Considering Whether to Eliminate Tipping at Your Restaurant
Last week at the Restaurant Finance and Development Conference in Las Vegas, a panel of restaurateurs discussed the concept of no tipping at restaurants.The panelists discussed the main benefit of doing away with tipping – that it equalizes pay among restaurant staff. When tipping is permitted, front of house staff like servers and bartenders can often earn significantly more than the members of the kitchen staff. This inequality can cause resentment by kitchen staff who feel that their pay does not reflect their hard work, which in turn results in higher turn over rates. While a simple solution to this problem might seem to be simply raising the prices of food at the restaurant, price increases consequently cause tip increases and thus, the inequality remains. By eliminating tipping, restaurants can set a price for meals and then allocate pay to their staff as they see fair. In doing so, restaurants may either raise prices of meals or alternatively add a predetermined gratuity charge to the bottom of a customer’s bill. Of course, the down side of a non-gratuity policy is that servers generally benefit from a model that pays them lower wages with the ability to earn tips.
In considering whether the implementation of a no-tipping system is a wise move for a particular restaurant, the panelists noted the importance of knowing your customer. Some customers place value on being able to designate an amount of their choice for a tip and could resent seeing a predetermined gratuity amount added onto their bill. Other customers, out of habit, may be put off by seeing higher prices on the menu that have been increased to account for hospitality. As things currently stand, non-gratuity policies are not the norm quite yet but have proven to be successful for some restaurants.
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