Service 101: When Gratuity is Included

Service includedIf a diner is unhappy with service at a restaurant they can voice their concern to the management or leave less tip for their waiter. As I mentioned recently about a recent poll on CNN’s food blog, Eatocracy.com, 49 percent of the people polled said they have left nothing for waiters, while another 34 percent said they have left a very low tip–as little as just a penny–to show their dissatisfaction with service. The amount of a tip, many respondents explained, gives financial reward to waiters for good work and punishes the bad ones.

But what happens when a restaurant eliminates the tipping structure out of their business model entirely? Does service improve or get worse?

Jay Porter, the owner of The Linkery in San Diego, says that his front of house staff and kitchen workers’ performance improved once his restaurant stopped accepting tips. The small neighborhood restaurant began its “no tipping” system in 2004 when they instituted a flat 18 percent “table service fee” on the final check for diners who eat at the restaurant.

“No other profession has the customer adjusting your pay scale according to performance,” says Porter. “That’s just not a circumstance when people do their best work.” Porter says this unique payment model brings his restaurant in line with other American industries. “It’s good for our staff to be seen as professionals, just like every other profession in America. No other profession other than the restaurant industry has people evaluating your work and basing payment on that.”

Porter is careful to point out that unlike other restaurants that add a fixed gratuity to all of their diners’ checks–places like Thomas Keller’s French Laundry, Alice Waters’ Chez Panisse, or even Venice Beach’s Sauce on Hampton–The Linkery is the only restaurant in America that doesn’t accept any payment beyond a service charge. “We don’t work for tips. We charge for what we do.” Any additional money diners might leave behind for the wait staff is donated to charity.

What does Porter say to people who argue that restaurant service fees fail to motivate servers to give good service?  “People who don’t like the idea of our service fee are the very same people who have jobs where they don’t have to worry about their pay being adjusted every fifteen minutes,” says Porter.

Michael Lynn, a recognized expert on tipping and a professor of consumer behavior in Cornell’s School of Hotel Administration, says most diners dislike the practice of tipping. “They wish they didn’t have to tip, but they dislike a service charge even more,” Lynn says. “But if you ask a diner if they would you rather see menu prices go up fifteen percent so that servers can make a liveable wage, that’s something they don’t even really want to consider.”

According to Lynn, Eatocracy’s poll doesn’t accurately reflect diners’ real tipping habits. “Very few people walk out without leaving a tip,” Lynn says. What people say they tip and what they actually leave behind are very different, Lynn says.  “The weather outside has as much of an influence on tipping as does the level of service,” says Lynn. The professor has tracked thousands of restaurant tabs for a trend in tipping. According to Lynn, “less than two percent of people stiff the server.”

Though that may be true, servers earning less than minimum wage can be the unfortunate recipient of a zeroed tip, with or without any explanation from their guest. Working for tips requires subjective performance reviews from customers on an ever fluctuating, minute to minute basis. Front of house staff at restaurants work in a  financially tenuous situation that no other industry’s employees have to bear.

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21 comments

  1. Phil

    It was interesting that you mentioned The Linkery in this article. That’s one of the few restaurants I know of that automatically include gratuity. I can’t say I agree with their philosophy, though.

    Don’t say “We don’t allow tipping” as if it’s a magnanimous gesture on your part. You’re still charging your customers an additional 18% of their bill, whether they’re given good service or bad. And past performances aside, I’m not guaranteed that my waitress isn’t going to have a bad night because of problems she’s having inside or outside of that restaurant. Paying an additional 18% to have her bring food and drinks to our table should be something determined by the customer, not the restaurant.

    There are very few industries that do this. I think it’s presumptuous to think that your customers are willing to pay an additional 18% of their total bill for service. While I rarely tip lower than 20%, it’s still a decision I’d rather make myself.

    Why not pay your wait staff 18% more instead of placing the burden on your customers?

    • sonam

      I’d rather the waiter be paid a living wage, than live in a fake world of plastic smiles and feigned interest in small talk. Whether its 18% or 80% more is really a matter for the restaurant to decide. I don’t need to know.

