Eliminate Tipping

[FUEGO]

I doubt the waitstaff at Denny's or IHOP make a ton, but my 18 year old nephew with zero waiting experience recently started waiting tables at a swanky downtown place that serves the $15 burgers. Pretty easy to clear $200-300 in a night (as in 6 pm to 2 am). That's $25 to 33 per hour partially tax free (or you can believe that all of those cash tips ended up being reported...). For an 18 year old with barely a high school education.

Not bad work if you can get it, and you don't even have to take your clothes off.

And sign me up for the no tipping sit down restaurant. I'd almost pay extra to not have an intrusive waiter interrupting my meal to ask if it was okay every 4 minutes. I tend to go for the "one step up from McD's" places that don't require a tip when meeting folks for lunch and part of that is so I don't have to deal with a waiter. If the waiter isn't getting tipped, I figure they'll focus more on efficiency and less on sycophancy.

[Big_Hitter]

Quote:

Originally Posted by FUEGO And sign me up for the no tipping sit down restaurant. I'd almost pay extra to not have an intrusive waiter interrupting my meal to ask if it was okay every 4 minutes.

that's how my golf club operates - tips are pre-loaded

[sengsational]

Maybe US restaurants should go the way of the cruise lines.

Years ago, the last night of the cruise, you'd have a bunch of hovering cabin stewards and dining room staff waiting for the envelope with cash. The amount of cash was up to the cruiser, but "recommended" at X bucks a day for room steward, and Y bucks a day for dining room waiter. I have no doubt that that arrangement yielded great customer service. The bad news was that they all were REAL crabby the next morning, even if they got a good tip, hehe!

Then it all changed. The cruise lines just put the tips on your bill (aka on-board account). Yeah, if you want to stand in line for an hour, you can go down and get it reduced or even removed, but who's going to do that? The service went down precipitously when these "auto-tips" started. The cruise line took away the "carrot" only left the passenger one "stick", which was the cruise-end survey. So now all the staff simply wish to stay under the radar; don't do anything "bad", especially when your nametag will be visible. The best technique I have found is to repeat their name like 20 times, clark howard style, especially if you think they're lying to you (the don't want to upset you if you can write their name on the EOC survey).

That doesn't map too well to the US restaurant tipping problem, but the idea was, what would happen if every "tip" became like the auto-tip for parties of 6 or more? You could go up and bi...er...complain and get it reduced, but who's going to do that unless service was horrific.

[FUEGO]

I almost mentioned the cruise lines as a model for getting rid of tipping. We have had excellent service on the cruise lines. I think they get rewarded big time for getting 9's or 10's on the cruise end survey, as our totally incredibly awesome server made sure to remind us to fill out the survey as that's how they get rewarded. Maybe it leads to promotion or better future contracts.

All I know is that the maitre'd and the hotel manager were seen in the dining room frequently and I imagine a head waiter that sucked would have "additional training" to bring their service up to the cruise line's standard PDQ. Similarly, the head waiter closely monitored the service of the two or three assistant waiters underneath them. In other words, management is present and actively monitors service levels all the way down the heirarchy. Managers manage, and the diners sit back and enjoy impeccable service. How it should be theoretically.

[sengsational]

Quote:

Originally Posted by FUEGO In other words, management is present and actively monitors service levels all the way down the heirarchy. Managers manage, and the diners sit back and enjoy impeccable service. How it should be theoretically.

You make an excellent point. The auto-tip does get the passengers out of the business of evaluation. And the cruise staff still do concentrate on service and let the passengers concentrate on just enjoying themselves. That's worth a bit, especially if you are trying to obey Pricess' command to "escape completely". If one of the staff stands out (at either end of the spectrum), those go on the eval, otherwise, we're chill!

[tulak]

Ivar's in Seattle is getting rid of tipping as part of the minimum-wage increase to $15.

Quote:

Now an iconic Seattle restaurant is trying its own experiment, raising the pay of its lowest workers directly to $15 an hour, getting rid of tips, and raising the prices on its menu. Here’s how the new pricing and wage system at the Salmon House and Acres of Clams restaurants is going to work: Servers and bartenders at the Salmon House in 2014 made the state minimum wage of $9.32 an hour, along with $18 to $19 an hour in tips, on average, Donegan said, adding that the restaurant’s typical server or bartender made about $60,000 a year last year. On average, customers paid a 17 percent tip for each bill last year. Under the new system, the price for each menu item at the Salmon House will go up 21 percent. That 21 percent represents a combination of 17 percent to make up for the tips that customers will no longer be giving, and 4 percent to cover raising the minimum wage to $15 as well as increased food and operating costs. The 21 percent price hike will be shared among restaurant hourly staff, with 8 percent going to servers and bartenders, and 13 percent to be divided among bussers, hostesses, dishwashers and others, Donegan said.

