Time To End Tips?

Read an article from the local CBS affiliate in San Fran/Bay Area suggesting that it’s time to change server compensation away from tips. The article mentions that this is an archaic way of compensation.

I remember when I was waiting tables and tending bar the pay was much better than any other job that I could have gotten with my skills at the time. Of course there was always the bad tip from time to time, but overall the good tips more than made up for it and I was able to make decent money. Also I was able to live is some amazing places too. I worked hard for the money, but again for the most part it was enjoyable and worth the effort.

What do you think? Is this something that could happen in the near term? If it did what would it look like? I guess prices would go up 20%ish to cover the extra wages. It would be interesting to see what would happen with service levels without the extra incentive. Although in Europe most places it’s not customary to tip, but I have noticed that the service is a lot slower. That could also be because they tend not to be as “in a hurry” as we seem to be here in the US.

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The full article is copied below. Let us know your thoughts.

KCBS News Anchor Stan Bunger offers his unique analysis of an American dining tradition.

When San Francisco Chronicle restaurant critic Michael Bauer speaks, people tend to listen. I’m thrilled to see Bauer call for an end to the practice of tipping in restaurants, but I wonder if his call will be heard by the right people.

Bauer suggests the end is near for the archaic (and some might argue, barbaric) system of compensating restaurant employees based on the whims of customers. He cites recent policy changes at places like Bar Agricole and Trou Normand in San Francisco and Camino in Oakland. They’ve raised their prices to include a service charge. Other restaurants are tacking on a per-person service fee.

All well and good, but the places Bauer cites and reviews tend to represent the tip of the restaurant iceberg. Many more meals are consumed (and money spent) at places farther down the food chain from the establishments he reviews.

The restaurant business is a notoriously tough one where low profit margins are the rule. Analysts assume labor makes up about a third of the average restaurant’s costs–but remember, the restaurant owner has taken a big piece of his labor cost “off the books,” relying on customers to compensate the staff with tips.

There’s a popular perception that servers are fairly compensated because good service equals a good tip. Ask anyone who’s spent any time in the business, especially at the places below Michael Bauer’s radar, and they’ll tell you the truth: it’s a crapshoot. Friendly, efficient service might produce a sweet tip…or not. It’s completely up to the customer.

It’s bizarre, when you think about it. It’s like letting moviegoers decide how to much to pay AFTER they’ve seen the movie or letting you wear a new suit for a day before you decide what you’ll pay for it.

We’re all a part of this, and of course, plenty of other cultures play it very differently. We seem to want good service but don’t value it enough to accept that it’s worth paying for. I don’t know about you, but I’ve always felt uncomfortable with the dynamic in which I hold the pursestrings and the waitress tries to curry my favor for a tip. It’s like tossing coins off the cruise ship to the natives, isn’t it?

I hope Bauer is right and the trend of building the price of service into the price of a meal spreads, but I’m skeptical. There are just too many indications that the restaurant industry typically views its service staff as expendable. Take the “auto-gratuity” situation: once the IRS started classifying things like the “18% service charge for parties of six or more” as subject to payroll tax withholding, many big chains simply ended the practice. Result: big parties, big tabs, small tips.

With any luck, places that don’t make Michael Bauer’s Top 100 list will get on board and price a meal in a way that fairly compensates all the people who create and deliver it. But I’m not holding my breath.

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  1. Christopher Roberts says:

    It’s absolutely on it’s way out, & couldn’t happen sooner. In large part, it doesn’t exist abroad (outside of the US), with basically no effect on service, and as someone who’s seen it from the inside, it’s absurd how detrimental it is to the cohesion of the industry. Having a server make 100k a year more than line cook makes no sense at all, not to even speak of what damage fast & largely untracked cash does to the mental health of the industry. It’s the reason that the heavy hitters in the biz, Thomas Keller among them, started moving away from it years ago.

