Are you saying tips are not taxed?

It is not that tips per se are not taxed as much as unreported income is not taxed. Whether it is servers, barbers, newspaper carriers, etc. or people paid cash for their services.

I enjoyed this Freakonomics podcast on tipping: Freakonomics » Should Tipping Be Banned? A New Freakonomics Radio Podcast (http://freakonomics.com/2013/06/03/should-tipping-be-banned-a-new-freakonomics-radio-podcast/)

I have yet to see though how fine dining establishments in countries such as France are able to maintain the fine dining experience without the tipping surcharge. One of the things that I liked about travelling in Europe was the fact that the posted price was the price paid, versus the posted price here reflecting what the owner keeps (taxes are included in the prices posted).

Right, the argument is laughable.

Like really? Acting like a server @ Chilis versus a legit steakhouse would make the same money under a 'no tipping' policy is just weak.

That is like saying someone working at a Ferarri service shop would make the same as someone at a Honda service shop.

The argument isn't laughable for the excellent servers who would be making a half to a quarter what they make now. if a widespread motion took place to go to flat wages, the specialized service you see at many places would disappear overnight.

So none of you think that the higher-end places would pay more (maybe not as much as the servers are currently making per hour with tips) to keep better servers if tipping started to go away? How do they retain good waitstaff in most of Europe where you don't tip, I wonder - higher menu prices to pay servers higher wages or something else I can't think of?

I think it's realistic that any place that switches to a no tipping policy adjusts prices or just adds a 15% surcharge on the total. I'm OK with that, as it would make it more up front what you're paying. Also, I tend to tip over 20% so would probably save money. So depending on the company, a more expensive place would be able to pay wait staff a premium to get quality folks.

Of course, I don't see every place going to this model. I would like to see something like this in place at the lower end places where the tips/wage model is abused and the wait staff don't even always make minimum wage.

So are you some kind of wizard that knows 'excellent servers' would be underpaid under a salary format?

You do realize that this would make the restaurant service industry like basically every other industry right? If I work in an office and I am doing better than my co workers, I get paid more. This is how jobs work. Why are you assuming restaurants would be excluded from this not-so-crazy concept?

No Tipping Means More Great Restaurants - Bloomberg View (http://www.bloombergview.com/articles/2015-10-15/u-s-restaurant-tipping-doesn-t-mean-better-quality-restaurants)


Service charges are similarly included in the check in France (15 percent is mandatory), Belgium and Hong Kong. A customer only adds more if the service has been exceptional. Many French waiters expect that as a matter of course -- not because they're as badly paid as their U.S. colleagues (they make about 1,500 euros [$1,700] per month, which is about average for Europe) but because they're French. In Belgium and Denmark, rounding off the check is mainly enough, and in Hong Kong, waiters only accept tips because they've been spoiled by the remnants of the British colonial culture.

This seems to imply tipping doesn't get completely eliminated. It just becomes a reward for service, rather than an expectation for the customer to carry the burden of paying the wait staff.

Jerry, or anyone with server experience know of any server where the owner of the place supplemented a server failing to meet at least the minimum wage that is granted to other industries?

Jerry, have you ever known any server where the owner of the place supplemented a server failing to meet at least the minimum wage that is granted to other industries?

No, not personally. But I have known folks who've been screwed over by this. I know one person in particularly, who hopped at a certain restaurant chain... they would routinely schedule her to come in, but then if slow, would have her sitting off the clock waiting to work, and then when she did work, she'd pull in as little as $4-5 an hour on average. But, as a single mother, she was afraid to file a complaint and had limited work options.

Right, the argument is laughable.

Like really? Acting like a server @ Chilis versus a legit steakhouse would make the same money under a 'no tipping' policy is just weak.

That is like saying someone working at a Ferarri service shop would make the same as someone at a Honda service shop.

Since that was obviously directed at my comments, let me just say that I never said that. I meant that the approach might make sense at a place like Chili's, where the servers are likely more transient and - no offense to Chili's servers - less likely to be professional in the truest sense of the word. People in places like those could conceivably benefit from a $15/hr flat rate, and Chili's could probably afford to give it to them by raising prices a bit.

But a place where servers are making $75K a year (and more) could likely not afford to have 25-50 people on staff making $50K to $75K a year (or more, as plenty of them do). So what do you pay them? Eighteen bucks an hour? Twenty? You'll lose them. You'll lose them to other states, or other industries. Your service will suffer, and your ticket prices will suffer too. Your market share will suffer. Your gross revenue will suffer. Your penetration will go down for items like appetizers, fine wine, premium spirits, desserts. Suggestive selling goes out the window when there is no incentive. It's a loser for the restaurant, a loser for the best professional servers, and I believe that it is a loser for the customer.

Read my post again. I never suggested the thing that you are accusing of being "weak."

