a single employee defect since she switched over to no-tipping.

What does the future hold for Borgen? "I did not get into this to own one restaurant, and run the floor every single night for the rest of my life. Growth is something I'm definitely interested in." And while that could come in the form of multiple Barcito locations or a collection of diverse restaurants, "at the core, what's most important to me is the idea that a restaurant is a pillar of the community," she says, repeating a phrase from earlier in the interview. "It's a great value, the kind of place where you can come once a week and feel really good about it. I don't think I want to go into fine dining and I don't want to go counter concept, even though as labor laws change, that becomes more and more appealing. I would love to be in different urban markets throughout the US." And when she does expand, she confirms there won't be any tipping in those restaurants, either. Rock on, Borgen.

Ryan Sutton is Eater's chief food critic.
Andrea Borgen is the general manager and owner of Barcito in Los Angeles. Image by Wonho Frank Lee.
Editors: Dana Hatic and Sonia Chopra
Copy editor: Dawn Mobley
See all Young Guns coverage here.