  2. Thanks for your comment. You raise some fair points.

  3. Jeffrey Summers says:

    Fair? In what way? To be intellectually honest, it’s completely unfair (not to mention dumb). It’s on its way out from where? 1.3 million foodservice operations in the US and most use tipping to compensate it’s workers. I also don’t give a tinker’s damn whether it exists in other countries or not. That’s one of the most ludicrous arguments against the practice you can make. Should we behead guests who complain?

    It’s no ones business if I tip or not. Or if my business employs tipping or not. Don’t want to tip, don’t patronize businesses that employ it. It’s also not detrimental to the cohesion of the industry. What planet do you live on? This is absurd thinking. And it was actually Charlie Trotter who started the idea decades ago. Which is fine and dandy but not every restaurant can charge $450 a meal.

    People who don’t want to tip can do so if they want. No one is stopping them. But to tell me I can’t in my business, with employees who want it, is a power grab of the worst kind. Sorry Christopher, but it’s none of your business.

    These distractive debates remind me of the H.L. Mencken quote,: “The urge to save humanity is almost always a false front for the urge to rule.”

    1. Not saying I necessarily agree, but it’s fair to say that in many countries they don’t tip in the manner that we do here in the US. Also let’s be honest the IRS would rather not have tip income as they lose a lot of revenue on unreported tips. Hence his cash point. Again, not saying that I agree, but he brings up valid discussion points.

    2. Keith Gellman says:

      Absolutely no please! QSR and fast casual is one thing, BUT There are times I want to go to a nice restaurant and ask for specific servers. At $18-50+ per person I think I deserve better than server-bots.

      As a restaurant manager can attest, he needs those pros to ensure at the least the customers at those tables have a great experience.

      Take away tipping and the incentive would vanish for the experienced pro-and the breed will die; you will surely stop going out as finding that fair value and/or special experience will be way tougher than it is today.

  4. Keith Gellman says:

    Absolutely no please! QSR and fast casual is one thing, BUT There are times I want to go to a nice restaurant and ask for specific servers. At $18-50+ per person I think I deserve better than server-bots.

    As a restaurant manager can attest, he needs those pros to ensure at the least the customers at those tables have a great experience.

    Take away tipping and the incentive would vanish for the experienced pro-and the breed will die; you will surely stop going out as finding that fair value and/or special experience will be way tougher than it is today.

  5. danny troupos says:

    This could be the dumbest idea I have ever seen. The socialists in Europe, that do not want to reward good service can keep on having bad service. Growing up in the food industry I always tip between 20 and 25%. And if a waitperson days a great job, they should make more than the cry baby line cooks. The wait staff is on the frontline of the business. Nobody should tell another person what to tip, Ever. Another way to reditribute wealth I guess. And by the way I don not care what the IRS wants..

  6. As someone who has managed restaurants in both tip credit states (Texas) and non tip credit states (California), I believe that tipping is either on its way out or will change dramatically in tip credit states.

    How can it be okay that a business pays its employees less than the minimum wage by offering the carrot of (non-guaranteed) tips?

    In effect you are, through societal pressure, forcing the customer to make up the difference between $2.13 and hour and the actual minimum wage in that state.

    In Texas they don’t charge 40% more for a hamburger than in California to make up for the wages but somehow businesses still thrive in CA.

    The tide is turning.

    Check out my blog post “The Death of Tipping in America” at http://www.thisrestaurantlife.com

  7. Keith Gellman says:

    FYI- David, You are leaving out some important facts. The $2.13 an hour is supplemented all the way up to minimum wage IF it is not achieved in any given week, Soon you will see real closing rates of restaurants. CA is up there. Take a look at some stats here on the latter part of 2014 rates, http://restaurantdata.com/SuccessfulRestaurantInvestor.pdf

  8. As a professional Server in the industry I most certainly believe those who don’t believe in tipping, we don’t want your business anyway. Those making the argument against the ‘practice’ are the ones who only go out for the special deals, or on someone else’s dime., and complain the most. Without the relationships the server builds with those who become repeat patrons to the establishment , restaurants would close more frequently. That wouldn’t help the industry or the economy. As for the cook making less money… does a film editor get compensated more or less than the star of the film? RIGHT!!! I’m the one in direct contact with the guest. If the food fails I get blamed and it reflects in my pocket not the cooks!!! So before anyone decides anything come trail me for a week or two. You can find me at your favorite NYC steakhouse. I love my job and no one is going to take away the joy of my gratuity.