Ivar’s to raise restaurant workers’ wages to $15 right away | The Seattle Times

Looks like we're now tipping 21%! It'll be interesting to see how it works out.

[utrecht]

$60K for a waiter? Seriously?

[haha]

Quote:

Originally Posted by kiki Ivar's in Seattle is getting rid of tipping as part of the minimum-wage increase to $15. Ivar’s to raise restaurant workers’ wages to $15 right away | The Seattle Times Looks like we're now tipping 21%! It'll be interesting to see how it works out.

One of the many gifts of living in a socialist paradise. Mayor Murray's next project is being sure we all pay up so that everyone can continue to live in Seattle, instead of being gentrified to the outskirts. I think of it as his preserving street crime initiative.

I wish Giuliani would come out and show us how to do it properly

[haha]

Quote:

Originally Posted by utrecht $60K for a waiter? Seriously?

I know a bartender at a downtown oyster bar who owns a nice home in walking distance to the central city, and raised and sent to college 2 daughters with a non-working wife. And they can afford to go skiing frequently.

Ha

[Running_Man]

For those who are complaining about tipping, the economics of a running a restaurant business necessitate the tipping. 44 percent of all restaurants fail in the first 3 years. Most are already operating on a string.
Restaurant Failure Rate Study

By having the compensation as tips and having the employees report their tips, as most employees tend to have the incentive to underreport their tips, this minimizes the amount of taxes the restaurant has to pay. So this process of tipping ends up being cost control for a restaurant.

The best servers are going to migrate to where they can make the best money, the server is your salesman in a restaurant, and they need to be able to read the customers in a way to maximize the bill for the owner while keeping the customer satisfied and happy, even as they spend more than they planned, and the tipping process is an incentive to do so. The best restaurants know how to select the best servers. To think anyone can be trained to be a good server means if you ran a restaurant you'd probably end up in the 44 percent category. Good servers are a tremendous source of information for management of a restaurant as well, their input from the front lines helps guide the changes and issues a restaurant needs to react to in order to succeed.

The guest arriving knows pretty much how much they are going to tip - usually somewhere between 15-20 percent and can with a rudimentary knowledge of mathematics know the impact on the cost of their meal and determine where they want to eat based on total costs of meals. Tipping allows the restaurant guest to exert control over the meal when it or the service is not up to par, especially if you are a regular guest of the restaurant and the owner of the restaurant to equalize compensation costs with the level of business for the restaurant.

As for complaining about the amount of money a server makes for 15 dollar hamburgers? If a server is making 200-300 a night for a six hour shift that means he or she is delivering 100 hamburgers per night in a sit down fashion or on average one every 3-4 minutes for 6 hours to customers, assuming a $10.00 margin on the hamburger that is $1,000 in variable margin for the owner to work with. That takes a real commitment to continue to hustle to make that wage "overpayment".

To pay servers hourly you will tend to get servers that slow down the process just a bit because making customer happy is now the only thing that counts you might now serve 80 hamburgers per shift and now the restaurant loses $200 in margin. The burger is going to need to be priced accordingly so to capitalize the servers wages, lets say $90 or $15 is "fair" pay and to account for lost margin the $15.00 hamburger becomes $17.25, $1.25 for server wages and $1.00 for the more relaxed pace of service in essence 15% more.

However those better servers will go to other $15 burger joints that pay tips and the process becomes a slide in quality that is often seen in poorer restaurants. This is the reason Yelp is successful, people tend to avoid poor quality in restaurants.

So in the end tipping reduces costs for the restaurant owner and matches revenues more closely with the relative level of business so moving to a model of no tipping to appeal to the crowd that is typically a cheaper customer and more likely to eat at Panera and Shake Shack is less likely to become a regular in a more expensive venue is in short a non starter.

