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After Banning Tipping, Service Improved & Revenue Increased

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http://qz.com/113597/after-i-banned-t...

Great article that destroys a lot of the myths we keep hearing over and over about tipping.

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  1. A service charge is a mandatory tip, eliminate tips and service charges and see what happens.

    1. I will say, for those restaurants doing something like this, I disagree with them listing it on the check as a "service charge". Paying your staff a reasonable wage is just part of the cost of doing business, plain and simple. It's also part of the cost of eating out, plain and simple. Any additional "tip" a customer leaves, would in fact be what consumers have argued tips should be all along - a reward for good service. Line iteming it on checks like that is only going to make people complain about it more. It would be like a restaurant putting stuff like a "condiment fee" or charging for lemon wedges or bathroom toiletries on the check...

      Also, I wonder if consumers ever consider that other difficult or demanding patrons are also very much to blame for your server not being able to attend to your table. No matter how good of a server they may be, they cant be in two places at once. If another table in the same section as your server is being very picky and running them ragged, they're just as much to blame for delays in your service.

      1 Reply
      1. re: Atomic76

        I'm all for transparent billing in all walks of life.
        (I'd love if they itemized ingredients too, honestly).
        I don't expect the service charge if I get takeout, so...
        Itemize!

      2. That article is a pretty thin argument that could be interpretted several additional ways.

        First, IHO, they did not ban tipping, they made it mandatory, no matter what the server or the house did.

        Second, he did not say what, if any, of the mandatory tip they call a service fee actually goes to the server. If it is not the full 18%, then I can see why he thinks "business is better"' because he would be ripping off the servers; not an uncommon situation.

        Oddly, his place is both totally unique and yet finds a study that validates his idea based on "research". Now if there are few if any examples, I don't think the data support the conclusion. If there are many examples, his is not a unique situation. He also did not provide much in the way of evidence for the experiment in terms of what was measured and how.

        If he is really convinced that tipping is unnecessary and that paying his servers is maybe worth it, what would happen if the 18% were not separately identified but was a portion of the pricing of the food and drink?

        Anyone know if he has continued the "service charge" in his new venue in San Francisco?

        1 Reply
        1. re: akachochin

          Akachochin,
          I think he has yet to open his new venue in SF.

        2. Difficult for me to comment on an American situation. However, here in the UK, a discretionary service charge is fast replacing old-fashioned tipping. I see that as a good move that generally leads to better service, as apart from givign better financial security to an employee, certainly fosters a team approach to the job. Personally, I'm even more in favour of those restaurants which fully include service in the menu price of the food, in the same manner as is the custom in countries such as France, Belgium and Spain.

          Certainly the conclusions the author comes to are supported, in my experience, by most Chowhound tip-related threads. Folks do not vary (or do not vary by much) their customer tipping even when service has been clealry appalling.

          30 Replies
          1. re: Harters

            I love this article. At this point, I really can't maintain a debate on the positives of tipping unless I see a study that supports tipping as opposed to opinions or annecdotes. Because it's become an argument I just don't understand - particularly as the opposite side of the argument is supported by research.

            I think a really interesting point of the article was about a low tip demarking a comment on poor service. That either management would/could never hear - or a point not mentioned, that a low tip from certain stereotyped group would be seen as the table being cheap and not a comment on poor service.

            1. re: cresyd

              Are you really suggesting that the article is some form of serious scientific study on the impact of tipping policies?

              If you are a restaurateur and are going to claim that "we did this and that and made money from it", you had better put up concrete evidence that you actually did, rather than merely proclaim that you did something that some random, clueless person in academia claimed to be a good idea.

              That article provided zero original research beyond first-grade standards.

              1. re: nocharge

                Oh, I think the evidence that is a successful business model is there, in the American experience, without any need to resort to academic studies.

                The country has a number of very successful, albeit high end, restaurants where service is included in the menu price (as the model in some European countries), let alone thinking of levying a service charge.

                On a wider front, the levying of a mandatory service charge/gratuity is commonplace in America for larger groups of diners. You never hear of complaints from customers about the principle of that charge being levied. If there were such complaints in any significant number, then businesses would change their practice. The fact that they don't is evidence enough that it works for both restaurant and diner. It is not an issue of principle for either party. It is a non-event.

                On a personal level on our last trip to New York (about 5 years back), we were both pleased to see a number of restaurants added the service charge/gratuity to the check, rather than have old-fashioned tipping. A welcome bit of progress there, IMO.

                1. re: nocharge

                  No - but the article did quote studies (http://tippingresearch.com/uploads/Ti...) and (http://tippingresearch.com/uploads/Bu...). Not regarding this article as even a test case - there are a number of studies on tipping. None of which that I've ever come accross support tipping as a business model.

                  1. re: cresyd

                    Oh, I agree entirely, cresyd.

                    I see no evidence, when visiting America or other countries where there may be different tipping cultures, that tipping inherently leads to good service or aids business success. What does lead to good service is having motivated, well trained and well supervised staff. I believe that what is important to serving staff, as is important to any other employee, is knowing that your income is going to pay your bills. It really doesnt make much of a matter if that income comes from salary, bonus, sales commisisons or tips. I accept that this will be a generalisation but, in my own experience, good service tends to apply in restaurants where there is a team approach to service, rather than a reliance on a specified server for your table.

                    1. re: Harters

                      I was replying to nocharge's question asking if I equated the article to a serious study - but I definitely do agree with your view on service.

                      While I think a lot of this can come down to common sense and serious evaluation of personal experiences, my point about research studies is my personal perspective about trying to avoid getting into too deep a debate with anyone where we just compare our various personal experiences in food service.

