Rants

Banning Tipping is the New Organic – Part Two

May 1, 2016
banning tipping is the new organic part two

Banning Tipping is the New Organic – Part Two

The lowest paying jobs in restaurants, as in any business, are usually the ones requiring the least experience, education and skills.  Notwithstanding that dishwashers are actually the linchpin of every restaurant (no other employee can do his or her job without a steady supply of clean pots or polished silverware), dishwashers are usually the lowest paid restaurant employees.  Many of the dishwashers we have hired at our restaurants are otherwise pretty much unemployable because they are teenagers, cannot speak English, have no work experience, have little education and/or have no marketable skills.  We start a dishwasher at minimum wage, but we also help them with their English or their homework, feed them (and their families), help to integrate them into their community and society at large, and try to teach them marketable and transferable kitchen skills.  Everyone is incorporated into our restaurant family, and we treat all our employees with respect, consideration and decency.  Sometimes a motivated and ambitious dishwasher moves from the “pit” to cooking on the line, with a concomitant increase in pay.  One dishwasher I hired as a high school student, and another who was a recent immigrant with extremely limited English, both later went on to culinary school and then returned to work on the line as cooks after graduating.  We are equally pleased when one of our dishwashers decides to stay in school or go to school so that they never have to wash dishes or work in a restaurant again.  When they were teenagers, each of my children worked as a dishwasher at one of our restaurants and, thankfully, not one of them wants to go into the business.

Is it wrong to have a hierarchical structure of remuneration based on experience, education and skills?  Or is it just wrong in the restaurant industry?  Assuming that we need to lessen the income disparity between front of house and back of house restaurant employees, which is begging the question as far as I’m concerned (see my series If You Can’t Stand the Heat, Get Out of the Kitchen), how can that be achieved?  Here are some possible solutions as I see it:

  1. Increase the minimum wage to a “living wage” (variously calculated to be somewhere in the neighbourhood of $18/hour and, in the best of all possible worlds, tied to the Consumer Price Index). Good luck with that.  From where I sit, I can already hear the screams of outrage coming from the future.  Let’s talk again in twenty years when we’re still waiting for a politically-mandated living wage to happen.  Besides, a living wage doesn’t address income disparity between the FOH and the BOH anyway, not unless tipping is also banned.  To be clear, as an employer, any rise in the minimum wage might be a problem for me.  As a decent human being, however, I am all in favour.  But it’s still not gonna happen any time soon.
  1. Increase cooks’ wages out of restaurant profits. Ha!  First of all, according to Restaurants Canada, the average profit for an Ontario restaurant is 3%, and let’s hope the economy doesn’t go in the crapper like it has been doing a lot lately.  So, good luck convincing any restaurateur to part with any portion of what is already a measly return.  Secondly, good luck making it mandatory.  Thirdly, good luck enforcing it.
  1. Increase prices and/or “find efficiencies” (code for reducing expenses by cutting staff, reducing portion size, using lesser quality food etc.), and pass the increase/savings on to the culinary team in the form of higher wages. Again, this is what restaurateurs do ALL THE TIME anyway to stay afloat.  Escalating expenses (the rise in the cost of gas, food, liquor, electricity, bank fees, payroll taxes, and so on) are nothing new to restaurateurs.  Since the margin in the restaurant business is so small, the only answer is to increase prices and/or find efficiencies.  But, the more you increase prices and the more you find efficiencies, the more your customers will notice and, possibly, eat out less frequently or elsewhere.
  1. Ban tipping and increase prices accordingly, using the increase to lessen wage disparity between FOH and BOH. Pay all staff a standardized, all-inclusive wage depending upon position, seniority and merit.  Receive global recognition and praise.  Start a movement that will forever be associated with your name.   Singlehandedly and instantly end racism, classism and sexism.  And, INCREASE PROFITABILITY!!!

Which one would you choose?

Set out below is what I think are the upsides and the downsides of banning tipping in restaurants for each stakeholder: server, cook, restaurateur and customer.

Server

From a server’s perspective there are a number of advantages to the no tipping model.  Firstly, there is certainty of wages: whether the restaurant is busy or slow, the server will earn an expected amount based upon an increased hourly wage rather than a tip-dependent one.  Consequently, there is no disadvantage to working lunch over dinner, or Saturday brunch instead of Saturday night.  An increased hourly wage also translates to increased unemployment insurance when the server is between jobs, increased workers’ compensation if the server is injured on the job, and greater damages if the server’s employment is terminated.  Some have argued that dispensing with tips increases a server’s sense of self-respect as he or she can now regard himself or herself as a “hospitality professional”.  That’s just lipstick on a pig; a server remains at the beck and call of a customer no matter what the server is paid, or calls himself or herself.  Some people are great restaurant customers and some people aren’t, banning tipping won’t change that.

