Tipping? Yes? No?

The endless debate over tipping and its attendant issues got a new wrinkle this week when New York restaurant owner Danny Meyer announced that he will transition to a no-tipping policy at his NYC restaurants.

HERE is the story as reported by eater.com.

Also this week, a restaurant owner in San Francisco who instituted a no-tipping policy ten months ago changed his mind and is going back to allowing customers to tip his wait staff. HERE is that story as reported by Michael Bauer in the San Francisco Chronicle.

Today’s Post-Dispatch has Ian Froeb’s front page article with several local restaurant owners chiming in on tipping. HERE is that story.

Here are a few thoughts on the matter…

Who benefits from a no-tipping policy?

The staff? Yes, sort of. The cooks will get more money. The servers, probably a bit less. The “hospitality included” upcharge prevents an unhappy diner from stiffing the service team. (An hourly wage means a server would get the same amount for a slow Tuesday night in January as for a bustling Saturday night in May. Although, if it’s really slow on that Tuesday night, he may be sent home early.)

The diner? Sure, he/she pays a higher menu price but now there’s no need to worry about doing the math to figure out 15%, 18% or 20% of the bill. Will service be just as good when the server knows he/she is being paid for simply doing the job, NOT because of how well or poorly he/she does it? That’s the big IF.

The restaurant owner? Certainly the bookkeeper will have an easier time reporting wages and deducting tax payments. The restaurant owner may be able to pay kitchen staff better. It may be a challenge to keep the wait staff happy, as the SF restaurant owner learned.

Could ANY restaurant, anywhere make this work in 2015?

Well, Danny Meyer’s places can. They’re in New York City which has a large dining population. Plus, his restaurants are established places with regular customers.

Certain upscale restaurants in towns like St. Louis might be able to make it fly. But older diners who prefer that changes come slowly may not be on board with such a radical switch.

Restaurants that cater to a budget crowd should avoid climbing aboard the no-tipping wave in its early stages. I can’t imagine that most Red Lobster customers would prefer a 20% price increase over choosing the amount of tip to leave.

Some other things to consider…

Is it so wrong that servers earn considerably more than cooks? The cooks endure burns, cuts and other hazards. But the argument could be made that the wait staff is more creative. They’re the ones who creatively upsell a table a 150 dollar bottle of wine. While the chef may be a creative genius, a line cook is charged with making most dishes the same way every time. (At some of the radio stations I worked at, the jocks—including me—drove older subcompacts while the sales men and women earned more and drove new luxury vehicles. Was this unfair? Maybe, but that’s just the way it was.)

Of course, the success of the servers is a direct result of the job being done in the kitchen. If food comes out slow, it’s often the server who gets the blame. If the meal is perfect because of the kitchen crew, the server may get the love in the the form of a bigger tip.

A older couple earning 300K/year pays the same for a dish at a tipping-banned restaurant as a young couple earning 46K/year. In a tipping-permitted situation, you might expect the higher earners to leave a significantly bigger gratuity. (Although most servers can tell you that’s not always the case. The rich can be cheapskates and the not-rich can be generous.)

What about the diner who wants to reward a special effort by a tip-free server? Does he surreptitiously slip the man or woman some cash? (My daughter works at a Starbucks where tips are pooled. She has received special personal gifts from regulars including cash, gift cards, toys for her cat and, from a shoe salesman, a pair of boots.)

Many servers like this aspect of the gig: you take money home every night! In a non-tipping Danny Meyer world, servers would presumably only take money home on payday and EVERY CENT would be reported income.

There will be bumps in the road to be sure. And we will continue to debate the pros and cons of tipping. But Danny Meyer’s move may be the first shot in what could become a revolution. Will it work? As they often say at the end of TV news reports, only time will tell.


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