                      I agree - I see no evidence that tipping helps - but spend enough time on these chat threads to understand there are clearly people who strongly disagree with me. So instead of just reading annecdote after annecdote, I'd rather just wait to read a study that equates tipping in a positive way (be it service, productivity, etc.).

                      What I found fasincating to think about in the article though was this notion of evaluating performance via tips. I have read enough different comments on CH to state that there are diners who say they tip 20% for average/meh service and a higher rate for good/excellent service. And I know personally that my parents tip 15% for average service and 20% for excellent service. So how is any server or management team going to decifer a tip percentage as "comment on performance" versus "comment on diner". As a management plan, the most immediate and consistent (supposed) feedback from the customer (in terms of tips) on how their staff is doing is via a system with minimal to no internal consistency. That was a take away point from this article that I hadn't thought of before and found interesting.

                      1. re: Harters

                        My anecdotal evidence is the converse of yours in the sense that I have seen many cases where the lack of tipping culture has led to bad service. Here is one anecdote:

                        In the early 90s, I attended a conference in Berlin in the recently reunited Germany. I was staying at the Intercontinental, but the first night, they were full so I stayed in a sister property in the former East-Berlin that Intercontinental had just acquired. It was a tall tower that used to be the flagship hotel under the old regime. After checking in, I went back down to the lobby lounge to have a beer. The lounge was pretty empty and there was a gaggle of cocktail waitresses just standing around chatting with each other -- probably holdovers from the commie era. It took at least 10-15 minutes before one of them finally made her way over to me to ask me if I wanted to order something. In the meantime, I was busy thinking to myself that if this had been in the US where the waitresses would have been working for tips, I would have been attended to in a split second.

                        Second anecdote, but of a different nature:

                        Some of the best paid bartenders I know work for a hotel restaurant that sees an extreme amount of bar business. Since the hotel is unionized and the union is one of the strongest hotel unions in the country, their base pay is way above minimum wage, they get benefits, and can even retire with a pension after 15 years. And job security is probably pretty high. Still, those guys work their asses off when the place gets overrun with people during happy hour. Why? They get $1-2 in tips for every bottle of beer they open. If opening an additional bottle didn't make them any extra money, would they work as hard just because of a "team approach to service"? I highly doubt it.

                        1. re: nocharge

                          I'm sure we can all provide anecdotes to support our prejudices. Here's mine.

                          A few years back, we were eating in an Italian restaurant in Stroudsburg, New York. It took easily 10 minutes for a menu to arrive and a further 15 for a order to be taken. Food came, we ate. We then tried to get the bill - that took a while as the waitress as still chatting to her friend at the bar as she had been all the time we were in. - it took another 10 to be delivered. If there had been a team approach to service, we would not have had such appalling service. Needless to say, no tip left.

                      2. re: cresyd

                        No study has ever provided any support for tipping as a business model? Did you even read the studies you referenced? From http://tippingresearch.com/uploads/Bu...
                        that you linked to:

                        Price Discrimination
                        Charging different customers different prices for the same good or service results in higher profits when (1) consumers differ in the amounts they are willing to pay, (2) the prices charged match the different segments’ willingness to pay, and (3) demand from price-insensitive customers is lower than the firm’s production capacity. In that case, revenues and profits are maximized by price discrimination because firms extract more money from price-insensitive customers without losing the business of price-sensitive customers (Hanks, Cross & Noland, 1992). Tipping represents a form of price discrimination, because it allows some customers to pay less than other customers for the same service. Although all customers must pay the same nominal price for a given service, they can differ in the amounts that they tip.
                        As a form of price discrimination, tipping is unique in two respects that deserve discussion. First, the price differentials paid under tipping are voluntary. Consequently, price-insensitive customers could avoid paying a price premium by tipping as little as do price-sensitive customers. Fortunately, research suggests that this does not occur. Price-insensitivity (or the amount consumers are willing to pay for a service) should increase with income and perceptions of value, both of which are associated with larger tips (Lynn & McCall, 2000; Lynn & Thomas-Haysbert, 2003; McCrohan & Pearl, 1983). Thus, price-insensitive customers do pay a price premium by tipping more than do their price-sensitive counterparts. Second, firms do not directly receive revenues from tips as they do from other premium prices charged to price-insensitive customers. However, they do receive those revenues indirectly in the form of lower labor costs. Since price-sensitive customers can and do keep their costs down by tipping less than price-insensitive customers, and since the price premiums paid by the price-insensitive customers do go indirectly to the service firm, the price discrimination achieved through tipping means increased sales and profits as long as the price-sensitive customers are filling seats that would otherwise be empty (Schwartz, 1997).
                        When demand from price-sensitive customers is not needed to fill seats, however, price discrimination through tipping simply attracts a more diverse customer base without enhancing revenues or profits. Therefore, firms enjoying strong demand and seeking a relatively exclusive, up-scale clientele may want to replace tipping with service charges or service-inclusive pricing as a way to discourage price-sensitive customers.

                        1. re: nocharge

                          The primary conclusion from the study mentioned is that no one tipping policy is best.

                          While price discrimination provides a solid business model for certain restaurants (by the study) - it also results in up-selling, ignoring tables not their own and discrimination of basically every group of patrons except for able bodied middle aged white men (provided they don't carry coupons). It also says that, "tipping provides at least as strong an incentive for servers to engage in these negative behaviors as it does for servers to deliver good service."