      If there are problems with service, or the bathroom is shabby, or the cook’s burnt your food, or the host was uppity — well, complain to the manger — that’s what he’s there for! If that doesn’t work, complain to BBB/Government/Yelp/Facebook …

      Or would you prefer garnishing the waiter wages in all these cases?

      • Food Woolf

        Sonam,
        I personally would prefer all employees in our country earned a liveable wage. However, that kind of grand change takes a large amount of support from earners and customers alike. I’m not sure if this country is ready to face the reality of paying people what they’re worth. What do you think?
        Brooke

  2. Jason

    @Phil You just said it’s presumptuous to think that customers are willing to pay an additional 18% for their service yet you ask why not pay you wait staff 18% more for their service without passing the burden on to the customers. These statements have zero logic. Where is this money coming from to pay for the wait staff’s wage increase? It’s not going to come from a menu price increase because then you would be having another little rant about that.

    You pay a service fee wherever you go. To the grocery store where it’s built into the price of your milk to pay for the clueless kid who send you toward frozen pizzas rather than to dairy. To the gym where it’s built into your banana smoothie even though it took 20 minutes to blend bananas and milk together because the girl behind the counter is having a life and death conversation with her BFF about Joey. When you pump your gas a percentage is taken to pay the attendant behind the counter even though you never go in and he just sits there reading magazines. You don’t adjust what you pay for any these items based on your service do you? No. So why should you be allowed to adjust the pay scale of a server? This way of doing it just shows you what you are paying up front and is not hidden in the cost.

    I wish all restaurants would impose a flat percentage and remove tipping for table service from our culture. This way servers are paid for amount of work done and not by the decisions of a group of teenagers or someone who had a bad day and wanted to make everyone elses worse.

  3. Johanna

    Having both worked as a waiter and nyc and also lived in Europe for several years, I have seen the issue from both sides. I can definitely say that there is a HUGE difference in the quality of the service between the US and Europe. In Europe (where tipping isn’t an issue) the service is MUCH slower and it isn’t unusual at all to have a server with a nasty attitude. That being said, at least they don’t kick you out after you’ve spent an hour at a table like they do in nyc!

  4. Leah Greenstein

    Great post Brooke (and great research). I have to say, after our recent honeymoon in Italy, I was even more unsure of which model was better. I think paying for service only creates better servers on occasion; it’s the culture of the restaurant that ensures a good experience by all. I think, ultimately, restaurants and servers can’t win. Diners don’t want to pay more for their meals, they don’t want to be told what the service charge is and they don’t really want to tip. So where do we go from here?

  5. Sonja {ActiveFoodie}

    Very interesting post Brooke. I have to say, my initial reaction was to say that tipping should be voluntary and discretionary because restaurant employees earn a wage, and the tip is just a “bonus” for providing an enjoyable experience. However, upon fruther reflection I understand the argument that the employees earn such a low wage that the tip makes up for the difference. I guess the bottom line is does the restaurant pay the employees more, raise the food prices and eliminate the tip; keep the salaries and prices the same and institute a “fee”; or just keep everything as is?

  6. H.C.

    I’m kind of in agreement with Phil that it’s a bit disingenuous to go “we don’t allow tipping” when a 18% ‘service charge’ is automatically added — how about if Linkery just folded in that cost into the menu. Or are they concerned their customers would balk at their unusually high price (though having been to the Linkery before, I feel the prices are already on the higher end before the 18% is taken into consideration. I still kinda applaud what they’re doing on the tipping front, as well as their sourcing of ingredients from local farms.)

    • Food Woolf

      @H.C., I’m not sure what you mean by disingenuous since The Linkery is very upfront and sincere about why they add a service fee to the check (which is–ultimately–folding in the cost of service to the check as you suggested). The service fee is applied to the paychecks of front of house staff as well as back of house staff (kitchen), so no tips are actually collected. This is the first business model of its kind, as far as I know, that folds in the cost of service into the guest check.

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  9. stephen

    I think that waiters make too much money for the work they actually do. They don’t do nearly as much work as the kitchen, dish, chef, etc. but that is the system. There are many hidden fees for a restaurant (linens, toiletries, soaps, sweeteners, garnishes…) and there aren’t very many ways to suck up this cost. Sure that is why sodas cost what they do. A restaurant has $1000s in lost inventory just behind the bar. This means that they are at a loss before even ordering any food, once they do order food they are already behind loads of money, and its all perishable!! If something doesn’t sell they have to suck up a loss. If you increase payroll in one restaurant by 20% by paying servers what the market is paid you’re gauranteed to fail. Unless you have such a high reputation such as the French Laundry or other very high end places that are on a waiting list to get in, there is no way to pull this off.

