What's Your Take On Restaurants Charging Mandatory Gratuity Fees?

Over the past few weeks, another controversy over automatic tipping has burst back onto the scene, following recent controversial articles in the New York Post and Eater.com.

The Post article, by author Steve Cuozzo, argues that tips should always be built into the cost of a restaurant meal, and that doing so would unleash a Utopian paradise where waiters and customers would forever treat each other with professionalism, respect and dignity. At Eater, however, we hear the contra-case in a a post where a diner complains after a party of four adults and two infants got charged an automatic 20% gratuity in a NYC restaurant because, technically, they were a "party of six."

Should we adopt the European model here in the USA, and build tips into the cost of the meal? There's at least some logic behind the idea. For example, in cities frequented by European tourists, waitstaff can get badly hurt when foreign customers don't know the tipping conventions here in the USA. If the customer leaves little or nothing as a tip as they do back home, the waiter bears all the risk of not getting paid. Many restaurants in cities frequented by tourists tack on automatic gratuities for this very reason.

On some level I can see the value adopting the European model: just build the cost of paying the waiter into the prices of the food and be done with it. Of course, doing so would conflict with the standard practice of every other restaurant in every other city across the entire USA. It's funny how Manhattan-based journalists often get very confused and forget that outside their tiny little island is a whole country of 300 million people and 3.8m square miles--with its own firmly established dining conventions.

And of course, there are glaring gaps in the logic behind mandatory tipping. For example, one argument in favor of mandatory tipping is this: if you just put a 20% fixed charge on the dinner check, then waiters won't have to upsell diners on pricier entrees, appetizers and wines to boost their check.

Except that the 20% charge is based on the value of the dinner check, so there is still the exact same incentive to upsell the customer. A bigger check means a bigger tip, mandatory or not.

Another perfectly justifiable question: if the waiter knows she's automatically going to get 20%--no more and no less--for waiting on a table, is there an incentive to try?

Fortunately, here at CK I not only have lots of restaurant-goers among my readers, I also have quite a lot of restaurant owners, managers and waitstaff reading here too. So here's your chance to share your views: what is your take on automatic tip fees?

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Anonymous said...

I say the restaurant owners should pay servers more. Tips should be what the customer feels like. And while 90% of the time I tip 20% and less for really lousy service, I don't like being EXPECTED to do that just because they receive a low wage. I am a business owner. I pay my employees real wages that encourage them to stay with me and to keep my customers happy. I think that could work for the service industry too.

Ros said...

My take: yes, please!

From a financial perspective: I was in Europe earlier this summer, and, frankly, having the taxes/tips/fees/etc built into the cost of items on the menu made it SO much easier to calculate how much my meal was going to cost (AKA: a 10$ meal is a 10$ meal, rather than a 10$ meal, plus 20% tip, plus 15% tax, so a 13.50$ meal...) People still tip for exceptional service, or (in our case) large parties will tend to leave a tip for the waiter 'cause of the hassle we know we cause, but other than that, you know what you're paying for.

From a humanitarian basis: someone's salary, and ability to eat/pay bills/pay rent should not be dependent on someone else's mood or knowledge of customs. If someone is doing their job, they should be paid a living wage - and waiter's wages, without tips, don't come anywhere near that.

From a motivational standpoint: people should do their jobs well because... well, because people should do their jobs well. In no other industry is it argued that people need the potential of money thrown at them every 3 minutes to encourage them to work better! It's assumed that everyone does their jobs, and that should they cease doing so satisfactorily, they will no longer be doing it at all. I really don't see how this is any different...

Stuart Carter said...

Speaking as a European - absolutely yes, the *ENTIRE* cost of the meal should be posted on the menu - tax included. Even after nearly 6 years living in the USA it still annoys me that I cannot predict how much my meal will be, plus the uncertainty about who to tip.

Steve Tallant said...

At the full-service restaurant at Wegmans, there is a no-tipping policy. But the waitstaff are salaried employees with benefits, etc.

In America, with much different healthcare structure than Europe, do you think that restaurants would and could absorb waitstaff into salaried employees, and provide medical and other benefits? That 20% would not quite equal 20%, and would surely be passed through to the customer.

Right now restaurants pay $2+/hour for their waitstaff. What do you think the impact on the American restaurant industry would be if that rate went north of $15/hour?

Milehimama @ Mama Says said...

My waitress sister hates the idea of being paid minimum wage. I know lots of servers who earn far above that (depending on their restaurant). My neighbor used to wait at Olive Garden, for example, and could make $30 an hour in tips.

I HATE mandatory gratuities. I had a similar experience happen to me- my husband and I took his mother and brother out. We had a 15 mo old and newborn. The newborn didn't even take up a seat at the table or a sling, and the restaurant was all but empty. I was so angry about getting that 20% mandatory (the 2 babies didn't even EAT anything, although the 15 mo did sit in their high chair) that we never, ever returned to that restaurant.

We tend to tip very generously because we're pretty messy, but if there's a mandatory then we don't ever add to it. But I thought the going rate was 15%, not 20%??? When did it change?

gharkness said...