  9. Coming from 40+ years in the Restaurant Business I think it is important to focus on what is important. A server should receive minimum wage for serving. The tip should be an incentive to give great service. I don’t like set gratuity as some places automatically add 18%. It should be based on how the service experience was. Several factors…Did the server ever return to see how your food was? Steak cooked properly? Did you get everything as you ordered it? I always tip according to the service. I don’t expect to be catered to, but I do expect a level of competence, with a smile, and a great attitude. We have enough things dictated to us now, we surely do not need to add to it.

  10. I find it ironic that the hospitality industry calls itself as such. I resent being forced to “manage” employees compensation and behavior via tips. It is the restaurant’s business to manage and compensate their employees. There is nothing hospitable about the current system.

  11. What I am curious to know is what percemtage of people know that in California there is no longer an exemption in pay rates for tipped employees. Would a patron aware that their wait person makes the minimum wage or better tip the same as they would in other states where their server is making $2.13 per hour. For example does a server at Outback Steakhouse Westminster, California deserve to make more than an equal server at the Outback in Holbrook, NY where the costs of living are close?? Unless the patron is aware of what the restaraunt’s payroll policy, they will assume their srever relys on tips for a decent take home pay. I do not mean they don’t deserve a tip, but at the same percentage? I reduce my tip for 20 to 10 percent, I can afford to go out 10 times for the price of 9.

  12. Most servers will actually consider themselves a small business within a business, thus, waiting tables is an “honorable” profession and should be treated with a certain level of high respect. If you can’t afford to tip, you can’t afford to eat out. We as servers have actually have had patrons say (usually angry ones) “Why don’t you get a real job.” So for those who would make such a statement, SERVING TABLES IS A REAL JOB. This statement is often from the lips of someone who simply does not want to leave a tip regardless of the level of service. We will discuss the tip later but i want to discuss the duties of most servers (good ones.)

    * Arrive before schedule and check POS for specials, a la mode offerings, and eighty six items.
    * Greet guests in a friendly and courteous manner during all interactions.
    * Handle all guest interactions with the highest level of hospitality and professionalism.
    * Abide by the policies and procedures as set out in the Associate Handbook and any other applicable policies.
    * Must adhere to the appearance and grooming policy.
    * Perform other duties/tasks and projects as assigned
    * Offers suitable wine pairing options to enhance guest experience.
    * Informed wine, spirit and cocktail knowledge, constantly improving and updating to suit guests’ needs.
    * Ensure guests meet the legal age in order consume alcohol beverages, check valid government issued identification.
    * Must be able to perform accounting duties as it pertains to closing out checks, giving change and accuracy in balancing end of day reports and paperwork.
    * Must be able to up sell and suggest specialty food and beverage items to each guest.
    * Writes customers’ food and beverage and keys into POS.
    * Clears and resets tables, including removing and replacing dishes, glasses, utensils and condiments in a timely manner.
    * Ensures cleanliness of the dining room, service areas and back of the house.
    * Have knowledge of menu and private party menus.
    * Responsible for pre-sets and removing unused pre-sets from the table.
    * Effectively communicates to management, both front and back of the house, any problems (e.g. Allergies), special requests (e.g., no garlic, no MSG, etc.) concerns (e.g. Timing) to ensure the guest a pleasurable dining experience.
    * Coordinates with kitchen and floor staff to ensure an exceptional guest dining experience.
    * Answers or finds the answer to questions regarding menu items, property and area events and attractions.
    * Resolves customer complaints including invocation of complete satisfaction policy.
    * Completes required side work as assigned.
    * Meets the attendance guidelines of the job and adheres to regulatory, departmental and company policies.
    * Fluent in English both written and verbal. Proficiency in other languages would be an asset.
    * Ability to work flexible hours including days, evenings, nights, weekends and holidays, including overtime as required.
    * Ability to follow all safety policies and procedures within the work area and respond properly to any hotel emergency or safety situation.
    * Ability to work well under pressure. Ability to serve up to 30 guests at the same time.
    * Work harmoniously and professionally with co-workers and management.
    * Must be able to initiate and engage in conversation in a professional and friendly manner.
    * Excellent interpersonal and customers service skills. Problem solving, and guest retention skills are required.
    * Must be able to work in the assigned bar and lounge.
    * Must be able to carry and balance cocktail and serving trays that weigh at least 15 pounds.
    * Must be able to stoop and bend, as well as maneuver up and down stairs.
    * Must be able to use hand motion when serving drinks and wiping down tables
    * Must be able to stand for extended periods of time to continuously perform essential job functions.
    * Must be able to attend to the needs of guests of differing age groups, seniors, adults, young adults, children and toddlers ensuring an excellent experience in dining.

