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.

[Imon Yourside]

Originally Posted by HonestChieffan

Who tips more than 20% really?

I Do if the service is fantastic.

[007]

Originally Posted by Just Passin' By

Just remember who your waiter/waitress was and demand someone different.

That doesn't work. They tell other wait staff about their poor tips now. I mean seriously, god forbid you actually care enough to give the customer a good experience.

Doesn't happen often but it does happen.

[Imon Yourside]

Originally Posted by Guru

That doesn't work. They tell other wait staff about their poor tips now. I mean seriously, god forbid you actually care enough to give the customer a good experience.

Doesn't happen often but it does happen.

I think most places have always done this, the rest is just like society. It's slipping away because the younger generations don't give a flip about anyone but themselves.

[Just Passin' By]

Originally Posted by Guru

That doesn't work. They tell other wait staff about their poor tips now. I mean seriously, god forbid you actually care enough to give the customer a good experience.

Doesn't happen often but it does happen.

I'm sorry you've had that experience. My dining experiences have been just the opposite.

[|Zach|]

Originally Posted by Tombstone RJ

So, the only people who consistently tip well are 'merican caucasian males ages 18-60?

Why do the libtards hate us so?

The best tippers (very generally) behind wealthy men are professional women.

[|Zach|]

Originally Posted by HonestChieffan

Who tips more than 20% really?

All kinds of people...a lot actually.

[|Zach|]

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.

Yea, I am sure you are a great tipper.

[|Zach|]

Originally Posted by Fish

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

[*]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.

This part makes no sense to me.

This dynamic hasn't changed. If anything it is *more* of a numbers game.

[|Zach|]

Originally Posted by J Diddy

I know what you're saying. However the driver generally does less, makes as much per hour (doing the only job he does), gets reimbursed mileage and gets to keep all his tips. Typical driver spends (worse case scenario) ten minutes to your house, talks to you for 30 seconds, and smokes a cig on the way back to the store. So for 10 minutes of "work" he makes double what the people who bust their ass do.

Don't get me wrong, drivers are valuable, but they're kind of like offensive linemen. You don't notice them til they screw up. (which is the sample act of following a gps to your house).

People in back get a set rate (which they agreed upon because they work there) whether it is busy or not. Guaranteed as long as they are there working their hours.

There is value in guaranteed money. That isn't the case with the driver.

[ghak99]

I'm guessing the IRS likes it.

[|Zach|]

Originally Posted by Rain Man

I thought the bolded part was pretty interesting. I'd never thought about that.

But that hasn't changed with this new system.

[|Zach|]

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.

The bolded part is ridiculous.

[007]

Originally Posted by |Zach|

Yea, I am sure you are a great tipper.

You are a ****ing idiot.

[|Zach|]

Originally Posted by Guru

You are a ****ing idiot.

[007]

Originally Posted by |Zach|

I don't understand your need to berate me at all. I have posted several times on here my tipping habits and you still choose to act like I don't tip well. I have a family of six so I have to stretch my money as far as I can. I tip fairly and I reward excellent service. So screw you and your need to constantly remind me that you believe you are so much better than everyone else. You are nothing but a judgmental ass.