Why We Should Not Ban Tipping In Restaurants

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It seems like articles regarding the notion of banning tipping in restaurants have become all the rage.  From restaurant owners to food critics, people seem to be lined up to question the value of tipping.  It strikes me as odd that no one has sought the input of the people on the front line of the tipping debate in composing these articles.  Instead they use incidental examples and “research” that would not stand up to peer review or be given any credibility in a true academic setting.  What is most troubling is that many of the people writing these articles have an agenda that is not in line with the server or the restaurant guest.

The most recent example of this is an article by Jay Porter, owner of The Linkery  in San Francisco, entitled, “After I banned tipping at my restaurant, the service got better and we made more money”  In the article he makes some of the common arguments.  He cites a study of 51 paid college students to show that tipping is not related to service that has so many holes in it that Cornell should be ashamed of publishing it.  He cites another equally flawed study stating that tipping encourages racism and profiling.  He then concludes “You can see that tipping promotes and facilitates bad service.”  Which is a leap far beyond what any of the studies cited showed.

His argument is that tipping forces servers to choose between doing their best work and making the most money.  I suppose that his basis for this is that since tips only vary a small percent (among college students eating in casual dining restaurants) according to the study, that servers won’t work hard for that extra 2-3%.  His response was to remove that incentive my implementing a flat 18% automatic gratuity and not allowing his servers to take anything extra left by the guest.  The logic being if they won’t work harder for the extra 2-3%, then they will obviously work harder if they don’t have that incentive.  The head of any behavioral economist reading this just exploded.

He continues his unfounded assumptions by stating that “we aligned ourselves with every other business model in America” and stating “other industries like health care and law aren’t exactly lining up to adopt tips as their primary method of compensation.”  This makes perfect sense if you consider a visit to the doctor or lawyer and unrushed experience in exceptional customer service.  In fact, what he did is make the compensation structure of a restaurant server match that of the least customer friendly industries in the country.

If a server receives the same percent regardless of service, then service is not the focus of the experience.  When your compensation is a flat rate, the only way to make more money is to increase volume.  This means convincing the guest to spend more (ie every commissioned sales person you have dealt with) or getting guests through the restaurant more quickly (ie the doctor’s office where you get about 10 minutes of face time).  Obviously restaurant owners love both of these ideas, but I can’t imagine any guest feeling the same way.  Still not certain how “the service got better” as stated in the title.

Of course any other restaurant owner might want to think twice about this since the IRS has made it very clear that such restaurant service charges do need to be treated as revenue.   This type of service charges are not the same as a tip and do require that the server is paid at least the minimum wage.  So in 44 states were servers are paid less than the minimum wage, this would be patently illegal.  Not to mention that the author openly admits via twitter that the 18% does not go to the server, but is split amongst the restaurant staff.  In 44 states that would again be quite illegal.

On his personal blog where he explains this idea in more depth, he states that the typical tip for a restaurant like his is 22% in a city like San Diego.  Can someone explain how going from 22% to 18% and then giving part of that 18% lead to servers making more money?  The math doesn’t add up.  I would guess the “we” in the “we made more money” doesn’t include the actual servers.  Isn’t that who the movement to ban tips in restaurants is supposed to help?  The non tipped employees get a raise from the server’s pocket and the owner makes more money by not having to pay for those raises.  Now can anyone else see why a restaurant owner might advocate this concept?

The only way any of this makes sense is if the guests came flocking in to The Linkery and left rave reviews about the incredible service the received.  I quick check of the Yelp reviews shows this is not the case.  It also shows that the restaurant is now closed.  So much for making the case that this is a sustainable business model for the future of the industry.

I have supported myself with tips for nearly two decades.  I have a whole network of websites dedicated to helping servers provide better service to earn better tips.  I have even written a book called Tips2: Tips For improving Your Tips.  I am a server who knows a thing or two about tips.  I don’t need a writer turned restaurant owner or a professor at Cornell to tell me that there is something inherently unfair about the notion of tipping for service.  I am also someone who enjoys dining out and am continuously grateful that the service I receive is not on par with how I was treated last time I bought a car or visited a doctor.  We should all want to keep it that way.

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About David Hayden

David Hayden is the creator of The Hospitality Formula Network, a series of websites dedicated to all aspects of the restaurant industry. He is also the author of the book Tips2: Tips For Improving Your Tips and Building Your Brand With Facebook.

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One comment on “Why We Should Not Ban Tipping In Restaurants

  1. Pete Dulin on said:

    Great response to the source article. Thanks for sharing your point of view, one backed by experience.

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