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.

[Rain Man]

Originally Posted by DaFace

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.

Interesting. I always went with 15 percent and then at some point I kept hearing about 20 percent being the standard so I upped it with a grimace and a bad feeling that I was yielding to peer pressure.

But it sounds like your definition equates "acceptable" with "good", so it seems like we're in the same place but via different paths. You give 20 percent because your typical service is "good" (i.e., acceptable) and I give 20 percent because I view that as average (i.e., acceptable).

[Rain Man]

Originally Posted by underEJ

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.

Based on the research quoted earlier in this thread, I have come to the conclusion that you were a slender white woman in your thirties with large breasts during your serving days.

[ThaVirus]

Then puberty developed his skills.

[Fish]

Originally Posted by Rausch

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

No, nobody was pretending that it was completely removed from the equation. Quite the opposite. The restaurant was actually vocal to customers about the included 18%, and referred to that as justification for why they didn't accept tips. They weren't trying to pull the wool over anybody's eyes at all. Employees weren't "Golden" simply by removing tips. They still have to provide proper service, or they'll get fired. Tips aren't the sole reason for a waiter to provide proper service. That's complete fallacy.

[kysirsoze]

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

Industry standard for good service is 15%. You waited tables so you know that. The fact that you walk into a restaurant knowing you will not tip more than 8-10% is just bullshit. You may dream of restaurants that let you get your own food and drink so you can cut out the server, but when you patronize a full service restaurant you are expected to pay for the service you receive. You obviously have the right to tip what you want, but your way of doing things is unfair to the people who work there.

You're not alone! There are more and more restaurants that provide great food with no wait staff. From what I've seen, it's a fast growing part of the market. That sounds more your speed. Or cook your own damn steak.

[007]

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 always got a kick out of people stating that increase was due to inflation and was necessary for servers salaries to keep up.

They obviously didn't understand that inflation automatically increased the size of the tip.

[Imon Yourside]

Originally Posted by J Diddy

Nobody in this area makes that little. Literally it's one company that pays sub minimum wage and it's the one I came from.

Like I said I just spent the last 10 years running a Dominos as a Gm and DM.

I have 2 friends that work at Dominos here and they make less than $5/hr and make anywhere from $5-35 a 4/hr shift in gratuity/gas reimbursement. Pizza hut(NPC) cut all of their employees to $4.25/hr, whereas it was just new hires. Papa Johns pays $4.50/hr here so i'm not sure what you're talking about.

[underEJ]

Originally Posted by Rain Man

Based on the research quoted earlier in this thread, I have come to the conclusion that you were a slender white woman in your thirties with large breasts during your serving days.

I have waited a long time for someone to accuse me of being slender! Though not even close to long enough to have been in my 30s 20 years ago.

I never got automatic hot tips. I am very tall, and was very athletic, so much more likely to be considered intimidating than hot. I am also an introvert, not an extrovert, so flirting for increased tips was never going to happen.

Unfortunately, that research isn't actually linked, though it was done by the same Cornell researcher. I'm going to look it up to see how the research was done. The justification by the restaurant owner writing the article that tipping doesn't lead to better service isn't supported by his quoted research.

I just read the first quoted study, out of curiosity, and I don't think the Linkery owner actually read it. It doesn't say that at all. It confirms that tipping is associated with perceived better service, and further that the incentive is increased by the incentive to increase sales. All it says is that some people increase 1% per 1 point better service rating out of 5, and some people increase 2% per 1 point better service. That it is varied does not mean that it is not an incentive.

I am curious about the discrimination argument as well and plan to read up on that. I did just as well in Oakland/ Emeryville with a clientele comprised of many more "likely bad tippers" than the other locations, like in KC. The studies seem to deal exclusively one sided. They either study the tippers or the tipped, and with extremely low sample sizes. I would like to see more information about how a study can quantify service and tip motivations in order to really assess the potential for discrimination. While I was a server, the only ones who complained about discrimination were the white men, but that may have just been they were more likely to be vocal about it.

