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Hey Big Tipper
Any discussion of service should eventually consider the subject of tipping. Is the act of leaving a tip for a service employee a form of tax or is it a moment of altruism? Do you as a buyer of services expect to find a linear relationship between the size of your tip and the amount of service delivered or do you just automatically do the math in your head and write it on the bill?
As a lifelong student at the School of Hard Knocks- College of Food Service I can tell you that it is a subject of much discussion, infinite aggravation and a huge component of overall income earned. Of course, tipping is utilized in many service industries besides food service. Taxicabs, hotels, hairdressers and tour guides come to mind. Since my experience is most with food service, I will confine this discussion to one topic: Why don’t we just eliminate tipping and add the full cost of running the business and paying a living wage to the menu prices?
Tipping is deeply embedded as a cultural thing. Tipping came to the U.S. in the 18th century from Europe and has been a cause of friction ever since. The NY Times published an editorial on 1897 that called tipping the “vilest of imported vices”. By 1915 six U.S. states had abolished tipping as a form of extortion. Stingy tippers can be a considerable source of stress to servers which occasionally leads to an altercation.
In modern times the cultural expectation of tipping leads us as a country to tip to the tune of $40 billion per year to a total food server group of 2.5 million workers. I did that math on that and got an average tip income of $16,000 annually which makes sense based on my experience. In some states where employers are allowed to count tips as part of the minimum wage (tip credit) the tips will substantially exceed the money paid by the employer. In states like Minnesota where I live tip credit is not allowed so that servers are paid a higher minimum wage (currently just under $10 /hour) and collect tips as well so that a good server can easily clear $20 to $25 per hour in combined income. That’s enough to support oneself in reasonable comfort, i.e., a living wage. Menu prices reflect the higher cost. If one traveled from Texas to Minnesota and bought the same meal at an Outback Steakhouse in both places the cost of labor shows up as $1.00 to $2.00 per plate more for the same item.
Should restaurateurs just leave things as they are or should they campaign to eliminate tipping and pay all the staff a living wage? In Manhattan restaurant titan Danny Meyers, owner of Union Square Hospitality Group, has embarked on a mission to do so. Over the past 2 years or so he has converted a bit at a time his 20+ high end restaurants. Meyers is also the creator of Shake Shack and reasons that if Shack can make it work on $5.00 burgers, he should be able to work out the economics on $100 plates of food. Meyers high end restaurants had to increase menu prices by 21% in order to eliminate tipping and pay the service staff what they need to make. So far it seems that Meyers customers have accepted the change and even embrace it. On the other hand, recently national chain Joe’s Crab Shack experimented with eliminating tips in a few of their locations. They found that online service scores decreased dramatically and they scuttled the experiment.
It turns out that expectations have a tremendous influence on overall customer satisfaction and server performance. Research at Cornell has shown that even though tip generosity is poorly correlated with service quality (people seem to tip out of habit and convention) the servers thought the correlation to be strong and therefor behaved as though their income depended on their performance. They worked harder for their customers. Not a bad result.
Additionally, customers as a group were happier with a tipping environment. Customers expect service to be better in a tipping situation and that can bias their perceptions. Most people still believe in the power of incentive.
So which way for the future? Mrs. Chef, who has worked for tips her entire career, is a notorious over tipper. She strongly believes in karma, at least where tips are concerned, and expects that she will reap as she has sown. I have learned just not to look when she is in charge of the tip. I myself am a little stingier, although I almost always leave 15% or better and feel bad about leaving only 10% for really crap service when 0% was earned.
What say you? Would you prefer a “service included” model or do you like things as they are?
(Hat tip to Stephen Dubner at the Freakonomics Podcast for some of the data I quoted here.)
Published in Group Writing
I eat often at local places where I know the wait staff. I also know how hard they work for crap wages. I tend to tip generously. I’m pretty sure the service would be the same with moderate tips, but life has been good to me so if I can share with someone working hard it’s a good thing.
When traveling we might eat someplace I’m pretty sure I’ll never be again. If I can drop a 20 on a great server at a Waffle House and make their day it’s well worth it, IMHO.
The Federal minimum wage for people working for tips (“tipped employees”) is $2.13 per hour. However, they must be paid the balance by their employer if their tips plus $2.13/hr do not amount to the regular Federal minimum wage:
https://www.dol.gov/whd/regs/compliance/posters/minwage.pdf
Many tipped employees do not want the minimum wage raised to $15/hr because customers would likely stop tipping altogether. In addition, getting income from tips provides the opportunity to “shelter” some of the declared tip income from the IRS.
