The zero per cent solution: Is it time to stop tipping in restaurants?



Right now, the no-tipping movement is the electric car of the restaurant world. Everyone on the inside is excited about this potential game-changer. Many restaurateurs think it’s inevitable, since tipping creates an income inequality that results in a shortage of experienced cooks that’s becoming increasingly unsustainable.

But nobody wants to go first.

The reason is the rest of us, the downright ignorant general public for whom tipping is a part of the culture of going out to eat. Disrupting something so ingrained would be a very risky move and no Canadian restaurateur is yet willing to take on the job of educating the masses about why tipping is such a bad thing.

So allow me.

Just for a minute, imagine that tipping applied to your job (provided you are not already a restaurant server). Are you a doctor? A mechanic? A software developer? A yoga instructor, car lot attendant or high school teacher? Those all sound like hard jobs and I hope you are appropriately paid.

What I’m asking you to imagine is that all of society has agreed to give you a little something extra each time you do your job. It’s not payment, mind you. It’s a gift, determined by the personal satisfaction and generosity of each client.

It’s also not totally reliable, fluctuating every day depending on your work, your client’s mood and a myriad of other factors. Yet this gift-giving becomes so standardized that the government passes a law allowing you to be paid less than the legal minimum wage, considering that the majority of your earnings come through the voluntary contributions of customers like us.

That’s the system we’ve all accepted for restaurant servers. And it’s riddled with problems.

First, let’s stop pretending this money is a gift. That’s goofy. Unless the customer wraps it in a bow or puts it in a birthday card, it’s revenue and tipping puts the control of that revenue into the hands of customers instead of the restaurateurs who design and manage how their businesses work.

“Restaurant operators are only in control of 80 or 85 per cent of the revenue that their customers spend,” Bruce McAdams, assistant professor at the school of Hospitality, Food & Tourism Management at the University of Guelph, says. “There are no other businesses that allow the customer to decide where that revenue is distributed. It’s insanity.”

For 20 years, McAdams worked in the restaurant business, in nearly every position possible: kitchen manager, dishwasher, pizza cook. Before starting at Guelph, he spent the last 13 years of his career at Oliver & Bonacini as vice-president of operations. He’s about to publish a research paper on tipping, co-authored with agricultural economist Mike von Massow. After interviewing 52 restaurateurs and 150 servers in Canada, the two biggest problems they identified were control of revenue and income inequality.

The first problem leads directly to the second: Many otherwise smart and well-informed people have told me they believe that restaurant tips are divided evenly, that the servers who collect the cash divide it with cooks, bussers and dishwashers. Actually, the average tip-out is about 3.25 per cent of sales and there’s no telling how that gets split. This means that tipping creates a huge income inequality between front and back of house.

According to McAdams’s research, cooks in Ontario earn about $14 an hour, while servers make $27.80 an hour ($9.80 hourly wage plus $18 an hour in tips). Plus, cooks’ earnings are subject to taxation, while the servers I’ve spoken with told me they commonly declare only about 15 per cent of their tips on taxes.

When I was a cook, I saw a server admonish a food runner for adding up his tips in the kitchen. “We never count our money in front of the cooks,” he explained. It was a thoughtful principle, but didn’t address the real issue. Cooks and servers all work hard, but one group gets a significantly greater share of the loot. One unintended consequence of the 10-cent raise in Ontario’s minimum wage for servers last October (from $9.80 an hour to $9.90 an hour) was that many restaurateurs were forced to increase labour costs to meet a new minimum for servers, instead of the money going to the still-underpaid cooks.

Yet as nutty as the tipping model is, customers are inured to it and any ideas for change are seen as radical. Various mechanisms have been proposed through which restaurant revenue can be redistributed to address this disparity, such as standard service fees or employee profit-sharing.

But the basic premise is that menu prices would have to rise to reflect the actual cost for goods and services. A $10 lunch will become a $12 lunch – and even though most customers would likely have tipped about $2 on that lunch, restaurateurs fear that making a voluntary cost suddenly mandatory will mean grumbling, or lost business.

“The market doesn’t bear those kinds of dramatic changes,” says Sal Howell, proprietor of River Café and Boxwood restaurants in Calgary. Howell would very much like to eliminate tipping and was getting ready to rally local restaurant leaders and work together to inform customers. Then came the oil crash.

“We have bigger worries on our plate right now than introducing something revolutionary,” Howell says of the mood among Alberta’s restaurateurs. But she’s still intent on making the initiative happen, hopefully within the year.

Last October, Danny Meyer of Union Square Hospitality in New York, announced that all 13 of the group’s restaurants (including Gramercy Tavern and The Modern) were switching to a service-included policy within a year. McAdams calls Meyer “a hero of mine,” but points out that the move was strategically timed. In January, 2015, Meyer took his hamburger chain, Shake Shack, public and by the time of the no-tipping announcement, his personal shares were estimated to be worth $50-million.

This allowed him to build a cushion for any blowback from customers – or servers, the best of whom might be loath to trim down their earnings. The current system, McAdams argues, provides too much incentive for servers to be mercenary, to work for themselves rather than the restaurant, adding to the transient nature of those jobs.

Ryan Donovan, co-owner of Richmond Station in Toronto, fears that moving to a no-tipping model would mean the exodus of his best servers to places where they can make more money. Last March, on the podcast Donovan said that he’d be glad to make this change, but only as part of a cartel of like-minded owners – naming Anthony Rose, Peter Oliver, Michael Bonacini, Jeff Stober and the King Street Food Company, who collectively operate over 30 restaurants in Ontario.