                          You are correct that I was being hyperbolic that there are no studies out there discussing the upside to a tipping business model. Particularly from the financial side. The mentioned study also mentions a number of areas where more study is required.

                          Regarding a business model where I am a consumer - I am largely only a consumer of the product. I eat in food establishments, I do not engage in the business side as an owner, manager, or employee. And while there may be a business model to support tipping culture - the service arguments I find to be far more heavily weighted to the negative.

                          1. re: cresyd

                            I totally agree that there are pros and cons with tipping. Often, though, whether something is a pro or a con is a matter of opinion or "it depends". For example, if a customer who is known to be a big tipper is given preferential treatment, is that a good or a bad thing? Is up-selling bad? Is a server comping a customer stuff in expectation of a bigger tip an inherently bad thing if it's within the server's allowance for comps?

                            What I argued against was the idea that it was somehow scientifically proven that tipping is uniformly a bad thing or that the guy who wrote the original article had destroyed any myths or contributed anything of value. Not the case. Tipping is a mixed bag.

                            1. re: nocharge

                              You are correct that tipping is not uniformly bad in the overall business sense - however, the qualities that I value in a restaurant experience, namely service experience, do not appear to benefit from tipping. And this doesn't even go into things like tipped employees being more inclined to lie to the IRS.

                              When I mention studies and tipping - what I really mean is that I'd like to see studies about tipping contributing to improved service. Because in that area I haven't seen much - now this is because I do not enjoy up-selling. And while I do like receiving free items, I don't necessarily seek it as part of "good service".

                              Israeli is a restuarant system where tipping is standard at 10% but also servers make at least minimum wage - and in my humble opinion rank as providing some of the worst service ever. Both individual incidents and as a overall depressed level of service provision. I've never been to Japan - but from what I've heard, service provision (with no tips) is at a very high level. So there could also be different professional cultures that contribute to service provision beyond specific financial incentive systems.

                              1. re: cresyd

                                Cresyd,
                                You are correct about Japan. There is no tipping, but service is normally at a very high level. I think you are right to identify different professional cultures here.

                                1. re: Tripeler

                                  There are certainly different cultures across the world. Both with regard to serving profession and with how employers treat their employees. Where I am, many full-time servers will have attended college, either fulltime after leaving school or part-time while in employment, to gain nationally recognised qualifications in food service. It gives the role something of a status within the industry, if not within society in general.

                                  I think it also fair to comment that service styles can differ between America and Europe (although we have different tipping cultures within Europe). I am always very aware of the server when in America whereas, at home and in the other European countries I visit, service during a meal very much goes on in the background. Whilst I might not favour American style service, it's not something I'd take issue with - it's just one of those differences that make America interesting to visit - I always regard it as the most "foreign" country I visit, even though the language is the same.

                                  For a visitor, the high level of tipping, initial menu price of food and then added tax, makes eating out in the States, at mid range places, quite an expensive option. I'm currently researching possible places to eat on our coming trip and, like for like, I'd reckon meals will be around 15 - 20% dearer than at home.

                                  1. re: Harters

                                    aren't you in britain? this is even with the value of the dollar?

                                    good grief, some of my most expensive trips in the last 10 or so years have been to england because of the monetary conversion factor being so skewed.

                                    1. re: hotoynoodle

                                      Yep, I'm in the UK. I know it's not easy to make direct comparisons but we are just about to spend 3 weeks in the States so I've been looking at restaurant possibilities in the places we'll be stopping. Assuming similar mid-range places, the menu price of a dish is about the same as in the UK. The immediate difference is that the UK price includes Value Added Tax, at 20%, whilst the American price will still have sales tax to be added. Then there is the differential tip rate at 10 - 12.5% in the UK against 15 - 20% in the States.

                                      But biggest difference is the lack of three course table d'hote menus which are readily available in the UK, at bistro or similar level, at around £15 -20.

                                      Chains and buffets are not really where I want t be eating, but it's at that level where the US scores over the UK.

                                      1. re: Harters

                                        ok, i see your point, but i guess my impression remains because that vat tax gets added to most items i purchase, above and beyond dining out, whereas here i just pay sales tax.

                                        just curious where you will be visiting? i know so many of the states are buried in chain-food hell.

                                        1. re: hotoynoodle

                                          We'll be driving from Atlanta to Nashville and then up the Blue Ridge Parkway to Virginia. Lots of small town America on this trip. And, yes, some evenings look like chain restaurant or no dinner. Still, I've always wanted to try a Cracker Barrel and this looks like the trip. :-0

                                          1. re: Harters

                                            a beautiful part of the country, but even i have never eaten at a cracker barrel! :0

                                            are there local boards or internet access to local papers that might lead you to better eats? lots of mom & pop type ops down there, so no need to succumb entirely to chains!

                                            1. re: hotoynoodle

                                              Yep, we've really no worries about eats. The Chowhound boards gave us a starting point and I've done further internet research for the places where we're likely to stop. By the by, on our last trip in that part of the world, we ate one of the worst meals of our lives in an indepently owned place. Much regret there, as we chose it over the only other nearby option - a Shoneys.

                                              1. re: Harters

                                                because boston is so densely populated we don't have the real estate footprints available for chains so i remain blissfully unaware of many. good luck!

                                          2. re: hotoynoodle

                                            In the UK the law requires all consumer prices to include all taxes so prices in shops already have VAT included. You should only see pre-VAT prices in trade outlets as businesses pass VAT on in their bills to the ultimate consumer.