[ERD50]

Quote:

Originally Posted by Running_Man For those who are complaining about tipping, the economics of a running a restaurant business necessitate the tipping. 44 percent of all restaurants fail in the first 3 years. Most are already operating on a string. Restaurant Failure Rate Study By having the compensation as tips and having the employees report their tips, as most employees tend to have the incentive to underreport their tips, this minimizes the amount of taxes the restaurant has to pay. So this process of tipping ends up being cost control for a restaurant. ...

To be honest with you, I didn't read any further.

Not paying taxes just puts the burden on lawful taxpayers, that 'reasoning' is not going to fly with me (and many others I'd guess).

If all restaurants complied, they'd all be on equal footing against each other, so not a big deal. They might lose a little to people eating out less, but that would be more transparent than pushing the taxes on other people outside the food exchange transaction.

'operating on a string' isn't a license to cheat on your taxes.


-ERD50

[Independent]

Quote:

Originally Posted by Running_Man By having the compensation as tips and having the employees report their tips, as most employees tend to have the incentive to underreport their tips, this minimizes the amount of taxes the restaurant has to pay. So this process of tipping ends up being cost control for a restaurant.

I always assumed that tips on credit cards are 100% reported.

Do we know what percent of tips are cash? I switched from paying cash to using a credit card at some point in my life, so my personal experience is " a shift from cash to more cc payments".

[Walt34]

Having heard that some restaurants "skim" the cc tips I tip in cash to make sure the waitress/waiter knows what the tip was even if I pay the bill by cc.

[marko]

Quote:

Originally Posted by utrecht $60K for a waiter? Seriously?

A true professional waiter in an upscale big city restaurant can make upwards of $250K. Not some college kid, but the kind of person who's been there 20 years, knows food (and can often cook) as well as the chef and has his own clientele. Yeah; seriously.

Quote:

Originally Posted by Independent I always assumed that tips on credit cards are 100% reported.

Credit card tips are reported. Cash tip reporting is subject to the server but is often monitored for 'accuracy' by the IRS by some reporting by the restaurant; I forget exactly how it's done.

You might be able to fudge a bit, but the IRS can look at the servers total sales and deduce that you're only claiming 5% instead of 15%.

[Walt34]

Quote:

Originally Posted by marko A true professional waiter in an upscale big city restaurant can make upwards of $250K. Not some college kid, but the kind of person who's been there 20 years, knows food (and can often cook) as well as the chef and has his own clientele. Yeah; seriously.

I had no idea. That's a long way from "You want fries with that?"

I guess I don't go to that type of restaurant.

[marko]

Quote:

Originally Posted by Walt34 Having heard that some restaurants "skim" the cc tips I tip in cash to make sure the waitress/waiter knows what the tip was even if I pay the bill by cc.

I do this myself, but this often hurts the lowest guy on the totem pole. Many times the money flows downward, not upward.

In many places, the waiter/ess has to also 'tip out' the busboy, bartender, hostess and a few others based upon that night's tip receipts. If s/he is able to show less of a tip, the busboy et al gets less money.

[Music Lover]

In Canada, no one can get paid less than minimum wage, wait staff included. The current minimum in my province is $10.70. A friend is a waitress at a local chain restaurant and works 2-3 days a week. She makes about $10k a year in wages and about $30k a year in tips. She declares about $2k of the tips on her taxes, which leaves $28k of tax free income each year.

$40k a year with $28k of it tax free is a nice living for many.

[Chuckanut]

Quote:

Originally Posted by utrecht $60K for a waiter? Seriously?

Well, in Europe, a waiter is a professional job in many restaurants. My first time there I was surprised at how many gray haired old guys were waiting tables at the better restaurants.

Even in the USA a good server can make pretty good money. I figure a waiter making $60,000 a year makes more sense than some hoopster, running back or outfielder making $5,000,000 a year.

[PhrugalPhan]

Just to add fuel to the fire... a posting from last Friday (though hardly surprising): How technology is making us tip more than ever - The Washington Post

[Music Lover]

There is no shortage of people who get offended if a millionaire athlete doesn't tip "enough". But tipping on a take out order? I don't feel that a tip is required at all, regardless of my income. IMO, picking up food as a take out is no different than buying a roast chicken at the super market deli. I don't tip the checkout person eat the grocery store, and I don't tip buying take-out food.

Millionaire QB Drew Brees leaves $3 takeout tip as online debate erupts | Toronto Star