The Great Tipping Debate
Each year, restauranteurs see trends that take the industry by storm. In 2016, one of the biggest trends may not be dictating what food goes on the plate, but how your business is structured at a fundamental level.
In October 2015, Danny Meyer of Union Square Hospitality Group announced Hospitality Included: a new initiative to eliminate tipping in his 13 NYC restaurants by the end of 2016.
“Hospitality Included is designed to compensate the entire team – in both the kitchen and the dining room – more equitably, competitively, and professionally, and provide clear paths for professional advancement.”
According to foodrepublic.com, several New York City restauranteurs are leading the charge to eliminate tipping but complications and uncertainty of how to abandon the practice means “the future of tipping in restaurants remains unclear.”
So what are the two sides of this debate?
There seem to be two types of people who are pro-tips. They are: those who think that the system is fine as is and those who do not see how the system can change without a complete and unrealistic overhaul.
Leave it be
Among the most outspoken to leave the system as it is are the servers themselves. Camille Lucas has been working in the restaurant industry off and on for the last twelve years and she thinks tips should stay.
“I love my job. As a server, I’ve had the opportunity to meet awesome people and share my love of food with them…Why don’t I want to make $15 an hour? Because with tips, I get to make more than that. For the first time in my life, I’m actually able to support myself and have a little cash to put into savings.”
A Phoenix server named Teddy says he will have to take a cut in pay if his restaurant moves to the no-tipping model.
“I’ll end up taking a cut in pay if this thing catches on, by as much as $30 or $40 per hour on weekends, which is when most of us make the real money.”
He goes on to explain that waiting tables is a sales job, and tips are a commission. These ideas are echoed by Rick Newman, Yahoo Finance columnist:
“Anybody who’s ever worked as a waiter or bartender knows you can boost your income at least two ways: by earning bigger tips (whatever it takes to do that), and by turning over your customers faster through speedy service, which means you’ll get more customers and therefore more tips…When I worked as a waiter during college and after, I could easily earn 4 or 5 times the minimum wage on an hourly basis. Based on today’s minimum wage of $7.25, that would equate to $30 an hour…Suddenly $15 an hour doesn’t seem so enticing.”
It won’t work
Mel Robbins, a CNN Commentator, as well as a former server and bartender, says the no-tipping model won’t work everywhere.
“The new model could work in [Danny] Meyer’s restaurants because he draws a particular type of clientele who are there for a high-end experience…If his clientele pays $40 for a steak now, they can probably absorb a $50 price tag…But the fact is that the math is not that simple. If restauranteurs charge more for meals, they’ll pay higher in taxes. As restaurants move to higher wages, the benefit costs will be higher, too.”
Several point to the idea that the no-tip model works in Europe, so why not here? John Winterman, managing partner at Batard in Tribeca, New York says migrating to a no-tipping model would require an industry overhaul.
“Our system is different. You would really have to compare factors such as payroll, labor costs, rents, taxes, costs of goods, hours of operations, holidays, employee benefits, even preferred habits and dining times…To change a system you can’t just cut a branch, you have to cut the tree — down to the root. Then you have to dig the root up and replant. Otherwise, there will be no real change. If there is a better business model, I’ll be intrigued to see how the new math works out and how a business can thrive. Until someone can show a truly better way to manage our industry’s economics, I don’t anticipate a seismic shift in how restaurants are run.”
There is a strong argument to keep the tipping system in place but what if this experiment works? What are the pros to ridding the American restaurant landscape of tipping?
What’s so bad about the tipping system?
Those who oppose tipping present many reasons to explain why it needs to be done away with. A Huffington post article published in 2014 titled, “9 Reasons We Should Abolish Tipping, Once And For All” states that impoverished waiters, frozen minimum wage for servers, and the fact that tips rely less on service and more on other factors are all reasons to do away with the tipping system.
Esquire.com lists six reasons why tipping should be illegal. Some of them include:
- Because federal law allows tips to make up the gap between hourly pay and minimum wage, tips are a part of the server’s salary, not an extra bonus like most think.
- The hospitality industry is the only customer service based profession that relies on tips. Doctors, flight attendants, actors and musicians are not paid based on your satisfaction so why should servers?
- The percentage standard doesn’t make sense when serving a $40 bottle of wine is the same as serving a $400 bottle but the tip would be vastly different.
(Read the rest HERE.)
There is also the common experience of tip anxiety. Tipping is supposed to be based on service, but as GrubStreet.com’s Adam Platt learned, it has become something different altogether. After a visit to Singapore (where there is no tipping), he decided to try tipping based on service in New York City. He learns that Americans have been conditioned as “tip zombies” who feel pressured to tip 20% no matter the service.
And according to The Tampa Bay Times, this pressure to tip well will only increase with new credit and debit card chip technology.
“Diners will have to indicate the tip before the card is run. That means no more scrawling a tip and dashing. Awkward. It seems tipping privacy is going the way of the dodo.”
Right now the majority of restaurants adopting the no-tip model are higher-end eateries in big cities like New York and San Francisco. Time will tell the success of this experiment, but, for the rest of us, it looks like tipping isn’t going anywhere. Perhaps Emily Post said it best in Etiquette in Society, in Business, in Politics and at Home:
“Tipping is undoubtedly a bad system, but it happens to be in force, and that being the case, travelers have to pay their share of it–if they like the way made smooth and comfortable.”