                                            So all retail restaurant/food prices are fully tax inclusive. That's what the Brits dislike service charges so much as it goes against the concept of paying the price displayed - it's become ubiquitous but is still considered price gouging by consumers who prefer to have the discretion to tip (service charges may be discretionary but nearly everyone in the UK is so polite they pay it even with poor service).

                                  2. re: cresyd

                                    I think the studies we have already seen indicate that at very least you can get better service if you are willing to pay for it by becoming known as a big tipper. (This is the converse of the claim in the study that servers give inferior service to customers they suspect will be poor tippers.) Now for a person who is known to be a poor tipper and receives inferior service, the tipping system at least allows cheapskates to pay less for their meals. The tipping system allows your restaurant experience to become a "you get what you pay for" deal for good or bad. That's also why the section on price discrimination suggested service charges and service-inclusive pricing as means to keep the price-sensitive hoi polloi out of your restaurant.

                                    1. re: nocharge

                                      As a diner though - I feel that this policy benefits restaurants/businesses more so than diners. To become known as a big/good tipper will require becoming a regular (or a celebrity, at least within a restuarant scene). Now if I like to try a range of restaurants, but am only eating out once a week - then my "regular" status may not really rank well enough to become well known among servers.

                                      To dip into my annecodotal experience though - I've also found that just showing up to a restaurant (or my case more often) a bar very regularly, regardless of tip size. Now, the research/test case would be to evaluate the serivce of someone showing up to a restaurant 2-3 times a week and tipping average verus someone showing up to a restaurant 2-3 times a week and tipping at a high rate.

                                      1. re: cresyd

                                        Agree that if you only rarely go to a restaurant, it's harder to establish yourself as a good tipper, but giving a truly memorable tip a couple of times will likely work. For a restaurant that you visit for the very first time, it might be more of a challenge to signal to the staff that you are a big tipper, but it certainly can be done.

                                        As for your second point, there are numerous reasons why a customer might receive some form of preferential treatment. Preferential treatment is rampant in the restaurant business starting with regulars, friends of a restaurant employee, people "in the industry", celebrities, etc. Big tippers tend to fall into the preferential treatment category, but I doubt that they are the dominant part. I agree that it would be very interesting to see some form of study of how all these factors play out. But from my own anecdotal experience, (which is not a completely trivial one) a regular who is a big tipper trumps a regular who is an average tipper big time when it comes to service.

                              2. re: nocharge

                                Nocharge - a well argued point, but isn't it a point about the profit maximisation based on the pricing policy, rather than the impact on service quality?

                                The usual argument is tipping drives an increase in service quality, but if 99.9% of people tip at 15 to 20% then where is the variation based on service quality?

                                There is also no pre-agreed "contract" to define what a server will get from an individual so servers need to provide great service to all because they are all likely to pay 15 to 20% no matter what (I won't go to the server selection debate based on customer stereotyping).

                                If consumers were rationale (which we know they are not) then the theory would be that tipping would become a lot more random. If I know I get the same service as other people why should I tip? I should ride on the coat-tails of those that don't and get an 15 to 20% economic benefit from not tipping. If consumers were rationale and thus a lot more random in their tipping then service standards could well be influenced by tips because there would be a far lower level of certainty about getting tips.

                                It's a counter intuitive argument but maybe service would get better if fewer people tipped as it would introduce less certainty into the server/customer relationship and servers would need to service all to a high standard to maximise the likelihood of getting a tip.

                                Whilst it is slightly anecdotal I think one of the better tests for the impact of tips is to compare tipping/service cultures across countries. In no/low tipping cultures (Japan/France/Australia) is service worse that the US? I would argue it isn't. I know everyone has personal anecdotes about singular experiences but on the whole, taking the thousands of service interactions, is there really any significant difference? And remember you need to normalise the comparison for cultural norms - so in France they don't bring the bill before you request it, thats not bad service that simply what they do in France.

                                I think tipping in the US is simply a cultural norm, its a habit people have got into and its a simple way to keep costs/prices apparently low - but lets not kid ourselves it makes the service better - that's just what we tell ourselves when we pass over the dollars to make ourselves feel better about the bill.

                                Can anyone comment if service standards have declined in Florida where mandatory/standard 18% service charges seemed very common in Miami Beach and Key West?

                                Finally - I think the reason for the service charge in the OP is to signal that random tipping isn't needed. If they didn't have it most would still tip even if the prices had risen by 18%.

                                1. re: PhilD

                                  I would make no serious claim about the effect of tipping on service in the aggregate. I would expect the nature of service to be different between Japan and Australia because of cultural differences even if they don't have the same tipping culture as the US and still different from the US even if the US didn't have one. But all these claims are very hard to verify given that "service quality" is a tricky thing to measure objectively.

                                  But here are a few of my claims about how tipping may likely affect the quality of service for the tipper on a more individual level:

                                  1. The "why should I tip" question is probably mostly relevant to scenarios where you are a tourist visiting a restaurant that you will likely never visit again. Why people still tip in those scenarios is probably a topic in its own right and I won't try to weigh in on that now. But I think it's pretty obvious that a patron's level of tipping in a scenario where the patron is a regular might affect the quality of service. Stiff the server every time and it's likely that you won't receive the same grade of service as a regular who is a big tipper.

                                  2. So a tipping system likely makes it possible for a person who is willing to spend the money to be a big tipper to get superior service, at least as a repeat customer. Does that mean tipping necessarily makes service better overall? No, but at least it makes it possible for a price sensitive customer to visit a place and leave a 15 percent tip. While likely getting a lesser quality of service than high-roller regulars, at least that customer would get a chance to try a place that might have felt out of reach if the menu prices had been 25 percent higher even if they would have been service inclusive. So one could argue that tipping allows price-insensitive customers to buy themselves better service at a price while giving price-sensitive customers access to a possibly lesser quality version of the same restaurant. The latter is a possibility that some upscale restaurants want to avoid and try to do so through mandatory service charges or service-inclusive pricing in order to keep those undesirable price-sensitive customers off of their premises.