“If you had a good amount of people, they could represent enough change.” Donovan said on the podcast.

Two Toronto restaurants – Little Italy’s Sidecar and Indian Street Food Co. in Leaside – have gone no-tipping, with the latter’s owner, Hemant Bhagwani, promising to adopt the policy with another restaurant he’s planning. But these are small operations. Large institutions don’t make big moves without measurable public support. I wouldn’t expect change to come from government mandate or a collaborative effort from big restaurateurs. I’d bet on a small player with big guts, the ripple effect from one small, but hugely influential restaurant.

Interested customers, in the meantime, might ask a few questions: In the current system, your tips decide your server’s salary, making you partly their boss. So ask about tip-outs. Ask them what percentage goes to the kitchen, what the cooks earn.

Or just ask yourself how you’d feel if this was how you got paid.

 

Also on The Globe and Mail



Why this Philadelphia restaurant discourages tipping
(AP Video)

Courtesy: The Globe And Mail

10 thoughts on “The zero per cent solution: Is it time to stop tipping in restaurants?

  1. quenadien May 11, 2016 at 9:53 am

    The fact that cooks in North America get such a lousy deal when it comes to sharing the tips may explain why the food is so lousy in most North American restaurants. We had the great privilege of living in France for four years. Tipping usually amounts to “rounding out” the price at the end of a meal (i.e. leaving a few tokens) since the service charge is included. Waiters and cooks derive most of their salary from a fixed source, and there is no comparison between what you get at an average French restaurant and what you get here.

    And I fully agree that taxes should also be included in the price we see, not only at the restaurant but everywhere.

  2. SteveWilliams3 May 12, 2016 at 5:29 pm

    It depends on the restaurant. If everything is standardized and the server is merely a transporter, eliminate tipping.

    If you’re at a fine dining establishment, the server is often a professional. They’ve chosen to do this for a living. They might be able to prepare some dishes tableside, as they do at Le Continental in Quebec City. The server may be a sommelier. They might have superior interpersonal skills and recognize you after one or two visits. They might learn your likes and dislikes. They realize Jack Daniels isn’t bourbon. They know what beverages to pair with your food. They’re also entertaining; quick-witted enough to join in the fun of an occasion and make it more memorable.

    Those are the people I tip well. They’re rare, and they deserve it.

  3. art1997 May 13, 2016 at 10:23 pm

    I found an easy solution, do not eat out. No eating out, no tips. Last year I have lost around 10 pounds !

  4. AndyJeffs88 May 15, 2016 at 12:14 am

    From a taxation perspective I have no idea how this system has gone on for so long.

    A girl I dated made roughly $65K in tips working full time at a popular chain restaurant, but only claimed $15K in income for the year (her T4 income). That results in unpaid taxes of roughly $12K per year. Multiply that by 30 odd servers and that’s $360K in tax revenue per restaurant that the government is passing on.

  5. carcharias May 15, 2016 at 11:05 pm

    In Europe the tips are included in the price in restaurants. In Japan there is no tipping in restaurants. In Australia the minimum way for servers in restaurants is $28.00 an hour and there is no tipping. Canada also needs to be civilized and get rid of tipping by raising the prices in restaurants and wages. Then if you get really good service you might want to leave something extra if you can afford it to show appreciation. At present we are basically being forced to leave tips for poor service.

  6. AbbasToronto May 17, 2016 at 10:20 am

    Although I would gladly tip the chef, the restaurant owner, and those who clean and tidy the place, I cringe every time I have to dish out 15-20% of the gross bill to the person who simply takes my order and brings the food to me. This is the person who deserves the least, is replaceable, while others are not.

    I can simply look at the menu at the entrance and order when seated (or even as soon as I stand in queue). A computer terminal is all I need.

    I can pick up my food. Self-service and Buffet do it with style.

    The person who deserves credit the most is the guy who cooks my food and arranges it on my plate. Pity all he gets is salary. Should I not have the choice which of the all actors I choose to tip?

  7. Greggore May 17, 2016 at 11:37 pm

    This is the first article I have ever read that addresses the real inequalities in the food industry. Cooks get the short end of the stick every time and so many good cooks have walked away from this industry because restaurants won’t pay fair wages and servers refuse to kick back fairly.

  8. RobertM6 May 18, 2016 at 9:13 am

    Tipping is a way for owners to shift the tax evasion onto their employees. When waiters make more in net pay than professionals with degrees there is something wrong.

  9. RDT2 May 18, 2016 at 5:02 pm

    Totally agree. Banish tips. While we’re at it, sticker prices should include tax, like they do it in Europe. It takes about 5 minutes to adjust your expectations, but you end up loving it.

  10. chakev May 18, 2016 at 8:20 pm

    I’m just back from two weeks in Japan where there is a relatively strict “no tipping” policy. That applies to everyone – restaurant servers, taxi drivers, bellhops etc. With almost no exception, service was prompt, efficient, professional and courteous.

    Over the Easter long weekend we were in South Beach, Florida. There, the policy in most restaurants is to automatically add a “tip”, which can be anywhere from 12% to 20% of the food and beverage total, to every bill. While the service was generally “okay”, there were many occasions where we sensed an “I don’t care” attitude.

    The difference may be cultural as much as it is the result of a difference in the tipping policy, however, given the choice I would take the Japanese model every time.

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