But a place where servers are making $75K a year (and more) could likely not afford to have 25-50 people on staff making $50K to $75K a year (or more, as plenty of them do). So what do you pay them? Eighteen bucks an hour? Twenty? You'll lose them. You'll lose them to other states, or other industries. Your service will suffer, and your ticket prices will suffer too. Your market share will suffer. Your gross revenue will suffer. Your penetration will go down for items like appetizers, fine wine, premium spirits, desserts. Suggestive selling goes out the window when there is no incentive. It's a loser for the restaurant, a loser for the best professional servers, and I believe that it is a loser for the customer.

I'm not sure I agree. If a server is making 75k, then that is based on a tip model of 15-20% (the average tip amount - although sometimes higher). So if the restaurant raises prices by 15% or adds a surcharge, then that increase should equate to the 75k in pay. Of course the waiter will lose out if they've been under reporting taxes, but the consistency of the increase should offset that concern.

And it's not like taxes will go away completely. As that article I linked mentioned, people still tax for exceptional service. It may just not be 15-20%.

I just find it interesting that the entire argument is based upon the theoretical event of the server in an upscale restaurant being underpaid. My post in #67 applies to this.


Since that was obviously directed at my comments, let me just say that I never said that. I meant that the approach might make sense at a place like Chili's, where the servers are likely more transient and - no offense to Chili's servers - less likely to be professional in the truest sense of the word. People in places like those could conceivably benefit from a $15/hr flat rate, and Chili's could probably afford to give it to them by raising prices a bit.

But a place where servers are making $75K a year (and more) could likely not afford to have 25-50 people on staff making $50K to $75K a year (or more, as plenty of them do). So what do you pay them? Eighteen bucks an hour? Twenty? You'll lose them. You'll lose them to other states, or other industries. Your service will suffer, and your ticket prices will suffer too. Your market share will suffer. Your gross revenue will suffer. Your penetration will go down for items like appetizers, fine wine, premium spirits, desserts. Suggestive selling goes out the window when there is no incentive. It's a loser for the restaurant, a loser for the best professional servers, and I believe that it is a loser for the customer.

Read my post again. I never suggested the thing that you are accusing of being "weak."



I not only think it will benefit servers, even excellent ones. I think it will benefit the restaurants overall. To refute your last line:

1. You will be naturally weeding out poor performers (like any job in another industry)
2. You will encouraging patrons to actually voice displeasure/concern (because they just paid a forced higher menu price than current), therefore improving brand image and creating a platform for goal/expectation setting.
3. You can easily reward excelling servers by offering bonuses and raises whilst being transparent about it and not relying on strangers to notice their extra effort.

All of these things are how the job market works everywhere else. The idea of servers not caring will quickly go out the window when you fire them for doing poorly. If I screw up at my job and customers aren't happy, I don't get to keep my job. These same forces will occur naturally.

These are, more or less, the various types of servers in the OKC high-end restaurant scene, how much they make, how much they work, and what percentage of the server-staff they occupy:

Server 1. Very well-established server with many long-standing call parties.
---Makes $70k+/year. Works ~35 hours per week, ~48 weeks/year. Effectively $42+/hour. 10% to 20% of server-staff.

Server 2. Tenured and established server with some call parties.
---Makes $52.5k. Works ~30 hours per week, ~46 weeks/year. Effectively $38/hour. 25% to 35% of a staff.

Server 3. Tenured server, working part-time.
---Makes $25k to $40k/year. Works ~18 to ~24 hours a week, ~44 to ~46 weeks/year. ~$30/hour to $35/hour. 50% to 60% of staff.

Server 4. New server, working full-time
---Makes $40k to $45/year. Works ~30 hours per week. 46-48 weeks/year. ~$25/hour to $32/hour. 5% to 10% of staff.



Server 5. College kid working part time.
In Norman this is the most common denominator, especially in the chains. They aren't in it for the long haul, and there is a lot of churn with the kids, though there were a few who would be there the entire time they were in school, especially when they were local. I remember Mike Armstrong worked for Bellinis the entire time he was at OU, even when the Norman location closed I think I remember him being at Watterford as well.

Server 5. College kid working part time.
In Norman this is the most common denominator, especially in the chains. They aren't in it for the long haul, and there is a lot of churn with the kids, though there were a few who would be there the entire time they were in school, especially when they were local. I remember Mike Armstrong worked for Bellinis the entire time he was at OU, even when the Norman location closed I think I remember him being at Watterford as well.

I was specifically talking about high-end restaurants. Most "college-kids" who are servers are not polished or knowledgeable enough to get a position at a high-end restaurant. That's not to say it never happens, but it's not common. Now, a lot of servers in their mid-20s find their way back to college. Very few people really stay in the industry because they love being a server. They stay there because the money is good, the flexibility is amazing, and the responsibility is null…It's just dinner. It's also a chance to work with people instead of paper.

And there are also a decent amount of quality servers who do it for extra cash. They're really good at what they do, but they only come in 2 or 3 nights a week because they know they can average a quick $175 - $250. Are high-end restaurants going to pay these servers who work seldom, $35/hour and be okay with those servers more or less dictating their own schedule? Because right now those positions work and it's a very symbiotic relationship.

