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Should Your Restaurant Get Rid of Tipping?

To tip or not to tip? That is the question for many restaurateurs as some of their colleagues, like Joe’s Crab Shack and Shake Shack, have made moves to ban tipping in their establishments. Instead of paying servers and bartenders the minimum serving wage of $2.13, with the expectation that most of their money earned would come from tips, these owners have boosted the pay rate to $15 an hour. To make up for the new cost of their front-of-house employees, some restaurants have implemented a slight price increase on their menus, or a clever “administrative fee” to guests' bills. While this new business model may work well for some restaurants, it may not be ideal for others. So the big question remains, should your restaurant get rid of tipping?

Say goodbye to tipping!

Besides the fact that tipping is an outdated notion to the rest of the world, it can create a further divide between your front- and back-of-house employees. For example, on an average night in your restaurant, a bartender or server could walk away with upwards of $70 after working a five-hour shift. However, even if you’re paying your cooks, dishwashers, and other back-of-house employees $10 an hour, it would take them more time to earn the same amount of money as their front-of-house co-workers, even though they’re doing the same amount of work.

Adding a consistent pay rate for your servers and bartenders can also help decrease your turnover rates. Since the tipping percentage varies from guest to guest, the amount that your front-of-house employees can expect to make during a shift can fluctuate, especially during slower times. Not to mention, they would never have to worry about the dreaded bad tippers. With an hourly pay rate, your employees can rely on steady stream of income, which might make them more likely to continue working for you.

Keep the change!

While not tipping may be a part of the culture of many countries around the globe, it doesn’t mean that your restaurant or bar needs to follow suit. In fact, some restaurants have had a hard time keeping servers after making the switch to a higher hourly wage. Many servers and bartenders who have spent years working in the restaurant world have become accustomed to leaving each shift with cash in their pockets, and they aren't ready to give that up.

Taking tips away may cause confusion among your guests, as well. Leaving a tip behind is a common way for guests to say “thank you” to your wait staff or bartenders. Without this, some patrons can feel as if they’re not properly thanking your employees for the service they provided them. Some people also believe that tipping the employees of a restaurant forms an emotional connection. Instead of just giving their money to a “faceless company," guests are directly supporting hardworking employees.


While paying front-of-house employees hourly may be beneficial to some businesses, others may have a hard time getting their employees and guests to adjust. So, to tip or not to tip? It's up to you to decide.

Posted in: Management & Operation | By Emily Hepner
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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