                                  3. So my conclusion is essentially that tipping allows people to get a better quality of service, at least in an environment where they are repeat customers, provided they are willing to pay for it. Is that unfair? Is it unfair that people with a large dining budget have more high-quality dining-out options than a person dining out on a McDonald's budget?

                                  4. As for the argument as to whether tipping could have an impact on the level of service at the aggregate level, I think it would be hard to prove or disprove. But just let me throw out the following:

                                  a) You could have a model where servers make a fixed monthly salary no matter what.

                                  b) You could have a model where servers get a fixed percentage of the revenue that they are involved in generating via a fixed service charge, in which case their income will depend to a large extent on how well the restaurant is doing in general. Of course, an individual server could still have some incremental impact on that and could increase the generated revenue through up-selling. But in any case, the difference in income between working at a highly successful place and a not-so-successful one could be very significant. Servers will be eager to get gigs at successful restaurants allowing the management at such a restaurant to hire the cream of the crop, something that will likely only enhance that restaurant's success. If you think that rewarding high-performers more than slackers, is that a bad thing?

                                  c) You could have voluntary tipping, which has a lot of similarities with b) but allows a discretionary element to the patron's ability to reward or punish servers based on the patron's satisfaction.

                                  5. As for services charges in Florida, they are likely there as a result of a large number of European visitors who would be likely to tip less than Americans. How that has affected the overall quality of service is probably not that easy to measure, but let's consider the following Gedankenexperiment: With just tips, servers in Florida give worse service to the customers they expect to give small tips (Europeans) than to those they expect to give good tips (Americans). With a service charge, the treatment becomes more equitable resulting in a gain in service quality for the Europeans at a cost of the service charge being higher than their normal tip, while the Americans may experience a loss of service quality while paying a service charge that is less than they would normally tip. Now, is such a scenario good or bad?

                                  1. re: nocharge

                                    I agree there are cultural differences in service levels across countries, but I argue that's irrelevant as most developed countries have good service levels - that is its the internal relativity of service to the country rather than external relativity to other countries. So no/low tip countries have a similar proprtion of good service compared to poor service as the US (maybe more if my anecdotal experience could be trusted). So does the "tip culture" drive this or is it independent of tips and based on other factors - maybe it's the work ethic of the country and the desire to perform well - intrinsic motivation is very strong, few people go to work to perform badly.

                                    I do like your economic analysis. It really proves the flaw of many economic models that consumers are rationsle. If they were only regulars would tip (are they the majority of diners - I doubt it). The casual diner would understand tipping makes no sense as its a post experience reward - servers would need to service the casual diner better to earn a tip as they rationally are not be predisposed to tip. If they tip the server wins, but there is no benefit to te casual diner to tip so only the irrational tip - thus making it a very random experience. The regulars on the other hand must tip as they will be punished next time if they don't tip. So in effect the regulars are hostages to tipping, the casual diner can be free of this tyranny (where is John Nash when you need him?).

                                    I don't agree with your profit share argument because I think that is already the reality. I am pretty certain the tips at Denny's, in aggregate, are far lower than any fine dining place and therefore wait staff will understand that trading up to higher end places means more tips. So in effect the desirability of places with higher potential profits is higher. That coupled with the motivational effect of a profit share/revenue should help drive better service. Given most people in the US seem to tip in the same range 15 to 20% ( I am trusting the self reporting levels I see on these boards - although maybe the self declared propensity to tip is as accurate to the amount of sex a teenage boy boasts about) is that much the same as a tip driven model in terms of financial outcomes?

                                    Florida is an inserting question. Certainly more international tourists but during my two weeks I would have guessed 90% of visitors are from the US. Could it be that many of the US visitors are from lower socio-economic groups and are enjoying restaurants and bars as a treat and may generally tip less anyway. So the service charge is as much targeted at them as it is at the mean (I am one) Europeans?

                                    My anecdotal experience in Florida - generally good service in most places, the smaller places were the best. However, coming from Asia I found Hotel service levels to be very poor even in top five star properties, compared to nearly every Asian hotel I stay in (and I stay in a lot) yet everyone was being tipped. It's is really counter intuitive.

                                    1. re: PhilD

                                      I don't think people are rational in the sense of strictly profit maximizing in general or when it comes to tipping. Human behavior is influenced by other factors such as empathy and eagerness to conform to customary behavior. When European tourists undertip in the US, it's probably not because they are rational or lack empathy, they probably just don't understand the local customs. A person who would stiff a server merely because he knew he would be unlikely to end up at the same restaurant again would probably have some psychopathic traits, at least in the area of empathy.

                                      Not sure I got your point about profit sharing (or that you got mine).

                                      As for Florida, according to the official statistics for tourism in Miami Beach, non-US residents make up 44 percent of the visitors and they are presumably not accustomed to tipping at the levels that are customary in the US.

                                      As for Asian vs US hotels, it's my experience, too, that good hotels in Asia tend to be better than good hotels in the US. But that's just like Singapore Airlines is far superior to United in terms of service, which has nothing to do with tipping, but is likely an example of "cultural differences in service levels across countries" as you put it.