Last I heard, Uncle Sugar assumes a certain level of tips for servers based on the sales in their section. If the server gets low-tipping customers, such as foreigners, they might wind up paying taxes on money they never got.
I don’t know how management does it but everyone at Chick-fil-A acts like they are receiving a 25% tip instead of nothing. Whereas at McDonald’s they act like they are slaves and are doing you a favor waiting on you.
Tips are a really strange thing and done differently in many companies.
I know of a few companies that expect tips to be pooled and shared. So bus boys, dish washers, cooks get some of the money.
I have seen places where the servers report their tips to the restaurant and had tip quotas. If they did not regularly exceed their quotas they would be lesser shifts or maybe cut. I knew a girl that would regularly dip into her own money in order to be sure she made her quotas.
I saw one restaurant that had tips so good that servers would pay the restaurant for the jobs. This got out to the public so they changed their pay method and all the staff quit since they could not make the same money.
I have also had a financially beneficial life. We don’t eat out much, but when we do I figure a few dollars in a generous tip means more to the server than it does to me.
Because I like consistency and predictability, I would in an ideal world prefer a no-tipping environment. But, I don’t advocate that because I have read too many stories about how often service in environments (generally countries) with no-tipping cultures is worse than it is in places with tipping cultures.
We have friends in Australia who like eating out (and tipping) in America because they say the service here is much better. The two times we have visited Australia, we didn’t think the service was paticularly bad, although several places it was a bit more “casual” than I appreciate.
When we were there, we tipped (probably more out of habit.) We lunched at one restaurant several days in a row and the server mentioned that any tip that went on a credit card bill was pocketed by the manager. So we started tipping her in cash.
Tipping in cash has a lot of benefits.
From a different angle, I find leaving a decent tip is an incredibly inexpensive way to provide someone else a delightful boost in their workday.
Where I live, taxes on restaurant meals are at roughly 10%, which tax must be separately stated on the bill, so it is easy to double that amount for a 20% tip calculation, and one can use that as a benchmark. An extra dollar or two I will never miss.
I remain tipping befuddled at counter serve food establishments. A “tip” line seems to be standard issue on the Square or PayPal payment systems that many food trucks and small sandwich places use. Do I put a tip on or not? One I recently ran into had no obvious “no tip” option, and only had options of 15%, 20%, and 25%. At least there although I ordered at the counter, my food was brought to my table by a staff person. I suppose the expectation of a tip may be built into the proprietor’s pay scale, but I am not seeing a service for which I’m really encouraging with a tip (especially since the bill is settled before I receive anything).
Outside of food service, I do leave tips for hotel housekeepers, which I gather is not universal. We stay at mid-priced hotels (Holiday Inn Express, Hampton Inn, Quality Inn, etc.), and we usually stay for several nights. I leave a tip ($3-5) each day. It is my subjective opinion that when I do that I get even more tidiness in the room and more generous replenishment of the coffee maker supplies than I do when I don’t.
Years ago when I first started the road warrior thing, I was on an assignment with two other consultants in New York. At dinner the first night, I asked, “What do you guys tip the hotel maid service?”
The first guy asked, “Are we supposed to tip them?”
The second guy was actually a bit sheepish, “I don’t tip them anything, although I really should. In my youth in Miami, I worked in a hotel in housekeeping…”
That second guy was about the worst consultant I ever remember working with. His generosity of spirit was not limited to the hotel staff.
I believe that you cannot avoid Uncle Sam. Restaurants pay their share of Social Security on wages including tips, and tip income is included in income tax withholding calculations. I always thought that was weird, in that the Customer is paying extra SS and income tax when they did not earn the wages.
Well, I grew up in and live in a community of frugal Hollanders here in NW Iowa. My parents (~80yo now) will tip a dollar per customer if they go out to eat. After all, it’s a whole dollar. I’ve gotten them to let me calculate the tip for them now.
I will tip ~15%. I will also round up to the nearest dollar. I rarely go less, especially since I live in a small town and everyone knows everyone. Also, it’s better to have a reputation as a generous tipper than as a tightwad.
But I personally would much prefer to do away with tipping altogether. If there is poor or exemplary service, that should be communicated, and it’s up to management to make sure that the customers are satisfied.
