If I had a restaurant, it would fail (Part 2)

This is a follow up to my post in May 2014 titled “If I had a restaurant…I would build the 20% service fee into the prices.” (Clicky clicky. It opens in a new window.)

Obviously I wasn’t the only one to think tipping is the work of the devil. Over the past two years several restaurants in several cities have experimented with tips built into the prices. Turns out: it doesn’t work. An SF restaurant owner, Thad Vogler introduced no-tipping at his two restaurants and now he’s reverting back to tipping.

It appears after he raised his prices with 20%, his servers’ true wages dropped from $35-45 to $20-35 an hour. It also appears that due to also increased taxes he would have to hike the menu’s prices around 40% to maintain the same wages for his staff. On the note of true wages: needless to say servers’ declared and true wages are entirely different. Now that servers had to tax on their income their true wages dropped, and according to Thad 70% of them have left over the 10 months of no-tipping.

I’m guessing a sudden price increase of 20% (let alone 40%) in San Fran wasn’t a viable option, given the variety and availability of restaurants in the city. Too bad. Another large city’s restaurant owner, Danny Meyer, announced getting rid of tips in 13 of his restaurants in NYC. Let us see if Danny can make it happen.

My takeaway is that no-tipping takes two to tango. As a DBA I pay taxes, healthcare and all that after my income – roughly 30% of my income goes to deductions after everything considered. Such is life. Most servers however are accustomed to declaring only a portion of their tips, keeping an un-taxed chunk. Restaurant owners also prefer that solution since they are not obligated to pay several deductions associated with their employees’ true income. So, from their standpoint: you’re taking home $100, and suddenly someone says: “You can take home $100 on a good night and maybe $30 on a bad night, but none of that is guaranteed. Or you can take home guaranteed $50 on both nights. Which one would you prefer?”

Apparently more servers would prefer the higher, but not guaranteed $$$.

Conclusion: so far no-tipping business model in restaurants is not viable. 

If I had a restaurant

I would build the 20% service fee into the prices.

Tipping should be based on performance, right? Turns out, it’s not. My experience shows tipping is based on everything BUT performance, and judging by the articles I’ve read, my assumption remains correct.

A couple things that influence tips:

  • Boobs. Male customers tip better if being served by young, blonde, busty servers. Female customers tip their male servers better.
  • Age. Young adults and teenagers tip better than mid-age customers.
  • Table size. The larger the table, the less tips (per person) the server gets.
  • POC and tourists. POC customers and tourists tend to tip less. POC customers and old ladies with strong Italian accent also tend to give me more attitude if we’re busy and I have to seat them at a noisier table, or when they don’t get a booth. From an experience I know how it feels to be a tourist, so I expect tourists to get upset. You can’t speak the language properly, can’t understand tonality and body language. Being in a foreign country is always stressful, so I know they’ll take it out on me. It’s fine. Regarding to POC, my theory is that POC have been kicked in the face by other people, other restaurants, other servers so many times, they expect the same to happen everywhere. Say what you want to say, this is still a very racist society. If I were as oppressed and mistreated as they are, I would be grumpy, too. Therefore POC get a pass in my book, even if I get criticized and yelled at by them on a highly frequent basis. (The winners of the yelling-contest are white mid-age, mid-upper class men, however.)
    Edit: As I said, we live in a racist society, so I’m walking on eggshells here. I understand this comment might come out very racist, despite all my intentions. Please note the fact that I also point out sexism, and the greediness of older generations in this same article. I’m picking on bad tippers, not POC.)
  • Performance. This seems to be a binary parameter in oppose to a continuous array. Meaning, if the server tipped well, she gets tips. If the server’s performance wasn’t satisfactory, she gets no tips. Even a small inconvenience in the serving experience results in huge drops in tips.
  • Awkwardness. My manager told me he gets $10-$15 on any average night when he sits at the door. (which then he gives to the kitchen, or buys a round for the servers at the end of the shift.) I was shocked, because I host on two of the busiest nights, and I’m happy if I get $15 out of tips IN TOTAL. He said, “you have to make them feel awkward. Be super nice, lean in, hold onto that credit card slip for just a second longer.” So I did, I made them feel awkward, and I doubled my tips. It’s guilt money – it’s not for my performance, but to make the customer feel less guilty in his/her own head. *mind blown*

Now a word on math, since we’re on my blog. At the restaurant where I work, an average person will drop around $30 on a meal. If Average Person wants to tip 15%, the total check ends up being $34.5. If Average Person wants to tip 20%, the check ends up being $36. See that right there?! It’s a matter of $1.5!
For Average Person the difference would be $1.5, which is loose change, pocket money. (Especially if Average Person already decided to go out and have dinner for $30.) For the server, that small sum of $1.5 adds up over one night.

Tips are part of a server’s/busser’s/bartender’s salary, and you shouldn’t have the power to adjust that salary unfairly. You, who come in once a month for 60 minutes, get drunk, make inappropriate comments, yell at the staff, complain about the prices: you shouldn’t be allowed to determine anyone’s salary.

I hope I’ll get to own a restaurant once, and in large, red letters write it on the cover of our menu:

“20% gratuity is built into our prices. If you think you’ve received excellent service today, please tell our staff. We’re always happy to hear your feedback. We, however, don’t require you to pay our staff’s salary – we already took care of that.”

Conclusion: When you tip, you think you consider performance, and performance only. NOT TRUE. Be a good person, and shell out that 20%.


New category: if I had a restaurant

I’ve been hosting part-time at a local bar/restaurant for quite a few months now, and it’s been interesting to compare my 9-5 office job with my 6-10 restaurant job.

Food service is a beast. Unless you’ve ever worked in the food industry, you don’t know how much abuse food industry workers take, both front of the house (servers, hostess, bussers) and back of the house (cooks, dishwashers).  And it’s not always the customers! The majority of the stress I experience is from co-workers, inner politics, managers.

For a while I thought it’s just my place that’s rotten. However, after talking to several other managers, friends who work at other restaurants, other servers whom I’d accidentally meet – I had to realize the entire food service industry is wrecked.

There is not much I can do about that. I could go and work at another restaurant, but it would be the same. So, the best I could do is observe, and learn, and think about what I would NOT do if I had a restaurant.

And be super thankful that I have my 9-5 job.