                                      1. re: PhilD

                                        Whether or not you'd call Israel a developed country or not - it easily has some of the worst service. Both individual incidents of eggregious behavior as well as an overall subpar performance. Servers are paid at least minimum wage and there's a standard practice of tipping 10%.

                                        With the exception of some very high end places though, mediocre to poor service is expected. And at the high end places, I consider a lot of the service to be at a good professional level - but not outstanding. However, compared to service on a whole here, it can appear outstanding.

                                        Why service is so mediocre here - I can give guesses, but it's nothing remotely scientific. But what I do believe is that since this now is the norm, there's no real incentive to change it.

                        2. I'm surprised that anyone actually takes this article seriously:

                          1. There is the claim that the no-tipping policy made service better, but by what objective measure and compared to what? Read the 800+ mediocre Yelp reviews for this place and you will find plenty of complaints about the quality of service and outrage over the mandatory service charge.

                          2. To quote from the article: "Tipped servers, in turn, learn that service quality isn’t particularly important to their revenue. Instead they are rewarded for maximizing the number of guests they serve, even though that degrades service quality."

                          Now, while there might be some truth to this assertion, how does that change with a mandatory service charge if it's distributed the same way as a tip? And if it's not, why isn't that mentioned and how is the service charge distributed?

                          3. If this restaurant was so successful due to its tipping policies, why did it close? Very few restaurateurs will close a very successful business. If the tipping format was such a great success, why not keep the place around and open a clone somewhere else to the benefit of everyone? Maybe the second place could even earn a little better ratings than the mediocre ones on Yelp of the original while generating a lot of money and doing the dining public a huge favor.

                          4. Oh, and the Zagat rating is 20 for service, which is not exactly great, with the comment:

                          and guests either "love or hate" the mandatory 18% service charge, most likely depending on whether they receive "attentive" or "spotty" service.

                          Not exactly the most ringing endorsement of the concept put forward in the article.

                          So much for the clown that claims to have proven that tipping leads to bad service and an article that certainly doesn't destroy any myths.

                          12 Replies
                          1. re: nocharge

                            I'm not surprised that so many people have a problem with this article. Challenging the status quo is usually unpopular.

                            I remember when the city attorney attempted to prosecute The Linkery for this policy and Yelp's discussion boards were full of people demonstrating exactly why a policy like this is necessary - many comments from people whose parents didn't raise them right boasting of only ever leaving $5 tips regardless of the size of the bill.

                            If you want a ringing endorsement I will give you one. I ate there frequently and had no problem with the service charge. Service wasn't always flawless, but service at any restaurant is rarely flawless, especially at The Linkery's price point.

                            1. re: Josh

                              I have no problem with the guy charging a service charge, just with his claim that banning tipping improved service (what's the evidence?) and made him more money (to the point that he had to close the restaurant).

                              1. re: nocharge

                                There can be no objective evidence on the subject of service. It is entirely subjective and in the eye of the beholder as to what constitutes good/bad service As I have already mentioned, my experience of living in and visiting countries which have service charges, instead of old-fashioned tipping, is that it promotes a team approach. My opinion is that a team approach delivers me generally far better service than the old-fashioned "single server" approach.

                                1. re: Harters

                                  Like I have said, I don't dispute that there are pros and cons with tipping. And I have no problem with dining at a place like Coi, which has a mandatory service charge that is shared with the back-of-the-house staff, or the French Laundry, which has service-inclusive pricing. But those places don't prevent patrons from leaving a voluntary tip should they decide to do so. They don't ban tips based on some bogus argument that a tip ban will magically improve service and increase restaurant revenue like that anti-tip taliban in San Diego with a defunct restaurant is claiming.

                                  As for the "team approach" versus "single server", it really may depend on the policy for how a tip or service charge is distributed. How the distribution of tips and service charges affect the general quality of service is an interesting topic, but one that hasn't been much discussed in this thread.

                                  1. re: nocharge

                                    One of the most enjoyable meals we've had recently is reviewed on the following link. The restaurant makes much of the fact that that there's no service charge and that tips are not expected (although not banned - such a thing would be ridiculous. ). The team approach is certainly in evidence - there were six staff working the restaurant and, at some point during the meal, all of them attended our table.

                                    http://chowhound.chow.com/topics/910677

                                    I don't know their employment practices but I assume, as general practice, most of the servers's income comes from a flat salary, probably supplemented by a periodic bonus based on company profits.

                                2. re: nocharge

                                  His restaurant closing wasn't from the service charge policy. IMO he was in the wrong part of the country for what he was trying to do.

                                  1. re: Josh

                                    So now in SD the place is known as the Missing Linkery.

                                3. re: Josh

                                  what was the price point, btw?

                                  1. re: hotoynoodle

                                    Mid-priced, I'd say. Roughly $20 for an entree, give or take a few bucks.

                                    1. re: Josh

                                      places that charge service charges, like per se, french laundry and chez panisse, DO provide flawless service. since the 18% "service charge" was being distributed to many more workers than just foh, i'd be surprised if servers were getting even 15% of a $60 check average. no way he was attracting high-caliber staff at that level of income.

                                      1. re: hotoynoodle

                                        Isn't the bill going to be more like $300 a head so $60 a head in tips - not a $60 dollar bill with a $12 tip?

                                        1. re: PhilD

                                          my price point was in reference to the both josh's and op's discussion of linkery, with $20 entrees. so a $60 pp average check @ 18% would only be $10.79 tip -- pp, especially with linkery owner boasting they forbade extra gratuities.

                                          (and with $20 entrees it would take some serious upselling to get to $60 pp. am being very generous for sake of discussion.)