    How then does one actually say “get a real job” what exactly is a real job and how do you classify it as such? Why is a job not serving a real job and one of serving not a real job. A bank teller is that a real job, or the doorman, the theater usher, the restroom steward, the car sales person, are these also not real jobs? Or is it only for those with a degree and various letters behind their name. Take a look at what my name could actually be written like, Rev. Ronald Kalenuik, CCC, BA, MBA yet I am a server, does this discount my degrees? Perhaps the real job means the amount of money one makes, most professional servers make sums much higher than those with a BA or other Bachelor type degrees. A real job must be one where the needs of the individual and his or her family are being met. The taxi driver or counter server work in no less of a real job than the doctor or the lawyer. The difference is the value that society places upon the individual, but the job they perform is very much real.

    This job of serving requires extensive knowledge in various areas, it requires the individual to multitask at multiple tables while keeping health and safety of the customer foremost but not letting the customer realize it. Performing all the requirements while dealing with the demands of a logistic corporation, a manufacturing corporation, an educational institute and a day care center (that’s just the first hour.)

    The server is required to a peace maker, have knowledge of obscure ingredients, tracking information as to the locale where the ingredient is grown. Knowledge field and farm, fresh and salt water fish and seafood, and is the product wild or farmed grown. They are required to do the exotic and then the mundane. An expert in time management, they are required to know the exact timing of the preparations of the kitchen to ensure all is delivered fresh and at the correct temperature. They must be ambassadors, diplomats, politicians and skilled orators. They become skillful at handling ego’s of managers, chefs, sommeliers, and more importantly the customer.

    Servers work every special occasion and birthday except their own. All long weekends take on a completely different meaning to the server. While they attend to the needs of those with the “real jobs” being sure that their families are having a great long weekend of fun, the family sits at home to wait for the server to return, tired, hurting, deprived of rest, exhausted, and it was all at or below the local minimum wage and a percent of the tips. (Most servers’ tips are split in various ways, we’ll see this later) Special days or holidays are always the highest in stress, in customer dissatisfaction, in errors committed, and at the door wait times all potential disasters that the server needs to defuse.
    Although many view the job as temporary (as they gain knowledge to transcend to their career) those who have made a career of serving, often find it a more rewarding and fulfilling career. In comparison to those who have successfully entered into their field of their choice and the professional server statistics show the server is happier in their job.

    The song “Take this job and shove it” by Johnny Paycheck, may explain the attitude of many, it is not a general feeling of the professional server. Given the stress and the high demands the professional server everyone who serves this is not a job but rather a vocation. A vocation is a term meaning “a divine call” which most servers truly believe they are. Another meaning is: occupation, or the principal business of one’s life. Talk to most servers and they will tell you that they do what they do because it is in their blood to do so. They leave for a time but soon they are back, many who have departed serving for another career will be found returning, often giving up the career to serve. The professional server is reminded daily of what they do, an acronym for service is: Social, Enthusiastic, Responsible, Vibrant, Intelligent, Courteous, Engaged. The professional server has been trained in service.