Even if there are any other upsides to servers of the no tipping model, all the upsides multiplied together with whipped cream on top don’t make up for the fact that I am convinced servers will make less money under this system.  Not only that, but an increased hourly wage means more tax, and who doesn’t love that?  Additionally, if, as an employer, you could have ten people making $10/hour or ten people making $20/hour, which would you choose?  Since banning tipping means increasing wages for servers, I guarantee that one of the consequences of increased wages will mean shorter shifts, less serving staff on the floor, each of whom will be working harder than before and will be cut loose sooner when business trails off, making even more work for the servers remaining.  Servers are as humanitarian as anyone else, but I don’t think you’ll find too many who are sympathetic to banning tipping as a means of reducing a wage disparity with the kitchen staff.  Aside from tipping out to the kitchen, as is the practice in many restaurants, most servers won’t see it as their responsibility to subsidize what they regard as management’s responsibility.

As many people are aware, particularly those in the restaurant business, there are a lot of unscrupulous restaurateurs.  Perhaps this is due to the thin margins, the constant threat of business failure, the fear of one negative Trip Advisor review, unspeakable stress, or just being a shithead to start with.  When I was a teenager I worked as the cashier at a casual restaurant.  The middle-aged manager (who I always rebuffed when he asked me on a date) warned me that if my deposit were ever short that I would “have to make it up to him” in other ways (nudge nudge wink wink).  When I complained to the owner of the restaurant, I was fired.  When I complained about being fired to the owner’s wife, I was reinstated and the manager was fired.  The ex-manager physically stalked me for months afterwards and, I am certain, was the perpetrator of the many obscene telephone calls I received at home.  At one restaurant where I worked as a busperson while in high school, I was fired for refusing to “recycle” the ketchup in those little paper cups which I cleared from tables.  Who knows what people dunked in those things?  This was back in the day when you could smoke in restaurants and the little ketchup cups were often used as convenient ashtrays.  At another restaurant, a customer on the street-side patio built up a hefty tab and then took a runner.  After unsuccessfully chasing the guy for a couple of city blocks, the owner of the restaurant told me that I would have to foot the bill.  When I refused, I was fired.  Anyone who has worked in a restaurant has similar (and worse) horror stories.  If I were a server, I would much rather take my chances with a restaurant customer than managers and owners like the ones described above.  And if some employers require their staff to work at least part of the day off the clock, I wouldn’t trust that person to be responsible for determining my hourly wage or my revenue share.  As for sexual harassment, I would bet that most of the offenders are superiors (for lack of a better word) rather than customers, and I wouldn’t want those creeps determining what I should be paid.

Cook

The upside to cooks from banning tipping and increasing wages is, of course, an increased wage.  What cook wouldn’t want that?  Well, just as with servers, I predict that cooks earning more per hour will see reduced shifts and reduced staff.  In addition, increasing wages for cooks won’t tackle the widespread and appalling practice of expecting cooks to put in some time off the clock.

Restaurateur

What restaurateur in his or her right mind wouldn’t want fawning press adulation?  What restaurateur wouldn’t want to be regarded as a righteous defender of the downtrodden and the saviour of, not only the restaurant industry, but humanity itself?  What restaurateur wouldn’t want to get their paws on a cash flow of up to 20% of restaurant revenue?  Danny Meyer himself acknowledged that the first full month of banning tipping and increasing prices resulted in his restaurant’s busiest, more lucrative month ever.  But if the purpose of the price increase is to distribute profits more fairly between the FOH and the BOH, how is the restaurant itself more profitable?  In Meyer’s own words, doing the right thing is the most profitable thing.  But what came first, the chicken or the egg?  Does it matter?  In my view yes it does, at least when you set yourself up as a champion of worker rights.

Of course, the greatest benefit to restaurateurs from banning tipping and increasing prices is the unfettered access to what would otherwise be the tip pool.  Margins in the restaurant business are so small and accountability so opaque that I have no doubt many restaurateurs will see the increased revenue, or at least some part of it, as a personal slush fund.  Can we seriously expect that restaurateurs and managers who sexually harass their staff, or require them to work at least some part of the day for free, are really going to be fair about revenue sharing?

Are customers truly relieved that they no longer have to do drunk math?  Are customers really happier when they pay more and have less agency?  As I understand it, many customers are uncomfortable with the no tipping model at some restaurants and leave a tip anyway.  So what’s the point?  And where does that money go?

It’s not all sunshine and roses for restaurateurs who institute a no tipping policy.  Increased revenues means more tax, bigger credit card fees and, for restaurateurs’ whose occupancy cost is calculated as a percentage of revenue, increased rental payments.  That’s not even considering the increased administrative costs, increased payroll taxes, potentially greater threat of employee defalcation, and difficulty in hiring and retaining FOH staff.  I just don’t believe that the best servers in town are going to be satisfied with the no tipping model.