Though I did note shortly before leaving my last employer that it had changed its travel expense policy to no longer reimburse travelers for tips to hotel housekeeping staff.
Tough bananas. I am sure the average traveling consultant makes over $100K. $3/night @ 200 nights is $600 out of pocket. Figuring on a four-night travel week. I think we usually did three nights, since we would fly Monday AM and leave Thursday afternoon to have Friday for paperwork.
When I lived in a suburb of
AustraliaSydney, they opened an Outback down the street, which I thought was kind of odd. But it was constantly packed. So I took my wife, and she experienced real American-style customer service. Which she and apparently everyone else in Australia really appreciated.Tipping is a great American tradition we should preserve for a number of reasons:
1- it showcases that soft power and normative expectations can limit “free loaders” without government intervention. It’s one of the few social exercises we have and works an important muscle in our community.
2- tipping is meritocratic. There’s a bit of luck in who you serve but over time and multiple iterations the best servers make the most money.
3- it’s progressive. Tipping allows for rich patrons to conspicuously display wealth and status while allowing less affluent patrons to enjoy lower menu prices. Removing tips would be regressive and hit poor patrons harder with increased menu prices.
4- it’s distinctly American and anti European. Europe is a fine place but Americans should embrace things that make us distinct.
5- Tipping is subversive agaisnt taxation- even AOC likely lied about her cash tips to dodge taxes.
“Culture eats strategy for breakfast”
-Peter Drucker
It’s amazing what having a guaranteed, consistent day off can do for morale, irrespective of any other factors.
I’m also notorious in this way, also because of years in restaurants. But Mrs. Chef can rest easy! Karma is commonly misunderstood to mean that you are rewarded or punished for past behavior. It actually just means that every situation you find yourself in is your own doing.
The only people I’ve ever known to whine about this are busy-bodies. In Florida, the places I worked payed $4/hour to servers. In Louisiana, $2. Still, the servers always made more than the kitchen, so I’ve never been all that sympathetic to servers (even when I was one), having started out as a line cook.
I only ever tip waiters, generously, and valets, reluctantly.
It is neither a tax, nor altruism. It is an employer-employee relationship.
In planning a trip to the wilds of Manhattan, I read up a bit on the prevailing views of tipping hotel staff there:
Those who tote luggage: $2 per bag. Sounds OK.
Those who make up your room: $2-3 per day assuming no special needs. Sounds OK.
The doorman who gets you a cab: $2. Sounds OK
The all-important lounge bartender: $1 per cocktail. Sounds OK.
The valet who delivers your car on departure: $5. Sounds OK.
The valet who takes your car to the lot on arrival:. $5-10 to insure it’s handled “gently.” Extortion!
This one I think depends on the drink. If it’s beer or shots, I’d probably do a dollar every other drink, especially if it’s bottles. Two-part cocktails a dollar per is fine. If it’s a multi-part cocktail with layers and stuff, dollar minimum, possibly two or three.
New York is an entirely different ballgame.
Tips rule around those parts. From what I’ve gathered, (growing up around New Yorkers in Florida) you throw a tip to just about anybody if you want them to move for you. (This would apply to a coroner and a valet alike.)
I’m so skeptical of places that force customers to tip in cash though. I just think it’s a way to avoid paying taxes on tip income, which annoys me.
Yes. The issue arises when the “list price” of a cocktail elevates to the $15 range (or more) because of the trend to adding “special” ingredients or high-end liquor. In fact, your father’s vodka martini was no harder to make than today’s Grey Goose martini with organic Spanish olives. So do you tip on the price (traditional for food) or the effort?
By “force,” do you mean an added, set gratuity? I was under the impression that this was no longer legal. Apparently, Obama intervened to make this harder because there is a general stereotype in the service industry that Black people don’t tip – and as a result, some restaurants got in trouble for adding an automatic gratuity to large parties of African- Americans even though they didn’t do it for large parties of Whites who might surpass the 18% standard.
But, yes, in the service industry, we don’t like taxes…..
Agreed.
I’m still not sure why the price of the food is the basis for the tip, but I go along with it anyway. When it comes to drinks I would still base it on how much they have to do, it’s not a different pour for top-shelf liquor vs. bottom-shelf.
BTW I once worked at a bar in DC many years ago (now rather famous) where non-tippers or extremely light tippers on large checks were pelted with a few pennies by the staff on departure. Would that play today?