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Oct 12, 2008 09:05 AM

Linkery's (SD) tipping policy attracts wider attention

Today's New York TImes Magazine features an article on the Linkery's much-debated no-tipping policy:

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  1. Yep. The photograph of the receipt shows exactly my dislike of the "no tip" 18% "service charge"...

    Tax is added to the 18%.

    If it were treated in a normal manner, tax is added to the food and not to the 'tip'. I dislike taxes. Very much.

    17 Replies
    1. re: Cathy

      I think it's a little strange to call it "no tipping". It's clearly a tip. The money goes to the servers and the kitchen staff as a payment for their service. It's simply a mandatory minimum tip amount.

      1. re: Josh

        Agree. If it were "no tipping" then the price should just be added into the price of the food, tax all of it and be done. To call it a service charge, making it appear optional, and then taxing it is strange and what I take offense about.

        Pay all of the staff an agreed upon hourly wage and then if there is extra money (at the end of the year, or quarter, or month-whatever you agree upon) give the staff a bonus. Don't play these games making me pay tax and then making the staff pay tax on that income also. It is double taxing of the same money.

        Let me re-iterate that I *don't* mind the 18% ( I tip 15-20% always anyhow). I *do* mind paying tax on the 18%.

        1. re: Cathy

          They write on their website that they "Provide table service for a fixed rate of 18% of the check, with the cost waived if there are problems brought to our attention."

        2. re: Josh

          I actually, don't have a problem with Jay's tipping policy. What I have a problem with is the greater policy (if you will) in the restaurant business in general of having the customer pay the wages/salary of the employee. In no other business does the consumer pay directly for the wages of the person providing a service and the owner/management gets to wash their hands of the bulk of the responsibility for the employee's income and benefit (if any) package.

          The minimum wage in CA is $8/hour. It went up on January 1 of both 2007 and 2008 (thank god it's not going up again in 2009). If every restaurant paid minimum wage to their employees none of us could afford to eat. Restaurants get away with not paying minimum wage because of tip policies, many of which will go unreported to the IRS because they are cash transactions with an often murky audit trail. Woe be to any business person who plays russian roulette with the State Board of Equalization...

          1. re: DiningDiva

            I don't have a problem with it either. I just think calling it "no tipping" isn't really accurate. But then I *am* a pedantic SOB. ;-)

            RE: your point about paying servers minimum wage, I think that if it was required you'd see some restaurants adopting those new-fangled table-side computer ordering systems, where the patrons select their items on a touchscreen and the food is delivered by runners.

            1. re: Josh

              Are waitstaff employees or are they independent contractors? Who is responsible for them the restaurant or the wait person himself/herself? I think everyone can agree (especially in SD) that competent servers are worth their weight in gold and in short supply.

              With my operations I have no choice, we're a union house, my employees get regular raises and an extremely complete range of benefits at virtually no cost (employees have no co-pay for our Kaiser option). The only flexibility I had was with our hourly or non-unionized staff. However, with the increase in the minimum wage in 2007 and 2008 my labor costs increased by $500,000 as a result. We were successful in keeping half of that amount off the bottom line. The other half? sunk us like a stone. I understand why the tip structure in the industry is the way it is. Without it restaurants would have to charge prices none of us could afford. It's a hard argument on both sides of the issue. Force restaurants to adopt a traditional labor structure ensuring minimum wages and you put them out of business and demote many good servers to subsistence living. Continue what we're doing and the inadequacies and imbalances remain codified. I think The Linkery policy works because of Jay's commitment and the fact that so many of his employees understand and share the restaurant philosophy. It's not for everyone, but it certainly works for them.

              1. re: DiningDiva

                But once one adds the tip the amount of the check, aren't they paying that price no one can afford at that point?

                1. re: ccbweb

                  No, because a tip rarely adds up to the same amount per person as does a salaried wage because it's spread out over many customers.

                  1. re: DiningDiva

                    Would you write a bit more about that? I'm not following something on the math here. You've clearly owned or own a business that deals with this stuff so I think you're writing about something you've seen play out and I'm just not understanding it clearly.

                    In thinking through it, my thought is that if the prices of all items in a restaurant were raised by some set percentage so as to include service (say, 17.5% as a not so random amount - the midpoint between the currently most often cited range of acceptable gratuity of 15-20%) and that amount were taxed by the state as a sale that the amount paid by the customer would be (within the amount of the tax on the service charge) more or less the same as paying the bill and adding the 17.5.% gratuity on at the end.

                    I'm perfectly happy to believe I'm missing something, though.

        3. re: Cathy

          Another rip, calculating the tip then doing the tax calc on that amount, totally incorrect. Hmmmm. I wonder if they're paying the state that amount of tax? So the bottom line is if you get lousy service you have no recourse with the 'service charge'. This place has lost my interest, what next will they tell you what to eat?

          1. re: cstr

            The State of California taxes service charges related to the sale of food as stated in Regulation 1603 (g) (2) (B). ( . ) State sales taxes are legally required to be collected by retailers and that money is legally required to be sent to the State.

