Restaurant bans tipping. Guess what happened?

[Fish]

After I banned tipping at my restaurant, the service got better and we made more money

Tipping, as a compensation scheme, is great for everyone.

Restaurant customers like tipping because it puts them in the driver’s seat. As a diner, you control your experience, using the power of your tip to make sure your server works hard for you.

Restaurant servers like tipping because it means their talent is rewarded. As a great server, you get paid more than your peers, because you are a better worker.

Restaurant owners like tipping because it means they don’t have to pay for managers to closely supervise their servers. With customers using tips to enforce good service, owners can be confident that servers will do their best work.

There’s only one problem: none of this is actually true. I know because I ran the experiment myself.

For over eight years, I was the owner and operator of San Diego’s farm-to-table restaurant The Linkery, until we closed it this summer to move to San Francisco. At first, we ran the Linkery like every other restaurant in America, letting tips provide compensation and motivation for our team. In our second year, however, we tired of the tip system, and we eliminated tipping from our restaurant. We instead applied a straight 18% service charge to all dining-in checks, and refused to accept any further payment. We became the first and, for years, the only table-service restaurant in America where you couldn’t pay more money than the amount we charged you.

You can guess what happened. Our service improved, our revenue went up, and both our business and our employees made more money. Here’s why:

• Researchers have found (pdf) that customers don’t actually vary their tips much according to service. Instead they tip mostly the same every time, according to their personal habits.
  
  
• 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.
  
  
• Furthermore, servers in tipping environments learn to profile guests (pdf), and attend mainly to those who fit the stereotypes of good tippers. This may increase the server’s earnings, while creating negative experiences for the many restaurant customers who are women, ethnic minorities, elderly or from foreign countries.
  
  
• On the occasions when a server is punished for poor service by a customer withholding a standard tip, the server can keep that information to himself. While the customer thinks she is sending a message, that message never makes it to a manager, and the problem is never addressed.
  
  
• You can see that tipping promotes and facilitates bad service. It gives servers the choice between doing their best work and making the most money. While most servers choose to do their best work, making them choose one or the other is bad business.

By removing tipping from the Linkery, we aligned ourselves with every other business model in America. Servers and management could work together toward one goal: giving all of our guests the best possible experience. When we did it well, we all made more money. As you can imagine, it was easy for us to find people who wanted to work in this environment, with clear goals and rewards for succeeding as a team.

Maybe it wouldn’t work in every restaurant, in every city. Maybe the fact that it worked so well for us was due to some unique set of circumstances. Then again, other service industries like health care and law aren’t exactly lining up to adopt tips as their primary method of compensation. So maybe we’re all just being suckered into believing tipping works.

It’s something you can think about, at least, the next time you’re waiting on a refill of iced tea.

[Just Passin' By]

Originally Posted by Guru

And this is the problem with tipping. Preferential treatment.

I understand being upset with the crappy tippers but a drivers job is to deliver the pizza to a paying customer. The money for the pizza is, after all, going toward their salary as well.

Ehh.... the 'problem' is that you think something's a problem when it isn't.

[DaFace]

Originally Posted by Tits McGee

http://thelinkery.com/blog/
Closed.

The article specifically says that they just closed down in San Diego to move to San Francisco.

[Rain Man]

Originally Posted by Guru

You can't even leave a poor tip for poor service anymore because they will remember you and give you poor service again if you return. Major problem with tipping right there.

Yep. So then you never go back, which hurts the business.

Now, you might never go back anyway, but if there wasn't the tipping issue I'd be more likely to give a restaurant a second chance. Not giving someone a tip is viewed as a personal affront, and I'm a little paranoid about getting food from someone who has a personal beef with me.

[DaFace]

Originally Posted by Fish

There's a good podcast on the subject in the link below. From actual "Experts" on the subject...

5 reasons we should ban tipping
The practice is confusing, inefficient and ultimately discriminatory, researchers say.

If you listen to the latest Freakonomics Radio podcast, you may never want to tip again. Host Stephen Dubner interviews one of the country's experts on tipping, Cornell University professor Michael Lynn, who has written 51 academic papers on the subject.

In the podcast, Lynn was asked what he would do differently if he could go back in time and rewrite the social norms related to tipping. What would he change?

He said he would outlaw tipping completely. That's a surprising response from someone who has basically devoted his career to studying the practice. Some restaurants already do this. Dubner mentions The Linkery in San Diego, which bans tipping in favor of an 18% service charge for diners.

From the experts in the podcast, here are five reasons the U.S. should ban tipping:

It's discriminatory. This is Lynn's No. 1 reason for outlawing tipping. In his research, he's found that the people who get the most tips are slender white women in their 30s with large breasts. What a surprise.

He's also found that minorities get fewer tips in general. When you have an aspect of employment that hurts a broad class of people, whether it's intentional or not, that's absolutely discriminatory. This is a class-action lawsuit just waiting to be filed.