...

But a place where servers are making $75K a year (and more) could likely not afford to have 25-50 people on staff making $50K to $75K a year (or more, as plenty of them do). So what do you pay them? Eighteen bucks an hour? Twenty? You'll lose them. You'll lose them to other states, or other industries. Your service will suffer, and your ticket prices will suffer too. Your market share will suffer. Your gross revenue will suffer. Your penetration will go down for items like appetizers, fine wine, premium spirits, desserts. Suggestive selling goes out the window when there is no incentive. It's a loser for the restaurant, a loser for the best professional servers, and I believe that it is a loser for the customer....


Fine, ban tipping, let the high-end restaurants die out, let servers go to other industries, I'm sure the "free market" here in Murka will set things straight soon enough...

...All of these things are how the job market works everywhere else. The idea of servers not caring will quickly go out the window when you fire them for doing poorly. If I screw up at my job and customers aren't happy, I don't get to keep my job. These same forces will occur naturally.

The problem with this theory, of course, is that it is hard enough to attract workers to the industry as-is, and the current opportunity to make lots of money is well-known. Honestly, it's a job that not too many people are going to want to do at $15/hr or even $20/hr as long as other options exist. And the ones who you DO attract for a steady but uninspiring paycheck will be...well...uninspired. Again, order-takers and professional servers are two VERY different things.

I feel like some in this thread are taking criticisms of wage-based and/or non-tipping systems as a defense for the tip-based system based solely in blind support for a tipped based system.

In reality, nobody cares what the system is as long as it functions well for EVERYONE involved, and in high-end dining, things in this country do in fact function very well. The criticism is that changes in the macro-environment are going to affect the micro-environments and that needs to be vetted before we go blindly into this revolution.

I'm going to stress this one major point again, because I feel like nobody has acknowledged it:

We value certain things in this country, and time is absolutely one of them. Eating in this country is function over form. We don't prefer to sit around a table with no food in front of us chatting and leisurely going from course to course. We have TV shows to catch and work to finish up and kids to get to bed. We also value profit. And changing FOH labor from an afterthought to a significant expense will predictably dictate that restaurants operate with less FOH staff on a nightly basis. This means that diners can expect an increase in dining times, whether they like it or not. 20 minutes a meal 5x a week is ~7 extra hours a month in a restaurant.

These are the kinds of changes that need to be acknowledged. We say "Well the French…" but forget that "…the French also…".

...
I'm going to stress this one major point again, because I feel like nobody has acknowledged it:

We value certain things in this country, and time is absolutely one of them. Eating in this country is function over form. We don't prefer to sit around a table with no food in front of us chatting and leisurely going from course to course. We have TV shows to catch and work to finish up and kids to get to bed. We also value profit. ...

Don't lump me in with that "we", along with *lots* of other people... There are tons of folks that *do* prefer to eat leisurely and don't put profit ahead of everything else. We also don't eat out 5x a week, and I'm not sure how much of the American population does.

Seems no tipping may not be working http://www.theatlantic.com/business/archive/2016/05/why-restaurants-walk-back-no-tipping-policies/482151/

Seems no tipping may not be working http://www.theatlantic.com/business/archive/2016/05/why-restaurants-walk-back-no-tipping-policies/482151/


Nevertheless, the service-included model is not universally popular among workers. In other evidence of growing pains, some discontent was reported in March among servers at Roman’s, a popular property in the mini-empire of the Brooklyn restaurant owner Andrew Tarlow, who followed Meyer’s lead in December by announcing that he would seek to go gratuity-free by the end of 2016. And, in San Francisco, Thad Vogler reverted back to accepting gratuity in January after experiencing high staff turnover among the formerly-tipped when he eliminated gratuity the previous year. “We couldn't compete in the market,” he told CNN. “We were faced with the options of raising prices more or bailing out.”

This is what I would worry about for American restaurants overall. If the entire system eventually overhauls, obviously you don't have people going from a non-gratuity restaurant to a gratuity-based restaurant. Many career servers or people who don't have much of a skillset outside of serving will certainly stay, but there are many who will opt for careers where climbing the latter is far more lucrative.

Assume a server is making $45/year. No-grat model comes in, pay gets cut to $43/year...not so bad, and perhaps they get a stray tip here or there and stays pretty close anyway. But what else happens: They have to work with the restaurant on their schedule and they can't afford to miss hours because that's the only way they get paid. They probably end up working more to make a bit less money.

At this point, the server, who has other skills, potentially even a degree says: I'm going to go work at paycom for $34k/year so that I can move up and start making $55k/year in 2 to 3 years.

At this point, the server, who has other skills, potentially even a degree says: I'm going to go work at paycom for $34k/year so that I can move up and start making $55k/year in 2 to 3 years.

The good thing about this, is it makes the economy more efficient, in that it encourages people that could do harder/skilled jobs to move into those positions and frees up the lower-skilled positions for people that are not qualified for the higher-skilled positions.