I would also be concerned with a large scale shift to a non-tipping culture where salaries for servers start in a comparable place, but as sales and prices change with time, the salary stagnates and doesn't keep pace and it is just another minimum wage shitty job where there is no incentive for sales and personalized service.

I say that having lived in New Zealand where tipping is not required, and service is still quite good in most places. Employees are well compensated and seem pretty happy. The business environments are different though, and the social structure of flat tax and socialized medicine are very different, so I'm just not sure is correlates well.

This is an interesting time to have this discussion.

[Rain Man]

Originally Posted by Guru

I always got a kick out of people stating that increase was due to inflation and was necessary for servers salaries to keep up.

They obviously didn't understand that inflation automatically increased the size of the tip.

I've also wondered if it had something to do with my location. I lived in a small town growing up, and then went to St. Louis, then to Austin, then to Denver. Somewhere in that St. Louis/Austin era I started hearing the 20%, so I'm not sure if perhaps small towns tip less and I was just getting educated, or if Missourians tip less and I was just getting educated, or if the standard really changed.

But then it sounds like there's not unilateral agreement that 20% is the standards since at least two people have said 15% in this very thread. I guess it's a little less regimented than I thought.

[vailpass]

I too came up on the 15 percent rule. If service doesn't warrant I'll go lower. If it goes above and beyond so do I. I've given 50 percent tips.

[J Diddy]

Originally Posted by KILLER_CLOWN

I have 2 friends that work at Dominos here and they make less than $5/hr and make anywhere from $5-35 a 4/hr shift in gratuity/gas reimbursement. Pizza hut(NPC) cut all of their employees to $4.25/hr, whereas it was just new hires. Papa Johns pays $4.50/hr here so i'm not sure what you're talking about.

I tell you what clown I would be more than happy to substantiate mine with a claim from a franchisee in this area. Can you do that. Didn't think so.

[BWillie]

Originally Posted by kysirsoze

Industry standard for good service is 15%. You waited tables so you know that. The fact that you walk into a restaurant knowing you will not tip more than 8-10% is just bullshit. You may dream of restaurants that let you get your own food and drink so you can cut out the server, but when you patronize a full service restaurant you are expected to pay for the service you receive. You obviously have the right to tip what you want, but your way of doing things is unfair to the people who work there.

You're not alone! There are more and more restaurants that provide great food with no wait staff. From what I've seen, it's a fast growing part of the market. That sounds more your speed. Or cook your own damn steak.

I don't cook, ever. Next time I go to a nice restaurant, I should ask if I can decline a server. Ask them if I can pick up my shit from the window and fill up my drink on my own. Then just watch their bewildered look

[Bugeater]

Originally Posted by ThaVirus

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.

Shit, for a short time in the 80s there was actually a Playboy Club at a hotel here in Omaha. I worked there for a few days as a "service assistant" and it was the biggest crock of shit ever. The Bunnies (waitresses) took the food order and got the drinks for the table, and the SA did EVERY ****ING THING ELSE. Then at the end of the night the Bunnies were suppose to give us a percentage of their tips, can't remember what it was but they basically gave each of us a couple bucks and some would flat-out stiff us. It was pretty much the worst job I ever had. I hated that goddamn place.

[Demonpenz]

well good thing for bug, is he has loved every job since.

[Rain Man]

Originally Posted by Bugeater

Shit, for a short time in the 80s there was actually a Playboy Club at a hotel here in Omaha. I worked there for a few days as a "service assistant" and it was the biggest crock of shit ever. The Bunnies (waitresses) took the food order and got the drinks for the table, and the SA did EVERY ****ING THING ELSE. Then at the end of the night the Bunnies were suppose to give us a percentage of their tips, can't remember what it was but they basically gave each of us a couple bucks and some would flat-out stiff us. It was pretty much the worst job I ever had. I hated that goddamn place.

Did they let you look at their breasts in lieu of your tip share?