I certainly don't think it should be called a 'gratuity.' That makes it sound WAY too optional. Just pay the employees, and charge the customers enough to cover it all, no percentage on top, no additional charge, but make sure the cost of the meal covers it ALL.

The customers won't be paying any more than they were before, if they were tipping properly. And if they weren't tipping properly and won't come back because you are 'forcing' them to pay more - is this a customer you really want?

One other detail: as long as they are being paid fairly, the wait staff and other service personnel should be prohibited under pain of firing from accepting tips. That will keep the customers from being made to feel like they *still* have to tip on top of an already fair wage.

chacha1 said...

Hmm. I don't really have a problem with "service compris." But I don't really have a problem with computing my own tips, either.

I don't go out to eat with babies (and even if I had a baby, wouldn't take it to a restaurant with table service) and I rarely go out in large groups.

Yet I think this probably makes me a representative diner-out, rather than an outlier.

If I had any objection to "service compris" it would be to the fact that it is often applied to number of diners. I tend to think it should be applied to the size of the check.

That is, a party of six with a bill of $136 is probably splitting the check anyway and applying a mandatory gratuity would just piss everyone off. The two-top with a bill of $136 probably ordered appetizers, entrees, a bottle of wine, and two desserts (this would be me and DH) and we would be too logy to want to calculate a tip.

Marcia said...

I can see both sides, but I'd prefer that it just be included in the price of the meal, and that the waitstaff be paid a fair wage. I can understand the "incentive to perform better" idea, however.

In California, at least, waitstaff gets at least minimum wage before tips. It does get a little old to see tip jars at the coffee shop, the sandwich place, and the burrito place though - you know, where you order at the counter and stand and wait for your food.

Lauren said...

Being from a tipping culture but having lived in non-tipping cultures, I can stridently say that lack of tip = lack of hustle. Meals don't come out together, you can't get service after your food is served, there is no quality check after serving most of the time...
My poilitics list to port so I'm all for a living wage, but the cost of a restaurant meal just isn't justified by the experience when servers are getting 12-18 euro an hour.

Barbara | Creative Culinary said...

I couldn't agree with the first writer more. People often wait tables because they know they can make far more than they would in a regular job. I get weary of hearing how servers don't get a fair hourly wage or benefits. I know friends of my daughters who have gone this route during college. They say they made more money than they do at their chosen profession that they get into after college!

I've read similar responses to the same question posed elsewhere and it's always the same. Customers want to 'tip' based on level of performance and experience, servers 'expect' 20% as a standard way of doing business.

This isn't the only industry where this is an annoyance. I'm expected to tip for a haircut too but I've stopped. If I pay someone $50 to cut my hair, I'm paying them to do a job and yes, I expect it to be done well. So I have to then tip them because they actually did their job well? I wouldn't come back if they didn't so I sort of think my gratuity is that I return again. :)

I've made it easier on myself since I find the expectation so annoying. I don't go out; preferring to have people come to my home where I can spend less money, feed more people and enjoy the process because I'm lucky I love to cook.

Daniel said...

Barbara makes a really intriguing point: it's easy for us as customers to hold forth and want a "living wage" for servers and waitstaff.

But what if mandating a higher wage and baking gratuities into the bill actually caused them to make less? I hadn't really thought about this, and it's clearly an important aspect of this debate.


Zaphod at Home said...

I think there should be some portion of the "gratuity" built into the prices. This would be to cover the hourly wage of the server. Call it 10% of the price as it exists now. Then, the customer should have the ability to show their gratitude toward their server, by including a tip, if they think the server went beyond expectations.

I think one reason there's so much contention over restaurant tipping is that customers don't inherently know what %of a tip would provide the server a decent wage, and what % of the tip would be for exceptional service.

I can't see restaurant owners wanting to change how things work now. I doubt they'd want to have their prices printed on their menus increase (even though it would reflect a more realistic price). It seems that the current tipping structure works as a form of piecework (in manufacturing that's where you pay employees some fixed $ amount for every part of some type that they produce) which provides incentive to the worker to maximize their own output. In the case of a restaurant server, maximizing output means turning more tables over, which means serving more meals/drinks, which is where the owner gets their revenue.

So I could see restaurant owners not wanting to absorb the risk involved with paying servers a fixed hourly rate, because then what is the incentive for servers to maximize the number of customers served?

Also, look at the wait staff versus the kitchen. Kitchen staff, I'll assume, make a fixed hourly pay rate. Since the owner is paying the kitchen the same amount if it's a busy night as a slow night, then that kitchen has to run very efficiently and productively, to minimize the amount of money the owner spends when the kitchen has nothing to do, while being able to turn out meals fast enough to keep up with demand when things get busy.

Now compare that to the front of the house, where an owner can put as many servers to work as they want to, because there's much less risk involved with regard to paying servers when they aren't busy. There's really no reason to make the front of the house more efficient or productive, because it's cheap to just throw more servers in, and make sure there's adequate capacity for when things get crazy busy.

