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.

[007]

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 can get behind this article. I don't carry cash so it is annoying when I run into situations where they are expecting cash tips. I go out of my way to avoid those situations but sometimes they still crop up.

I would have less problem with tipping if people would stop using it as a bribery system to get more attention and just tip standard like most other people.

[Rain Man]

Originally Posted by Guru

I can get behind this article. I don't carry cash so it is annoying when I run into situations where they are expecting cash tips. I go out of my way to avoid those situations but sometimes they still crop up.

I would have less problem with tipping if people would stop using it as a bribery system to get more attention and just tip standard like most other people.

I just view it as a tax unless something amazing happens, like I fall down a well and they rescue me.

I've lately started rounding up to prove to myself that I'm a nice guy, but my tip distribution looks something like this:

15% tip - 0.1% of my tips if the person is a total dud.
18% tip - 2% of my tips.
20% tip - 65% of my tips.
21% tip - 30% of my tips.
25% tip - 2.7% of my tips.
50% tip - 0.2% of my tips on smaller bills, just because I feel like a nice guy that day and the cute waitress touched my arm affectionately.

[Bugeater]

Originally Posted by kstater

How so? The more people they move the more guaranteed tips they get

Read post #50.

Originally Posted by Demonpenz

I tip huge because I can. If someone is busting their ass I will give them what I can afford.

Foghat ****ing rules.

[Fish]

Originally Posted by Rain Man

The same way you do at a grocery store or a mechanic's shop or a dentist's office. Restaurant workers are the same species as other workers who don't take tips, so I don't understand why they have to be treated like Skinner's rats. Do they have no work ethic until the pellet rolls down the chute?

No shit. I'm shocked at the number of people who think that removing the tipping system would turn waiters lazy and evil, and that the employer would simply allow it without consequences..

[007]

Originally Posted by Rain Man

I just view it as a tax unless something amazing happens, like I fall down a well and they rescue me.

I've lately started rounding up to prove to myself that I'm a nice guy, but my tip distribution looks something like this:

15% tip - 0.1% of my tips if the person is a total dud.
18% tip - 2% of my tips.
20% tip - 65% of my tips.
21% tip - 30% of my tips.
25% tip - 2.7% of my tips.
50% tip - 0.2% of my tips on smaller bills, just because I feel like a nice guy that day and the cute waitress touched my arm affectionately.

I would consider you a standard tipper.

[Ecto-I]

Interesting article. On a personal note, I've been to the Linkery twice... the service sucked, and the food was mediocre. I was happy to see it go.

[ShortRoundChief]

Originally Posted by Fish

From that article:



Right now minimum wage for tipped workers is $2.13.

In California it is $8 for everyone.
http://www.minimum-wage.org/californ...-minimum-wage/

I did misread the previous statement and thought that it was the prior model where those wages were earned.
Basically, it's forced tipping with tip sharing within the company mandatory.

[BIG_DADDY]

I hate forced tipping percentages and avoid places that do that.

[ShortRoundChief]

FTR, I can see the tip sharing with having to pay over the federal minimum wage. The forced percentage is kind of excessive.

[Imon Yourside]

Originally Posted by aturnis

Cow Tipping is gay.

Agreed

[BIG_DADDY]

Originally Posted by Fish

No shit. I'm shocked at the number of people who think that removing the tipping system would turn waiters lazy and evil, and that the employer would simply allow it without consequences..

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.

[kysirsoze]

Originally Posted by BWillie

I dont want a waiter at all. Im there for the food and for someone to clean the dishes so I dont have to. I like the system that Oklahoma Joes uses. You order, they have a counter, you get your food and sit down an eat it. Is having someone bring you your food and water so you dont have to ever lift your fat ass worth $15? It isnt to me.

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

[kysirsoze]

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.

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.

[Stanley Nickels]

Originally Posted by Fish

Upscale NYC sushi place does the same thing: http://abcnews.go.com/blogs/headline...ant-bans-tips/

The wife and I ate there in April '09. That is, bar none, the best sushi I have EVER had. Everything was classy as ****, too.

[Shaid]

Originally Posted by kstater

All this does is show that the average person tips less than 18%. They're still trying to turn over as many people as they can to get the next table to charge another 18% regardless of service quality.

Pretty much.