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Is Tipping Outdated? The Hospitality Industry Has Some Thoughts

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Let’s face it: it feels a little embarrassing to you pull out your phone at the restaurant and calculate the percentage for how much tip you should leave. But, it appears that all this anxiety about percentages at the end of the meal could soon become irrelevant. In the United States, is tipping outdated as a practice?

Tipping is a distinctive part of America’s culture. When the practice of tipping was first introduced by wealthy Americans in the late 19th century, people considered it bribery. But restaurants saw an opportunity there. They could pay servers ridiculously low wages and have the customers pay the rest.

The federal minimum wage for tipped employees is set at $2.13 per hour, so it’s no wonder that servers across the country rely on tips to make up the majority of their income. But here’s the thing: more and more restaurants are moving away from a tip-based model for servers. Waiters are now being paid a higher hourly wage and restaurants are raising prices on dishes to cover the costs.

The no-tip system is considered either a very good thing for employees or a mere fantasy, depending on who you ask.

Could tipping become a thing of the past? Let’s explore.

Consumers Are Concerned That a No-Tip Policy Will Affect the Quality of the Service They Get

Tipping is supposed to encourage good service. But, does it really? Many argue that tipping doesn’t encourage hard work. The factors that determine the tip’s size have almost nothing to do with the quality of service. You might tip more if the waiters tell you their names, draw smiley faces on your check, or develop a personal rapport. A large group of people with a considerable bill will leave a disproportionately small tip. Cash tips are smaller than credit card ones. The list goes on.

According to one study, quality of service has an insignificant impact on the size of the tip, accounting for between 1 and 5% of a customer’s overall satisfaction. It is, therefore, fairly obvious that letting the customer reward good service does not encourage hard work, considering the size of the tip has almost always nothing to do with the service received. Many restaurant owners believe that by giving servers a decent minimum wage, rather than having customers control their salaries, hospitality will change and for the better.

A “Tipping Outdated” Mindset Promotes Unfairness

Not only does tipping appear to have almost no impact on the quality of service, but it also creates disparity among workers. Most of the time, the cooks don’t receive a share of the tips. This practice only deepens the disparity of compensation between restaurant workers. Implementing a no-tip system is believed to make compensation fair among all the employees since they all play a part in the customer’s satisfaction.

Getting Rid of Tips Means That You Will Pay Less

One of the first restaurants to eliminate tipping at their locations in certain cities is Joe’s Crab Shack. Servers at Joe’s Crab Shack will now be paid a wage of $14 per hour. This additional expense will be covered by increasing the food’s price by 12 to 15%. Considering that most customers leave a 20% tip, this new policy will not only make servers’ life better but will also make your nights out cheaper.

The Effects of a No-Tip System

Although paying servers a decent wage should be normal, not everybody is happy with the results. Restaurant owners who implemented a no-tip system complained that servers started to leave because their minimum wages were less than their tipped wages.

Part of the problem is that restaurant owners need to raise prices enough to make up for the decrease in income that some of the tipped workers were seeing. But, they are afraid that by raising prices to 30% or 40% they will lose customers. It’s a vicious cycle, and many don’t see a way out of it – don’t raise prices enough, and you will lose your staff; raise it too much and you will lose customers.

So is tipping outdated? All we know for now is that the no-tip system is still in its experimental phase. Many restaurant owners don’t know how employees and customers will react to it. But one thing is clear: a server’s pay should not be determined by whether or not you have room for dessert.

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