            1. re: jayporter

              This should be stated clearly in the description of the "no tip" policy, so that people understand they will be paying an additional 7.75% on that 18% charge.

              I find it easier to pay an additional $1 per item, as all the Chaldean/Mediterranean restaurants in El Cajon charge for inside the restaurant versus to go orders than to mess around with all of this, under the guise I will feel better about where my money goes.

              1. re: Cathy

                Your money goes directly to everyone who works in the restaurant. Where do you believe it is going when it is all written on the check and tracked in the system and audited by the state?

                The extra $1.30 on a hundred dollar tab is certainly a concern, though.

                Also in the article is an explanation of the thought process about why they didn't just fold it into the price as you suggest. Its amazing what one can learn reading the articles about which one is writing.

            2. re: cstr

              If you read the article, they do provide recourse for lousy service. I think the manager is quoted as saying that if you do not like the service, they will generally offer to remove the service charge.

              I don't mind the service charge as it is generally what I would tip anyway. My feeling is that giving a smaller tip after you have had bad service isn't going to make up for the bad service, or change the server's behavior. I never noticed about the tax issue before.

              If service is so bad that it ruins my meal, I would want to speak with a manager and leave nothing, so the tip vs. service charge would wind up being the same - 0.

              1. re: JRSD

                I am not at all likely to sit through an entire poorly serviced meal and *then* ask to speak to a manager within hearing range of a questionable employee.

                I am more likely to ask to speak to a manager if my food is not close to the menu description and the server does not do anything to correct the problem.

                In any case, I do not ask for compensation and merely do not return to the establishment.

                1. re: JRSD

                  I generally tip 20%, and if the service is poor, I'll tip 20% but let the server know, in an effort to remember me, and expect better next time or it'll be the last time. With an SC the waitperson may feel imune to customer feelings knowing their tip is secure and I would have little impact on the quality of the server. In some instances, I would speak to management if the dinner/lunch etc, was a disaster. I am surprised that SC's are taxed, if an est. has to use this policy, I question the issue they are attempting to resolve. Are they aware that their staff is being under tipped and why?

              2. re: Cathy

                This doesn't make much sense. When i tip I look at the price after taxes is charged.

                So which is better? Paying 18% on the tax or paying 8% on the tip?

                Well since multiplication is is an associative operation then it doesn't matter which is charged first. You pay the same thing in the end. Don't let your hatred of taxes blind you from logic.

              3. Every place that I've gone to that does this calls it a "service fee". That seems fair and if it's on the menu then it should be clear. You have to call it something but calling it a "no tipping" policy isn't very clear because you're still paying for service. This however might be more the article and not the practice or place.

                The only issue I can see is that usually only the very high end places like Chez Panisse (mentioned in the article) use this policy...or French Laundry which states the price of dinner is all inclusive minus wine (but then it's a set menu mostly). In these places it's sort of a relief.

                Oh yeah, I do see places tack on an automatic 18% for large parties and that seems fair because waiters can get stiffed...but they can also be incompetent as well, or be run thin by is that fair?

                Any way, below high end, I'd like the option on the tip for a number of factors (like uneven-ness of service) but can't really fault a place for doing so...although if everything isn't well executed, I'm not sure I'd be prone to returning.

                1. Never been to the Linkery and only wish Jay Porter the best..
                  Here's what I have read and understood on the issue..

                  A service charge for the employer is treated as a taxable sale.
                  A gratuity is not a sale however is taxable under both fed and state (as wages, payroll tax liability for both the employer and the employee).
                  Simply stated, the employer is NOT subject to matching payroll taxes for a service charge as opposed to a gratuity.
                  I am not a taxation attorney but play one on TV..

                  1 Reply
                  1. re: Beach Chick

                    To piggyback on Beach Chick's well wishes, I think it's great that a local restaurant is attracting such fan fare, albeit controversial fan fare. Maybe I'm being too simple here, but isn't the bottom line that if you truly enjoy the food at Linkery, you just have to deal with the 18% charge and if you're unhappy with the forced gratuity, choose to not dine there?

                  2. I don't get what people are complaining about. They call it a "no tipping" policy because they don't accept anything extra. Plenty of places add an 18% service charge but this is the only one that refuses to accept more.

                    I think the issue is that people think they lose their perceived power to influence the wait-staff. That power was never there. If you want to reward the restaurant then just become a repeat customer. If the service is bad then don't go back. It's also much more fair since it gets split with the kitchen staff who is many times more responsible for the food then the wait staff ever is. Plus numerous studies have shown that tips don't influence how you're being served. Especially if it's something you pay after the fact and they would have to remember you or guarantee that you get the same server every time to be truly effective.

                    Plus at the end of a meal you shouldn't be forced to do math. In no other business do I have to do this. If someone makes an excellent product do I pay the manufacturer extra? No, I buy more of his product and tell people how great it is. It should be the same thing for the restaurant industry.