"I realized: come up with a no-tipping policy, give [staff] more wage, let them share profits into the company," said the chef and owner of the Amaya fleet of restaurants.
Instead, Bhagwani says, he will charge a 12 per cent administrative fee on every bill, as well as allocate 10 per cent of restaurant revenue toward higher wages for restaurant workers.
"Instead of paying [staff] minimum wage, we create a pool and it goes into their wages, depending upon the positions, how many hours they're working," he said.
Michael von Massow, an associate professor of hospitality, food and tourism management at the University of Guelph, said the tip-free restaurant idea is gaining traction largely because of "trouble keeping kitchen staff."
He said a model like this one, aimed at paying workers in the back-of-the-house better "will really help to lower the turnover that kitchens experience."
But retaining talented staff is only one part of the thinking behind the no-tipping stance, Bhagwani said. He also wants to encourage a more equitable environment.
"I've always felt the dishwasher in the restaurant works the hardest and he gets the lowest money."
"I wanted them to feel a part of the restaurant," he said. "It's their restaurant as much as it is mine. That was key for me."
A wait-and-see approach
Going tip-free is a decidedly bold move. This week, New York restaurateur Danny Meyer said his 13-restaurant empire will phase out tipping, making big waves in the restaurant and hospitality industry.
But B.C restaurant Smoke 'N Water, considered the first Canadian restaurant to abolish tipping, reinstated the practice after three months in 2014. Its customers simply did not buy the concept.
Bhagwani is not fazed and is taking a wait-and-see approach. In fact, he said the move toward fairer wages might encourage customers to return.
"I don't think customers will have an issue with it," he said. "When they know that a restaurant is paying a fair wage, I think it will bring people back into the restaurant."
Though, at first, his wait staff were not convinced, he said.
"They thought I was crazy," he said. "They thought it was bizarre. But I had to convince some of them to stay with me and see how it goes."
Yatin Bhatia, service manager at the Bayview Avenue restaurant, said it is fair to divvy up gratuities with back-of-the-house workers.
"Some share of tips should be divided, not only with the kitchen, but with the dishwasher and people who are at the back. That's fair," he said.
As for the tip-free policy, he is eager to see its effect.
"Expectations are high. It should be positive. Let's see how it goes."
Will tipping be obsolete?
A tip-free policy is indicative of the restaurant industry thinking about its staffers' quality of life but also retaining long-term employees because it makes business sense, von Massow said.
"People are important. Servers are important. Kitchen staff are important. They are an important part of our experience in restaurants," he said, adding that long-term staff contribute to the speed, consistency and quality of service and food.
"Turnover costs you money but it also costs you your experience."
"Restaurants are recognizing this," he said.
Von Massow said diners are likely to feel relieved not to have to calculate a tip.
"I think for a majority of customers it actually becomes a more pleasant experience."
He anticipates going tip-free will become more common over time and it "may eventually become a universal practice."
"I believe this model is going to come. Is it going to come quickly? No. Is it going to come without some growing pains? No."
"I think for the right restaurant with the right customer base it will be profoundly successful."
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