It may lead to corruption. Another expert interviewed in the podcast, Magnus Torfason from Harvard Business School, said he has found that countries with more tipping have more corruption.

It's really uncomfortable. For the tipper, that is, and possibly for the tippee as well. That's because people don't know what they're supposed to tip and for what service. How much is enough? And do I have the right bill on me? I can't really ask this person to break a $20 bill, can I? Help!

It's essentially subsidizing businesses. Lynn has estimated that about $40 billion a year is given in tips in the United States. Dubner pointed out that NASA's annual budget is less than $20 billion. So we could build two NASAs with all the money being tipped. That's money that businesses don't have to pay to their waitresses and other service employees.

It shifts work away from the employee. Tipping can actually create so much unease that some customers end up doing the work instead of the employee. For example, people carry their own luggage to their hotel rooms even though there are workers hired to perform that specific service. People park their own cars farther away, even though there's a valet right there at the door. As a result, some service workers end up with nothing to do, which is inefficient and wastes a company's resources.

I listened to that podcast on the way to work this morning - pretty interesting. I did think that the discrimination angle was kind of fascinating to think about. In theory, if a bunch of black waiters/waitresses wanted to get together and file a class-action suit, it's an actual possibility (though by no means guaranteed) that a judge might rule that tipping is illegal. Now THAT would make things interesting.

[DJJasonp]

Not sure if mentioned previously or not....but I see that the original article didnt bring up this point:

What this policy also does....is that it keeps the staff and bartenders from having any incentive to toss a free drink or dessert a customer's way, in an attempt to boost their tip.

I kinda see both sides of that. From a business-owner perspective, that could be detrimental to the bottom line. BUT - I know that my wife and I will be repeat customers if we're taken care of by a particular server or bartender (and ultimately, the establishment makes more money from me).

[ThaVirus]

Originally Posted by Gravedigger

Let me fill you in on some delivery driver knowledge.

7.25 an hour while inside the store, 4.25 an hour while on the road. 1.30 out of your $2 + delivery charge goes to the driver per delivery. The driver pays for wear and tear, gas and is held responsible for anything that happens on the road if its their fault or not.

$1 tip or lower = cheap ass get out and get your own pizza.
$2 = Nut tap.
$3 = Average.
$4 = Thank you! You just helped me forget the last shitty customer who didn't tip.
$5 + = You're a great person. Ill be sure to bring you your pizza first next time.

I worked for 10+ years as a driver, AM, AGM and GM. I've seen it all, I've heard it all, and if you tip online $1.00 and the driver has a second delivery that gave him $3 or more, guess who gets their pizza first?

I think a lot of places are different. I've worked delivery in two different pizza places and received a flat rate that was right around minimum wage at the time. In Florida, I think it's around $7.25 now.

Anyway, in the first place the driver received $1.50 of the $2.50 delivery charge and $1.00 of the $2.00 fee in the second.

With a delivery area that covers roughly 5 miles, driving an average car that gets around 25 MPG, that $1.00 often just pays for fuel. Wear and tear also can't be overstated, in my opinion. Driving delivery absolutely wrecks your car. New tires, brakes, oil changes far more frequently, and it destroys your transmission with the city miles.

Originally Posted by Bugeater

I dated a waitress for 5 years when I was in my 20s, her and the other waitresses always maintained that it was working-class men who tipped the best. But that was 20 years ago...I know Zach has been in the business more recently so maybe things have changed.

Yeah. Obviously it really depends, but given the choice, I'll take a middle-class white person from the age of 28-45 over anyone else.

[BWillie]

I think it's funny that ppl pride themselves on tipping more than 20%, like they are some man of honor. GTFO. I would like to thank those ppl for subsiding ppl like myself. I am cheap, & proud of it. Being frugal in my life as enabled me to live the life, have a surplus of $ that I can use for other things that MATTER. I've been a waiter before, so don't give me that shit like oh you don't know you haven't ever worked it. I made probably WAY more than I deserved at the time. Most waiters don't YET have the job skills to make as much as they make waitressing. Obv. that is why they do it. Usually because they either 1) Don't have education 2) Are on their way and in college 3) Or just can't do anything else. And I'll be damned if I'm going to tip 20% just cuz you are good looking or kissing my ass so you can pay for your 5 kids.

I've calculated I'll save $14,000 throughout my life by tipping 10% instead of 20%. You know what that means? You guys just bought me $14,000 worth of cocaine, hookers, and barbeque sauce. Thank you

[jd1020]

Originally Posted by BWillie

I think it's funny that ppl pride themselves on tipping more than 20%, like they are some man of honor. GTFO. I would like to thank those ppl for subsiding ppl like myself. I am cheap, & proud of it. Being frugal in my life as enabled me to live the life, have a surplus of $ that I can use for other things that MATTER. I've been a waiter before, so don't give me that shit like oh you don't know you haven't ever worked it. I made probably WAY more than I deserved at the time. Most waiters don't YET have the job skills to make as much as they make waitressing. Obv. that is why they do it. Usually because they either 1) Don't have education 2) Are on their way and in college 3) Or just can't do anything else. And I'll be damned if I'm going to tip 20% just cuz you are good looking or kissing my ass so you can pay for your 5 kids.