    When I conduct service courses for my clients here is what the staff will be trained in:

    • Hospitality and the waiter • Menu: Types, uses and services: Buffet service; Family service; Plate service; Silver service; Functions service. • Food service equipment• Food service procedures • Mise-en-place (everything in its place) • Taking orders • Suggestive selling • Styles and sequence of service • Silver service • Gueridon service, (food is presented, cooked, or finished on a trolley in front of the guest.) • Beverage equipment and service procedures • Beverage product knowledge • Patron-care • Wine rituals • Cash register operations • Handling customer complaints • End–of–service procedures • Espresso machine operation.

    Having a complete understanding in these areas requires dedication to professionalism, and once learn it does not end there servers are constantly upgrading their knowledge as food trends become popular.

    So much of the server’s job is to provide the guest with the highest of standards, the standards must be in place and enforced by all, servers, chefs, managers. They are never up for debate, a standard means the way it is done, automatically without thinking. Think of it, after the manner of a car’s transmission, there is the manual which requires coordination and thought but for most they drive an automatic, just get in and go, the work and thought are completely done with the car. Everyone applies the standards without thought, a server cannot serve hot food if in fact the cooks do not follow the standards of providing it hot. The manager cannot change the standard when he or she just happens to feel like it, they put are in place to the delight, satisfaction and safety of the customer, not the ease of those who must enforce them. Any business without standards will frustrate the employees, managers, owner and most importantly the guest. They are likely not to exist too long. Those which do stay in business will see the business struggle in retention of employees and satisfied guests.

  13. Fredrik Alexandrow says:

    Here’s some thoughts from socialist Europe:-) Im living in Sweden, the most socialist country in europe.
    1. Some say its bad service in europe…I wouldn’t agree. The Mc Donalds staff is as friendly as everywhere else and when it comes to upscale restaurants they´re as good/fast as the ones you find in the states. However, They don’t disappear from the table not saying goodbye because I just left 20% tip and not 25%. We do get tip in sweden as well. Its between 5-10% and the whole amount is for me to show my appreciation, If Im not satisfied I won’t give anything. The waiter will know he did a bad job. Sometimes I even give tip to the kitchen and not the waiter.
    2. The cost of staff is about the same in Sweden and the US, compared to sales. Our minimum wages are about 21$/hour (including tax and social cost 52%). Which means that we are not even close to the numbers of staff you have. That gives you two things: 1) I think we work more efficient in Sweden. 2). If your system would changes in to including the tip in the price (which I would say is the way to go) then you might loose jobs in the industry…
    3. I read that line cooks are no good for nothing in these comments…If the waiter didn’t have anything to serve I assume he/she would be out of a job. If the chef/cook is doing a great job I assume the tip would be better than the other way around. Of course the kitchen staff is as important than anyone else. Everyone in the restaurant is setting their signature on my experience. My parameters includes food, service, interior,

  14. Keith Gellman says:

    Frederick makes good points. By the way. I have been to lovely Stockholm and experienced the service. It is good enough and in an upscale place it was better but nothing like the sharp, high end service experienced here in the US. Had to be a reason, but not sure. Yes cooks are important as are chefs, but they have way less to do with the real customer experience.as is often thought.

    And hi quality servers here (in the US) often earn between $30-$100 hour on any given night. I know I was one of them. Take for example a 5-6 hour shit in an upscale restaurant. Pros often earn in an upscale restaurant that gets service, between $150-$350 per night on average. Yes its’ true.

    Using the word “server” as an automa-tom is not the same as an experience server pro..

  15. Jose Dominguez says:

    I have worked in the Hotel & Restaurant industry for 20 years in Central America and United States. In my country the tip (10%) is included in the bill and called “Service Charge” and let me tell you that this certainty that the waiter has that they will receive their Tip regardless of service rendered DOES affect the experience. In the US servers are much more proactive, they are quicker, they pressure the kitchen to be more efficient, etc because they know that mistakes will mean less tip. If the Tip is included they will not be motivated to push for the kitchen to be quick, to serve great food, to bring drinks quick to the tale because when these things fail they will just call the Manager for him to deal with the problem. I agree with previous comments that it is unfair for servers to make tips and kitchen nothing; that is something that needs to be fixed.

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