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.

[Gravedigger]

Yeah working in the restaurant business I can say this is pretty much bullshit, and wouldn't work for every style of food business.

You start charging 18% service charge on pizza deliveries, bet money your business won't be getting better. They charge a delivery fee, which the driver only sees half of that regardless of gas prices, but I'd like to know how much of that 18% he gives to his employees. You'd make money on bigger tickets, but 10% on a 20$ order isn't shit, I assure you.

As someone pointed out it sounds like the restaurant is making money on the waiter's cut and also taking more money from the customer in some instances than they are willing to give.

[BWillie]

Originally Posted by kysirsoze

So don't go to full service restaurants. Support quality business models like OK Joes. Easy as that.

No, it's not as easy as that unless you want to eat at McDonalds and Chipotle every day. How many quality restaurants DON'T have waiters and waitress service? Honestly, Oklahoma Joes is probably the best there is and that is just because it's fkking BBQ. There is virtually no where you can get a good steak and NOT have waitress service.

It's a win win for the business and the consumer. The consumer doesn't have to incur those costs, neither does the business. I would think if anybody, the business/restaurant would prefer it because they have much less risk and overhead. No benefits, less liability, less labor costs, less payroll, admin etc. Somewhere along the way some rich fat ass was like, you know what, I don't want to get my happy ass up and get my drink. I want some kid to kiss my ass while I shove this big steak down my lard ass throat, so they can feel special. I don't need to feel special, I have accepted that I am not a beautiful and unique snowflake.

[Rain Man]

Originally Posted by kysirsoze

I can tell you that the empowerment you envision is an illusion. The only way your tip is really going to result in better service is if you are a regular and you tip very well. Otherwise it's kinda luck of the draw with what server you get. Even if a service charge to pay the servers was included in lieu of a tip, you still have the right to complain if there is a problem, which is really the only thing that makes a real difference in a restaurant with tipping.

When you think about the incentive system, it does shed some light.

As the customer, your incentives are:

- if you're a regular, tip well regardless of service in hopes that you'll get good service next time.

- if you're not a regular and you get good service, your incentive to tip well is general kindness and a favor to the next customer, weighed against the fact that you leave with more money if you don't tip well.

- if you're not a regular and you get bad service, your incentive to tip well is the knowledge that you'll be called names after you leave, weighed against the fact that you leave with more money if you don't tip well and send a message for the next customer.


As the employer, your incentives are:

- None. You don't care either way. You want your good servers to get good tips to keep them. With your bad servers, do you want them to get good tips to keep them from grousing, or bad tips so they'll quit?

As the server, your incentives are:

- Avoid the really bad tips by providing at least minimal service.

- Scout out good tippers and give them particularly good service.

- Serve as many tables as possible because there's not that much variation in tips regardless of what you do.



I don't know if I learned anything from that, but I typed it so I might as well post it.

[WhiteWhale]

Originally Posted by BIG_DADDY

AS a consumer I want to be empowered. I don't feel like just handing that power over. I can see why you might though.

That is one of the most pathetic things I've ever heard.

[kindra68]

What about the waitresses that bust their ass and it’s not all about just turning tables?
I work Monday – Friday 10am – 4pm. Monday & Tuesday I’m the only server. Wednesday I get a bartender that refuses to do anything but stay “in his warm spot” and play on his phone. Thursday I get a bartender and she gets the bar half of the restaurant (3 booths and 3 hightops) and Friday I get a bartender (same tables) and a waitress that splits the other half of the restaurant with me. Monday- Wednesday I run my ass off. I run sales over $500.00 each day. Thursday and Friday the business falls off. So much so last Thursday my sales were $181.00 and Friday $69.00. I have several people that only come in Mondays and Tuesdays. They know I’m the only one there and it might take me a second to get to them but when I do, I walk up with a smile and treat them like they are the most important people there. Heck I have a couple of people that only show up “after the rush” because they know I’m the only one there. As in I greet them at the door, seat them, get their drinks, get the food order, put the order in the pos, then wash my hands and go make the order (it’s an open kitchen). When the order is done I take it out of the oven and serve it to them. And if they are drinking anything from the bar it’s usually at this time they are close to empty, and so I run back to the bar and l make another round of drinks. And yes I do all this for $2.13 an hour. But on the flip side, would I do it for $10-$12 an hour and NO tips? Awe hell no!
((I’m not even going to get into the whole “tipout” bs))

[notorious]

Originally Posted by J Diddy

I'm not sure how that's banning tipping. Seems to me it's a way for the company to get a cut of the tips.

Bingo

[Rain Man]

Originally Posted by kindra68

What about the waitresses that bust their ass and it’s not all about just turning tables?
I work Monday – Friday 10am – 4pm. Monday & Tuesday I’m the only server. Wednesday I get a bartender that refuses to do anything but stay “in his warm spot” and play on his phone. Thursday I get a bartender and she gets the bar half of the restaurant (3 booths and 3 hightops) and Friday I get a bartender (same tables) and a waitress that splits the other half of the restaurant with me. Monday- Wednesday I run my ass off. I run sales over $500.00 each day. Thursday and Friday the business falls off. So much so last Thursday my sales were $181.00 and Friday $69.00. I have several people that only come in Mondays and Tuesdays. They know I’m the only one there and it might take me a second to get to them but when I do, I walk up with a smile and treat them like they are the most important people there. Heck I have a couple of people that only show up “after the rush” because they know I’m the only one there. As in I greet them at the door, seat them, get their drinks, get the food order, put the order in the pos, then wash my hands and go make the order (it’s an open kitchen). When the order is done I take it out of the oven and serve it to them. And if they are drinking anything from the bar it’s usually at this time they are close to empty, and so I run back to the bar and l make another round of drinks. And yes I do all this for $2.13 an hour. But on the flip side, would I do it for $10-$12 an hour and NO tips? Awe hell no!
((I’m not even going to get into the whole “tipout” bs))

So in essence are you saying that you're making more than $8-$10 per hour on tips?