What's my point? I'm not sure anymore, but it's just interesting that currently, servers are basically gambling every time they come into work, with the hope that in the long run they come up in the black. Changing the system so that the server cost is built into prices turns the owner into the gambler (as if they're not already gambling on everything else in the restaurant).

Anonymous said...

I know you hate this kind of comment, but I whole heartedly agree with Ros.

chacha1 said...

Yet another complicating factor is that in many (if not most) restaurants, tips are pooled. So the excellent server doesn't get 100% of the tips from her own tables ... they are shared across the other servers, including the one who is always out in the alley smoking a cigarette when his tables are calling for water, and often across the busboys, hosts, and bar staff (if any) as well.

I'm still undecided on this issue but I think the best thing consumers could do is to make a point of speaking to a manager any time they receive exceptionally good OR exceptionally bad service - rather than making those points through the tip.

Ronda said...

I have never heard of tips being pooled! Is that true?? Because when I tip generously, it is intended for the person who did the job! If that is the case, it would certainly make me less likely to give any bonuses!

I've always thought that servers should be paid a fair wage, and tips should be not *expected,* but allowable for superlative service. I think that's what 'tip' originally meant!

Eleni said...

Hello, Europe speaking! UK specifically, and you all know what stingy bastards we are when it comes to tipping!

It's a vicious cycle: we get shit service, we don't tip. Which is the cause and which is the effect?

Personally, if I get good service, I'll leave a tip. Waiting staff, taxis, hairdressers. If I get shit service, I won't tip - why should I? I've never had a job that relied on tips, and I still want to do my job well! Plus, all our waiting staff get minimum wage in this country BEFORE tips - it's illegal not to.

If a service charge is automatically added to the bill, it is usually optional. And only once have I had to ask them to take it off (although I couldn't say it to the surly waitress' face - I chickened out and asked to speak to the manager!). We Brits are so reluctant to complain (about anything!) that I do suspect that a lot of sneaky restaurants (particularly tourist traps in central London) are getting away with poor standards. But surely you Americans would have no trouble asking for an optional gratuity to be removed? One thing I have always loved about the USA is how forthright you all are: you know what you deserve and you speak up if you don't get it!

Farvana said...

I say build the tips into the price for one simple reason: high tips don't add much incentive to work harder.

Tips aren't regular. There's many reasons a customer might be unsatisfied with the restaurant besides the service (cleanliness, atmosphere, and, of course, the food), things which a waiter doesn't have control over. Without a consistent reward scheme, there isn't a good reason for hard work beyond the work itself.

The cooks get paid a decent wage and are expected to perform to a certain level; the busboys are paid a decent wage and are expected to perform at a certain level. Waiters should be paid a decent wage and should be expected to perform at a certain level. I'd much rather have a shitty waiter get fired than try to tell him he's a shitty waiter via a poor tip, especially since that waiter may assume he's doing a decent job and I'm just a non-tipping dick.

Hilari said...

I've heard of tips being pooled, but I don't know that I agree that it is something many or most restaurants do. None of the server friends I've had have worked at restaurants where tips were pooled (although some have worked in places where they had to tip out to busboys or bartenders). If that was the standard, though, I would say that automatically adding a tip in to the check would be preferable.

Assuming the standard is for the individual server to keep his/her own tips, I don't particularly like the idea of having them built in. I tend to be a pretty generous tipper, (in the last 5 years, I tipped a guy 15% once for really terrible service, other than that, I look at 20% as a minimum), and I tend to eat at the same places on a regular basis, so it is not uncommon for me to establish a relationship with a server that I encounter regularly. It works out beneficially for the both of us, I know that I will get good service, and they know that they will get a good tip. I worry that that sort of relationship would suffer if tips were standardized.

Anonymous said...

I think tipping has gotten out of hand. I have always been considered a generous tipper but I am becoming more and more reluctant to tip well due to bad business practices by both servers and restaurant owners. Tip pooling, mandatory gratuities, owners skimming tips from staff, etc, has made me a proponent of a more European style of dining. I recently went out for a mediocre buffet meal with 8 friends where our group was finished in about 45 min, the only thing our waitress did was bring drinks once at the beginning of the meal, we had to ask a bus person to get her to come back to take our coffee order. This person received over $50 in mandatory gratuity. That is more than half a days wage for an average person, plus the server makes their hourly wage on top of that tip (multiply by the amount of tables in her section). I think this is ridiculous, pay a server a decent wage with benefits and have the price reflected in the meal cost, no tipping at all. I receive no tips in my profession in fact would be fired for taking any gifts or gratuities from customers. Also remember that most people do not claim tips earned on their income tax so they are also getting away with paying less taxes than the average person. Let's get real and get fair...make tipping a thing of the past.

wubblesful said...

Just be upfront about what you are charging the customer and stop with all this sneaky stuff. You think the customer needs to pay more, charge them more in a straight forward way and leave the tipping for people who want to say thank-you for exceptional service. It's the sneaky, manipulative nature of this mandatory tipping that is irking people. People don't want to feel like they aren't being dealt with in a straight forward way.