                              2. From what I know (from my San Diego friends who have eaten there) is that if they made more money it was by charging $20 for one sausage and a teaspoon of potato salad.

                                1. Funny how people believe absolutely everything they see on television or in print.

                                  1 Reply
                                  1. re: MIKELOCK34

                                    The opposite can be true, too. Some people never believe anything they read if it conflicts with their opinions. Is that a better approach?

                                  2. There was a longer story about the introduction of the service charge at The Linkery a few years ago in the NYT Magazine:
                                    http://www.nytimes.com/2008/10/12/mag...

                                    There is some nice discussion of the history of tipping in America, and a summary of some economists' and behavioral scientists' opinions about tipping.

                                    And this article did not go unnoticed on CH at the time, so here's a backlink to that discussion:

                                    "Linkery's (SD) tipping policy attracts wider attention"
                                    http://chowhound.chow.com/topics/564185

                                    1. Jay Porter continues to write on the issue. Same premise as the initial article, but I think this article is a bit better written/editted.

                                      The end though is definitely a soapbox for him when he talks about the kind of people who dislike the removal of a tipping system. Take it as you will.

                                      http://www.slate.com/articles/life/cu...

                                      23 Replies
                                      1. re: cresyd

                                        Certainly it seems to flow better. I'd be interested in seeing the research that suggests that tipping is discriminatory, often on grounds of race.

                                        As upthread, I am completely of the view that old-fashioned tipping does nothing to aid good service in itself and, indeed, can work counter to it. So, in that, I'm very much on Porter's bus. The difference between the service charge we commonly have in the UK and Porter's restaurant is one of compulsion. Here, it is always entirely discretionary, although it's fair to say that it is rarely challenged or amended, except when very poor service has been given. That may well be why a small, but increasing number of places, are simply incorporating the cost of service into the menu price of the food, as is done in a number of other European countries and, so it appears, would be Porter's long-term goal. Good luck to him - although I suspect there are deep cultural differences between Americans and we Europeans on a range of social matters which will make progress on this very difficult.

                                        1. re: Harters

                                          Given the potential for discrimination (same work for different rates of pay) along racial lines - it would be interesting to see if this ends up in the court system. Seeing a voluntary system change would be great, but it'd be interesting to see how it would play out in the courts.

                                          1. re: cresyd

                                            I think tipping ending up in the court system on the basis of discrimination is a long shot. Most laws in this area cover the behavior of employers, not individuals. As long as a tip is considered a voluntary gift from a patron to a server that the restaurant can't touch (other than specifying tip-sharing policies), it's hard to see how anyone could go after the restaurant in court. As far as I know, there is no law that would prohibit an individual from giving away money to other people based on racial biases, so it's not like the patron is engaging in an illegal activity that the restaurant has an obligation to prevent.

                                            As for discrimination in general, there is an awful lot of that going on in the restaurant industry based on looks, but ugly people are not a protected class.

                                            Interesting to see that Porter is still at it claiming that service at his restaurant improved without explaining how he measured that or why there are so many Yelp reviews complaining about poor service.

                                            1. re: nocharge

                                              I thought that cresyd was referring to waitstaff (and by extension, restaurants) providing lesser service to certain customers based on their race, sex, etc. I could imagine the courts getting involved in specific cases, but I'm not sure it would amount to a global indictment of the entire tipping system…

                                              1. re: DeppityDawg

                                                I thought it was a reference to the following quote from the article:
                                                "In a tip-based system, nonwhite servers make less than their white peers for equal work."

                                                1. re: nocharge

                                                  You're right, after re-reading cresyd's message ("same work for different rates of pay"), I agree that that must have been the reference. And I agree with you, it's not a basis for a discrimination suit, if the pay is coming lots of different customers who don't communicate with each other and who aren't following anyone's instructions. Who would you sue in this case?

                                                  1. re: DeppityDawg

                                                    My understanding is that you'd still sue the restaurant for having an employment system that benefits white workers over nonwhite workers.

                                                    Presuming it could happen, it'd be interesting to see how it'd play out. That was what my comment meant more so than to say how it would be ruled.

                                                    1. re: cresyd

                                                      My guess is that the problem would be proving that letting a patron voluntarily leave a monetary gift to a server is an inherently discriminatory act. Most laws in the area of discrimination tend to focus on ensuring a fair process, not on guaranteeing a specific aggregate outcome.

                                                      All I can say is that it would be a sad day for liberty if a restaurant patron can spend as much as he wants of his hard-earned money on food and booze, but not legally give away some of it to a hard-working server.

                                                      1. re: nocharge

                                                        In terms of liberty I don't really understand that. There are loads of service workers that don't receive tips. Surely there are other ways of expressing gratitude.

                                                        1. re: cresyd

                                                          The liberty argument is pretty simple: If it's my hard-earned money, why shouldn't I be allowed to give it away as I see it fit just because I might have racial or gender biases? As for other way of expressing gratitude, I'm puzzled by what you might have in mind that would have real value but without any of the problems you perceive with tips.

                                                          1. re: nocharge

                                                            For a start, I think if such a legal case occurred it would be limited to a specific restaurant/chain. Essentially the servers at one establishment would be able to show that over a reliable period of time that a tipping system of payment was resulting in a situation where white service staff were earning more per hour than nonwhite servers. Basically a system - whether intentional or not - that resulted in a racial bias. If such a case resulted in such a ruling where tipping was no longer allowed - it would most likely apply to that one restaurant/chain.

                                                            So you would still be at liberty to choose to dine at restaurants that retained a tipping policy. Such a ruling might result in a cooling effect of other restaurants changing in order to preemptively avoid such a lawsuit, but it wouldn't have any wide sweeping result.