  10. j

    ““No other profession has the customer adjusting your pay scale according to performance,” says Porter. ”

    Uh….Sales?
    Real Estate?
    Anything in which someone gets commission is being paid based on your performance. If you don’t do a good enough job at selling something, the customer will move on to another store, and you won’t get squat.

    I don’t agree that tipping should be required, mainly because the servers are already making as much money where I live as my family does. Why should they get bonus money which could go towards my own survival? If you happen to have the extra to spend, then by all means. But when it’s my birthday and I go out and buy the cheapest item on the menu and SHARE it with my boyfriend, just so that I can try to feel like it is a special occasion, I shouldn’t feel forced to pay extra just because they managed to get me the right food. If it went directly to the person actually making the food, I would feel differently, but in every case where I go out to eat, I am literally the easiest table a waitress could have, she is doing the BARE MINIMUM job requirements to serve me.
    Write down food. Bring food+beverage. Remove dishes. Bring cheque. This is the job they signed up to do, and shouldn’t get extra for it. Waitresses no longer get paid meager salaries in the US and Canada. Their wage is usually the same or very similar to everyone else’s minimum, within a dollar.

    • Food Woolf

      Thank you so much for your comment. Actually, your point about most servers making minimum wage isn’t true. In many states, servers make closer to $4/hour because the industry of food service is built on the idea that servers will make approximately 16 percent in tips. When you eat out at a restaurant–regardless if you believe it–you are entering an agreement to pay for services rendered. Part of that service fee (for doing the “simple” things as you call them) is covered by tips (even the government expects you to tip a minimum is 15% and taxes the server giving you that service on that amount based on their sales from their paycheck–regardless if you tip them).

      I understand that times are tough and eating out is a luxury. If you want to save money, make a beautiful dinner and go to a camp ground with picnic tables so that you can take control of every aspect of service from the ordering of the food, the setting of the table, and serving of drink.

      Regardless of how little you order at a restaurant, or how “low maintenance” you believe you are, the point is that the work of a server is a PROFESSION that requires payment. Servers are professionals that require payment in the form of a low hourly wage and tips that are doled out by the customer. Whether or not you respect the work of restaurant people, the work that they do is important, valuable, and worth respect.

      Please keep in mind that when you go to a restaurant to eat you are entering a business that is built on charging fees for service. Restaurants are one of the few that don’t always REQUIRE that service fee be added to the check. In real estate, if I’m not mistaken, that fee is automatically added to the final amount due.

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  14. A from Australia

    Being from Australia, tipping is offensive. The employer should pay ‘atleast’ the federal minimum wage – whether he is required to or not, otherwise they are the one shafting the employees.

    When I visit the USA I never tip, the waitperson is my equal and as such will treated as an equal, hence to give money to them for doing the job they have choosen to do would be like me giving money to a beggar (there is no difference). If you want to beg for a few $$ then I suggest you need to get some self respect. (This tip will help you for a life time.)

    However if you feel that rich people should ‘share the wealth’ then Karl Marx would be proud that you wish to turn the USA in to a communist nation.

    Furthermore why don’t you state the price for an item exactly, instead of adding tax etc on. If the meal is $10.00, I should be able to pay with a $10 note. In Australia, and most of the world it is the norm to state the price including all taxes fees etc and trust me the system is simple and fast as a result.

    Or do you have this complicated system because it keeps poor people poor or simular ?

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  16. Am

    I’m totally agree with you. Mostly the gratuity part, why put the burden on the consumers/customers even those waiters/waitress give a terrible services. People in US should bring their voice up to against all the restaurants put on their menu expected for 18% gratuity and automatic added on the receipt/bill. At the ended, the customers pay for restaurants owners’ employees wages, help them to make more profits, and waitrons are pay less taxes for gratuity/tips are not reported. This system needs to change ASAP.

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