I Abolished Tipping at My Restaurant, and Our Service Got Better

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Aug. 14 2013 2:23 PM

What Happens When You Abolish Tipping

I got rid of gratuities at my restaurant, and our service only got better.

Waiter in a restaurant.
In restaurants where gratuity is built into the check and tips are banned, waiters still have an incentive to give good service—they want to keep their jobs, and they want raises.

Photo by Dorling Kindersley/Thinkstock

For more than six years, I ran a restaurant without tips.

A couple of years after opening the Linkery restaurant in San Diego, the team and I adopted a policy of adding to each dining-in check a service charge of 18 percent—a little less than our tip average had been. We also refused to accept any payment beyond that service charge. (If someone surreptitiously slipped a twenty or two under a water glass, we donated it to a rotating “charity of the month,” usually selected by a staff member or patron.)

We made this change because we wanted to distribute the “tip” revenue to our cooks as well as our servers, making our pay more equitable. Servers and cooks typically made similar base wages—and minimum wage was the same for both jobs—but servers kept all the tips, which could often mean they were taking home three times what the cooks made, or more. In California at that time, it was illegal to distribute any tip money to cooks. (Recent court rulings in the Western U.S. have loosened that restriction somewhat). By replacing tipping with a service charge, we were legally able to redirect about a quarter of that revenue to the kitchen, which reduced the income disparity and helped foster unity on our team.

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We had considered just incorporating that charge into the cost of each menu item, but we decided that it was easier for consumers to understand our pricing if we kept it analogous to that of a tipped restaurant. In a similar vein, we applied the service charge only to dining-in checks, since tipping is not yet a firmly established social norm for takeout. We used this service charge as a substitute for tipping from 2006 until we closed the restaurant this year to move to San Francisco.

When we switched from tipping to a service charge, our food improved, probably because our cooks were being paid more and didn't feel taken for granted. In turn, business improved, and within a couple of months, our server team was making more money than it had under the tipped system. The quality of our service also improved. In my observation, however, that wasn't mainly because the servers were making more money (although that helped, too). Instead, our service improved principally because eliminating tips makes it easier to provide good service.

It’s easy to understand why this is. Before I started working in hospitality, I worked in the tech industry, making fancy software for television set-top boxes. I was part of a skilled team in a challenging field, and we were expected to do our best work. Our compensation system followed two basic patterns. First, we negotiated our pay rarely, typically only at the beginning of a project (for freelancers) or once or twice a year (for salaried workers). We weren’t interrupted every hour or so with a trickle of payment that was supposedly based on how well were perceived to have done a recent task. Second, we were compensated by, and we negotiated with, the organization that employed us, not the consumers who benefited from our work. We didn't have to call up the end customers of our products and ask them to pay us for our work. (“Hi, Mr. Jones, I hope you've enjoyed using the auto-record feature on your cable box. You know, it took me like three weeks to write that code and I was wondering if I could get some payment for that.”)

These two principles probably apply at your work, too, if you work somewhere other than a restaurant and with your clothes on. They’re a well-established way of compensating people, in part because if you don't have to always think about money, you can focus on doing your job well. Software engineers, marriage counselors, bridge builders, you name the profession—in almost every industry, it's expected you'll be able to do your best work if you're not constantly distracted by compensation issues. Why don't we want that for restaurant servers?

I can hear your objection now: How could servers be motivated to do a good job without tips?

This is a common question, but it is also a silly question. Servers are motivated to do a good job in the same ways that everyone else is. Servers want to keep their jobs; servers want to get a raise; servers want to be successful and see themselves as professionals and take pride in their work. In any workplace, everyone is required to perform well, and tips have nothing to do with it. The next time you see your doctor, ask her if she wouldn't do better-quality work if she made minimum wage, with the rest of her income from her patients' tips. I suspect the answer will be a version of “no.”

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