And have you noticed that your tips go up if you work harder? Have you developed any strategies to maximize tipping, such as turning tables over as fast as possible, or giving disproportionate attention to people who are known high tippers or suspected high tippers?

And do your regulars tip you more if you're having a good service day than if you're feeling lethargic that day?

These are legitimate questions, by the way. I have no agenda with the answer despite the fact that I would prefer a non-tipping world with correspondingly higher prices.

[kysirsoze]

Originally Posted by Rain Man

So in essence are you saying that you're making more than $8-$10 per hour on tips?

And have you noticed that your tips go up if you work harder? Have you developed any strategies to maximize tipping, such as turning tables over as fast as possible, or giving disproportionate attention to people who are known high tippers or suspected high tippers?

And do your regulars tip you more if you're having a good service day than if you're feeling lethargic that day?

These are legitimate questions, by the way. I have no agenda with the answer despite the fact that I would prefer a non-tipping world with correspondingly higher prices.

Not posed to me, but I'll answer. I didn't ever notice a particular difference in tips if I felt like I was kicking ass as opposed to when I felt like I was falling behind. Sometimes, if something went wrong with a table and I fixed it to a point I looked like the hero or if they had some special need that I made an extra effort to accommodate, I would see a benefit. Even then, however, it wasn't at all assured and these situations were clear outliers.

Also, most good tipping regulars tipped well regardless because they loved being treated like friends when they came in. We would know their name and/or favorite drink/dish. That kind of thing.

The only thing that really drove up profit for the servers was volume and alcohol sales. And cleavage. Don't forget cleavage. Even that, however, only really seemed to make a difference with certain groups or, especially, those eating/drinking in the bar area. A lot of attractive girls in the regular dining room didn't seem to much better than myself. (An average-ish looking white dude)

Hope this helps.

[HonestChieffan]

Originally Posted by J Diddy

I'm not sure how that's banning tipping. Seems to me it's a way for the company to get a cut of the tips.

shhhhhhhh.....there are stupid people who approve.

[kindra68]

Originally Posted by Rain Man

So in essence are you saying that you're making more than $8-$10 per hour on tips?

And have you noticed that your tips go up if you work harder? Have you developed any strategies to maximize tipping, such as turning tables over as fast as possible, or giving disproportionate attention to people who are known high tippers or suspected high tippers?

And do your regulars tip you more if you're having a good service day than if you're feeling lethargic that day?

These are legitimate questions, by the way. I have no agenda with the answer despite the fact that I would prefer a non-tipping world with correspondingly higher prices.

on "good" days = yes.

I bust ass if i have served you 27 times, or never seen your face before.
i treat each table like an awesome tipping table. if you go in expecting crappy tips, you will receive crappy tips.
now i do pick up as many tables as possible. anytime i'm asked to pick up a table, if there is anyway i can, i do. I've had several people tell me "oh that table NEVER tips" and i have walked away many times with a good tip.

don't go in lethargic. if you feel like crap or just don't want to be there find somebody to pick up your shift. crappy attitude = crappy tips.

if i'm not at work i'm not making money.
if i'm not picking up tables i'm not making money.

[alnorth]

I'm fine with a policy of a mandatory tip for extremely large parties, but if its just two of us and they stick me with the mandatory 18% gratuity, I probably will not return.

I typically tip a lot more than 18%, but I don't want to be forced to pay for service regardless of the quality.

[Valiant]

Originally Posted by J Diddy

I'm just curious why the restaurant shut down if this grand experiment was such a success? He says that they're getting ready to open a new one sure, but why shut down a successful restaurant?

This. There would be no reason they shuttered. They would have opec a 2nd location.

Coorelation and causation example.

[kindra68]

kysirsoze you speak the truth!

Originally Posted by kysirsoze

..
Also, most good tipping regulars tipped well regardless because they loved being treated like friends when they came in. We would know their name and/or favorite drink/dish. That kind of thing.

very true. ((It's funny to have my boss tell me "hey your ladies just came in"))

Originally Posted by kysirsoze

The only thing that really drove up profit for the servers was volume and alcohol sales. And cleavage. Don't forget cleavage. Even that, however, only really seemed to make a difference with certain groups or, especially, those eating/drinking in the bar area. A lot of attractive girls in the regular dining room didn't seem to much better than myself. (An average-ish looking white dude)

Hope this helps.

also true. but i'm old, fat and don't show any cleavage.
i bust ass and turn tables. I just make sure none of my tables feel like i'm hurrying them.

[Tits McGee]

News flash, The Linkery and it's related restaurants went BK a month ago.
Who is posting this old news...

[Tits McGee]

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