                                                            In regards to other ways of expressing gratitude - positive comments, letters given/sent to a service provider's manager is of very high value. As it doesn't happen often, it can help raise the regard of an employee in a manager's eyes which can have both long term positive effects in the company where they work as well as providing a good recommendation if they choose to seek employment elsewhere.

                                                            1. re: cresyd

                                                              So in terms of other ways of expressing gratitude, couldn't a patron's comments or letters to a manager etc. about a server be just as tainted by the patron's racial or gender biases as a tip? And those comments might influence the server's prospects in terms of getting a raise, a promotion, or a good recommendation. So insofar you want to outlaw tips on the basis that they may be influenced by racial biases on part of the patron, shouldn't that hold for feedback to management about a server as well?

                                                              Maybe you feel that the ideal world is one where you can't legally reward servers with voluntary gifts or make positive comments about them to management because of the possibility of you, the patron, might have a racial bias and the outcome could be one that reflects that bias when it comes to income. However, it doesn't match my notion of liberty very well and is not the kind of world in which I would like to live.

                                                              1. re: nocharge

                                                                From your comments, I get that tipping is very important to you. As I presume you live in the US, I don't think you will face a situation where you will encounter a tipping free society anytime soon.

                                                                Regarding your comments about a patron's positive comments to a manager being based by race - while that may show racial bias contributing to how management decisions are made, that is a different issue than the notion of not receiving equal pay for equal work based on being white/nonwhite.

                                                                Personally, I rarely feel the need to "reward" a server. Most servers I appreciate do their job well. in the way a dry cleaner does their job well. I tip when I'm in the US because I respect that's how the payment structure works. But I don't see it as a reward.

                                                                1. re: cresyd

                                                                  If racially biased comments from patrons to management have an impact on a server's prospects of getting a raise or getting promoted, the result may well be racially based inequalities in compensation, same thing as you worried about in allowing tipping.

                                                                  1. re: nocharge

                                                                    Nope, that concern was not equal pay for equal work. When talking about promotions, that's glass ceiling issues (in this class related to race as opposed to gender). Two different issues.

                                                                    1. re: cresyd

                                                                      If two servers do equal work, but one gets a raise or gets promoted based on racially biased comments from patrons, don't you have an "employment system that benefits white workers over nonwhite workers" as you called it when discussing possible bases for suing the restaurant?

                                                                      1. re: nocharge

                                                                        You do - but, in general you could probably apply that to a wide range of professions (in regards to ethnic background and by gender).

                                                                        Not receiving equal pay for equal work is a subset of that issue. And at this point a distinctly different issue when talking about a legal case.

                                                                        1. re: cresyd

                                                                          If the result of the comments is a raise for one server but not the other, it very much involves equal pay for equal work. But perhaps even more importantly, job security may be at stake. Servers get fired for the flimsiest reasons -- I remember one who got fired for merely showing up on time, not half an hour early as management expected of go-getters -- and potentially racially biased feedback from patrons may well have an impact. If potential racial bias should lead us to ban tipping, we should probably ban patrons from making comments to management about service as well.

                                                                          1. re: nocharge

                                                                            It was interesting having a debate with you, but I think we have reached an impasse on how we're approaching this issue. All the best.

                                                                            1. re: cresyd

                                                                              Yeah, we may have pretty much exhausted this particular thread of thought. All the best to you, too!

                                                      2. re: cresyd

                                                        I'm not versed in American law but I assume that any case would have to be against the employer. I see it like this - in most parts of the country, "normal" minimum wage does not apply to restaurant servers. That makes the employee dependent on tips for their income and is, therefore, an inherent part of their conditions of employment. The employer is not obliged to pay the low "tipped wage" and could, if they chose offer a higher rate of pay. As an aside, we have a national minimum wage in the UK but most restaurant servers have an hourly rate in excess of that.

                                                        So, I assume that it would be relatively easy to argue that the employer is entirely complicit in the process and would be liable if the judgement did not go in their favour. Now, trying to prove discrimination in a case would be a very different matter.

                                                        1. re: Harters

                                                          You are incorrect. The minimum wage applies to restaurant servers same as everybody else and there is no presumption that a server should depend on tips for his income. The notion of a tip credit that exists in the federal minimum wage law and in many states just means that the employer can pay a lower cash wage if the server makes enough in tips to reach the minimum wage limit. Should the server not make enough in tips to hit the limit, the employer is on the hook for the difference. In other words, the law does not remove the responsibility of the employer to ensure that the server's income is at least the minimum wage, it just reduces the employer's obligations in the case the server's income from tips is sufficient.

                                                          1. re: nocharge

                                                            Then your law is even more peculiar than I had thought. And certainly very much slanted in the employer's favour - the exact opposite of what my understanding of minimum wage legislation is all about in most countries of my experience.

                                        2. Something that's going unmentioned here is the sometimes obnoxious behavior of servers chasing after tips and upsells. I'd much rather have a service charge and a server giving me honest answers about the menu than some peppy automaton trying to goad me into spending more money.

                                          1. Some countries do now allow or have the custom of tipping. From my experience their service has been similar or much better. Employers pay your damn workers.

                                            1 Reply
                                            1. re: NekoNekoFancyPants

                                              Yes, there is no practice of tipping in Japan and service is generally better than places like the U.S.

                                            2. I think the logic in this article is pretty convincing. It would make life easier if restaurants trained their staff to provide excellent service, and also paid them appropriately for their efforts.