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Should Your Restaurant Get Rid of Tipping?

You may have heard about some restaurants that have chosen to do away with tipping in favor of offering their employees a higher hourly wage. There’s support for both sides of this argument, including concerns about inconsistent earnings and support for tipping's motivational influence on servers. Let’s explore this topic and discuss the effects tipping can have on your restaurant business.

Why Tipping Should be Banned

If you're considering getting rid of tipping at your restaurant, here are a few arguments to support that choice.

Vague Tipping Etiquette

It’s not always clear when tipping is or isn’t expected. There is often confusion around take-out orders, fast casual restaurants, and buffets, just to name a few. And it can be especially confusing for customers when the expectations vary on almost a case by case basis.

It can be hard to tell where the money from the tip jar is going because different establishments will handle it in different ways. For example, coffee shop employees may split up the tip jar as they finish up their shift, but some establishments will collect all the tips for the whole year in order to pay for a holiday party for the staff.

Most foodservice staff work hard for a low hourly wage and they rely on tips, so it’s important for customers to understand how their money is being used and in what circumstances they’re expected to leave a tip.

Inconsistent Earnings

Many people don’t realize that servers at restaurants are only guaranteed an hourly wage of about $2.13. The rest of their income comes from tips. Sometimes, a server’s tips will suffer due to circumstances beyond their control. A rowdy customer, a shortage of a menu item… there’s any number of things that can go wrong. Customers aren’t always sympathetic towards these mishaps, and that’s unfair to the front-of-house staff.

Tensions Between Front- and Back-of-House

During a busy shift, front-of-house employees have the potential to earn more money than those in the back-of-house. This is because servers’ wages are largely determined by the amount of tables they wait, while back-of-house employees typically have a fixed hourly wage. This leaves your back-of-house staff at a disadvantage because even though they are under just as much pressure with the increased volume of customers, they don’t see any reward for working extra hard.

Employees Feel Underappreciated

Even though serving staff and bartenders can make a living on tips, the low hourly wage may make them feel underappreciated. Offering staff a consistent pay rate can reduce your employee turnover. Your employees will enjoy the security of knowing what to expect from their wages each month, even during slow times of the year, which can reduce stress in their personal lives. It also shows your staff that you appreciate them.

Why Tipping Should Not Be Banned

If you want to continue the tipping practice in your establishment, here are a few points that support that choice.

Personal Interactions

Tipping can help interactions between customers and servers or bartenders feel more personal. Leaving a generous tip is a nice way for customers to show their appreciation for the service provided to them. To discourage tipping may cause confusion for guests and it removes the emotional connection that servers and diners have become accustomed to as part of the restaurant-going experience.

Incentive for Good-Quality Service and Upselling

It can also be argued that the tipping system acts as an incentive for servers to provide guests with the best possible experience. It’s a similar idea to sales commissions since tipping is a percentage of the total cost of the meal—servers stand to earn better tips if they upsell.

Higher Menu Prices

The money that goes towards an hourly wage has to come from somewhere. In most cases, this will mean raising the price of items on your menu. The cost for customers typically winds up being the same as it would be if a customer were leaving a tip, but customers who are accustomed to leaving tips might be scared of the high menu prices.


While you may be accustomed to tipping in restaurants, it may not be the best system for servers because it prevents them from earning a fixed, reliable wage. On the flip side, tipping is a great way for customers to show appreciation for the service provided and acts as an incentive for servers to go above and beyond. Clearly, there’s no real right or wrong answer to the question of whether or not tipping should be banned. You just have to consider both sides and choose what’s right for your unique business and the needs of your staff.

Posted in: Management & Operation | By Jessica Wieser
Stephen Hammel Says:

As a customer, I like tipping. I tend to tip about 20%, and I'm told this is a hard-core 10% town, but the last time I was out, I left an $8 tip on a $12 meal, because the waitress (is that an offensive term?) kept refilling my ice water, and she kept smiling as if she had no higher purpose in life, although she must have been exhausted and had an aching back. Why tip so much? Because I want to find her when I go back to that restaurant. I will, on occasion, leave a 50c tip, and I feel guilty because the waitress needs the money, but it's my way of encouraging her to find a different occupation. Paying employees more, across the board, and forbidding customers from tipping, means your superstars will get paid less, and your mediocre employees and beginners will make more. Common sense says the superstars will jump ship and the mediocre servers will stick around. Guess how your customers will respond? Waitresses don't just deliver food to the table. They are *salesmen*, who not only get customers to return, but they upsell, giving customers a more enjoyable experience as well as filling your cash register. The most important job a manager has is to make his waitresses a lot of money on those 20% sales commissions (or 10% in this town) that tips represent. I would also suggest nickle-and-diming customers with a service charge. The average merchant charges $14.99 for something, as if people were dumb enough to think it makes a $15 item look less expensive. Originallt, John D. Patterson of NCR invented odd cents pricing as a way to get Frank W. Woolworth to buy cash registers. Store clerks would have to ring up sales in order to give the customer change - instead of simply dropping money into their aprons. Those "unnecessary" cash registers paid for themselves in reduced employee theft in no time. So Kmart started selling at 43c and 88c, to emphasize savings over conventional stores. Premium merchants, such as jewelers, charged round dollars, as a way of saying "we know what our product is worth." When McDonald's was charging 15c for hamburgers and 12c for french fries, Sandy's successfully competed by selling hamburgers for 12c (and made up much of it by raising their fries to 15c). If you are trying to sell bargain food. maybe a value menu will work for you. Seems to me that if a consumer wants a restaurant with waitresses, stating prices in round dollars rather than off cents says you're not ashamed of what you offer. Adding a service charge? That looks like you're trying to trick the customer into paying more. I wouldn't want to eat there. If you're pulling thart in public, who knows what ends up in the food you're selling! It's not really your restaurant, you know. The customers will decide whether the doors stay open.

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