I've calculated I'll save $14,000 throughout my life by tipping 10% instead of 20%. You know what that means? You guys just bought me $14,000 worth of cocaine, hookers, and barbeque sauce. Thank you

I think it's funny that it's standard that it has to be 20% of the check.

Do they teach waiters at 5 star restaurants how to bring water to your table differently? Hell... I've noticed now that the person taking my order very seldom brings out the ****ing food.

[ThaVirus]

You're a ****ing cheapskate.

I often tip well over 20% and I NEVER do so to brag about it or feel good about myself. I do it because I've been there and I know how much that great tip can mean for the person that gets it.

I've never missed a single dollar that has gone to tipping.

[ThaVirus]

Originally Posted by jd1020

I think it's funny that it's standard that it has to be 20% of the check.

Do they teach waiters at 5 star restaurants how to bring water to your table differently? Hell... I've noticed now that the person taking my order very seldom brings out the ****ing food.

I can agree with this.

If you think about it, we tip our servers 20% of the bill... To bring us drinks and take our food orders?

Seriously, in a lot of large-scale establishments, there's a separate person to greet/seat you, bring your food out, and clean up your mess when you leave. Servers often have little to do.

[Rain Man]

Originally Posted by jd1020

I think it's funny that it's standard that it has to be 20% of the check.

Do they teach waiters at 5 star restaurants how to bring water to your table differently? Hell... I've noticed now that the person taking my order very seldom brings out the ****ing food.

And it was 15% until I was about 30. I have no idea when the norm suddenly became 20% and how that happened.

[Rausch]

Originally Posted by Fish

In our second year, however, we tired of the tip system, and we eliminated tipping from our restaurant. We instead applied a straight 18% service charge to all dining-in checks, and refused to accept any further payment.

So forced-tipping was applied, employees knew they were golden, and you got to pretend like it was completely removed from the equation.

[el borracho]

Nothing to do with water service. Waiters at high-end restaurants know how to pair wines with food and can tell you the difference between a grana padano and a fontina. A very good waiter can provide direction on a menu that the guest probably doesn't know and will have items in place before you even realize you need them. High-end waiters are very different than the guy offering you pizza shooters and extreme fajitas at TGI Fridays.

You might also be interested to know that the waiter at the high-end restaurant likely shares the tip you leave with the food runner, the busboy, the bartender and the hostess.

[DaFace]

Originally Posted by Rain Man

And it was 15% until I was about 30. I have no idea when the norm suddenly became 20% and how that happened.

I still think of 15% as being the standard tip for "average" service (20% = good and 10% = bad). That said, I tend to go on the 20% side most of the time as long as I don't have any specific complaints.

[underEJ]

It has been many years since I waited tables, but I am one of the ones who made out great in the tipping structure. Worked at many places, a bunch in Westport, and then also in SF and Oakland, and just a bit in LA, and found the same to be true anywhere.

There are three kinds of tips, excellent service/good sales tips, hot/cute tips, and friend/regular tips. All three are available to just about any server regardless of gender, race, or age as long as you know your customer base and can read people well.

You cannot give the same service to all tables because different people want different things. Restaurants that train people to do the exact same thing at every table and script the experience annoy alot of potential good tippers. Business people want their needs met without much interruption, families appreciate a little slack for the few extra considerations they need, people on a date like anything that can make the meal special, girl friends often want to know a bit about you and connect a little, guys out are the same, and both appreciate good drink suggestions.

The idea that hot girls do the best seems true, but some of that is purely a confidence thing. Having confidence and carrying yourself well can go a long long way. I also never worked in a place that clothing was an advantage. Generally aimed for slightly upscale, the button down shirt and tie for both men and women type place, so low cut clothing wasn't available. If you don't want to compete with the hooters girls, don't work at hooters. Find a place where your physical attributes are best suited.

Anyplace you work, except maybe an airport or hotel, can afford any server regulars if you want to open yourself to that kind of relationship. About half the places I worked did not permit comping of any kind to customers, and regulars still come in. It is all about the bartender/server relationship and anyone can do this too.

I have seen all kinds of great servers. I was a great server. Most of us consider ourselves something like independent contractors running a smaller business inside a larger business. The bottom line is tips. To maximize the bottom line, sales must go up, efficiency must go up, and customer service must not suffer to do either of the other two.

I would definitely not prefer the no tipping restaurant solution as a server. I made more money than others because I had developed my skills.