Customer

One of the arguments for banning tipping is that it makes a customer’s life easer: no more difficult calculations after a night of drunken debauchery, and the end of awkward, icky and pressure-stricken speculation about how much or how little to tip.  This is just dumb.  If you can’t calculate 10%, 15% or 20% in your head, then you have no business going out to dinner, or having a job that pays for that dinner, because you’re clearly not too bright.  I want your job as it obviously pays you enough to dine out, but does not involve pressure-filled scenarios or even simple math.  I find it awkward to pass the guy sitting on the sidewalk outside of Starbucks but instead of banning Starbucks I give the guy a buck.

Another argument for banning tipping is that it makes a customer’s budgeting easier.  I’m not buying this one either.  Most people don’t know what they are going to order for dinner when they go out a week from now, or how much it is going to cost, so what difference does some very simple, grade school math make?

Some have suggested that by removing the ability to “punish” poor service with a bad tip, dissatisfied customers will, instead, approach management with a complaint.  Anyone who has been in the restaurant business for five seconds knows that is baloney.  Either you are the sort of customer who speaks directly to a manager with a complaint or you are the sort of customer who rages anonymously on Trip Advisor, and banning tipping isn’t going to change that.  If, as I expect, that banning tipping and increasing wages will mean not only less FOH staff but also less experienced FOH staff, the likely result will be increased complaints to the manager and multiplied customer rants on Yelp.

It has also been suggested that customers will feel better about themselves knowing that the increased price of their dinner ensures that everyone at the restaurant is getting a decent salary.  This argument is so bogus I don’t even know where to begin.  Most people don’t know and don’t care that their clothes were manufactured in foreign sweatshops and that their dinner lived an ignominious life before it ended up on a plate.  Most people just want cheap eats and cheap clothes.  I’m not saying that that’s right, because it’s not, but that’s just the way it is.  I suspect that tip-included pricing is motivated by the bottom line, and not an actual or perceived bottomless heart or sense of social justice on the part of the restaurateur or the customer.

Banning tipping removes, at least in part, a customer’s ability to pay based on his or her determination of value.  Unless a customer can opt out of tip-included pricing, it means that the customer will pay more even when service is abominable.  From a customer’s point of view, it is irrelevant whether he or she pays $100 for dinner plus a $20 tip, or $120 with the “hospitality included”.  Except that I don’t see how banning tipping and adding a 20% service fee or administrative fee, or increasing prices by 20%, means that all employees, including the BOH, get a raise.  In order to keep servers whole AND increase cooks’ wages, the service fee, administrative fee or prices would have to increase by MORE than 20%.  At Meyer’s restaurants, the prices went up on some items by 35%.  At the end of the day, at Meyer’s restaurants and at mine, the customer pays not just for the food on their plate but also every single one of the restaurant’s other expenses like payroll, rent, electricity, taxes, bank charges, linen costs, licensing fees, accounting and legal expenses, etc.  How management determines an appropriate charge for the food and services the restaurant provides, and how management divvies up what is paid to employees, landlords, suppliers and so, are business decisions (subject to applicable law) not social justice decisions.

When gas prices soared a couple of years ago, my linen supplier added a “gas surcharge” to my invoice.  This was in addition to the “environmental fee” and the “delivery fee” and the “inventory fee”, all on top of what it costs to wash the tablecloths.  I told the owner of the linen company that I really wasn’t interested in his accounting practices, but that if he truly wanted to be transparent, he should also include his “profit” as a line item on my invoice.  Similarly, I don’t believe that my customers care about my restaurant’s internal accounting practices or the justifications for them.  And I’m pretty sure they wouldn’t care if my employees got a raise as long their own pocketbook wasn’t affected.  Banning tipping, increasing prices, altering employee wage structure and then calling it wage fairness is just sexing up what amounts to accounting.

Tipping is an archaic practice, but that doesn’t necessarily mean it’s a bad thing.  Maybe Danny Meyer is right to ban tipping, and for all the right reasons, and maybe I’m the one who’s wrong; there are days when I’ve been wrong twice before breakfast.  Maybe I just have tall poppy syndrome.  I hope that’s it.  I really hope that banning tipping accomplishes everything its proponents claim it will.  But I am a realist, perhaps even a sceptic in most things.  My old business partner used to call me a “negasaurus”: an unflattering collation of downer and dinosaur.  Could be.  But I’ll take deliberate, ponderous, methodical dinosaur any day over mythical, imaginary and illusory unicorn.  If dinosaurs couldn’t outrun glaciers they likely couldn’t catch up with a bandwagon either.  So I’m going to let that tip banning bandwagon pass me by this time.  I’ll keep observing, researching and considering the issue.  If the bandwagon passes by again, and if it is filling up with right and righteous folk, then I may decide to climb on board.

Read Part One of  Banning Tipping is the New Organic

Listen to this playlist from Tim Moxam and make my recipe for pulled pork…

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