Year of Upheaval for Restaurants That Ended Tipping | Hacker News Reader

Year of Upheaval for Restaurants That Ended Tipping

nytimes.com

76 pointsgrzm104 comments

> Tips are also handled differently in different states, but in New York, by law, they can be pooled and distributed only to “front of house” employees: those who work in the dining room, like waiters, bartenders and backwaiters (formerly known as busboys).

That really makes no sense to me. When I go to a restaurant, I value the food a lot more than the service. I've come back again to restaurants where I hated the service but loved the food. I've never returned to a restaurant where I loved the service but the food was so-so. So, if I had to choose, I'd be tipping the kitchen staff only.

But as a European, I don't really like the practice of tipping and the rather pushy service from waiters trying to increase the bill (and come every 5 minutes asking me if everything's alright) that comes with it. It's also so much easier to not have to think about tipping at the end of a meal.

The kitchen staff are paid much higher hourly and usually work full time. If you heard what kitchen staff say about customers you probably wouldn't want to tip them.

For example when I was a waiter we made $2.13 an hour. Kitchen staff were usually in the $10-$15 range and many of them got overtime.

Tipping is just a way for owners to increase profits by passing more cost to the customer.

Ok, in the article, they mentioned: > “There was regularly a 500 percent deficit between the back of the house and the front of the house,” said Abram Bissell, the executive chef of the Modern. “Like every kitchen in New York, we were having trouble attracting and retaining talent at that pay grade.”

and

>An experienced line cook who carries $40,000 in debt from years of culinary school earns $12 an hour, while a new server can reap three times that much.

So it was my understanding that the Kitchen staff weren't paid that well. Also, I don't really care what they say about customers as long as the food is great :) They're not customer facing anyway.

But yes I do agree, tipping is just a way for owners to increase profits by passing more costs to the customer. It's exploitative and it creates bad incentives in term of customer interactions. I don't think that the customer service in restaurants is better in the US than in countries without tipping culture but on the other hand, I've seen quite a bit of pushy obnoxious behaviors from waiters that were trying to increase their tips.

You are talking about high end restaurants in New York. Chains and smaller mom/pop restaurants and not hiring line cooks with degrees.

Servers do make much more money but sometimes having steady pay and full time benefits can even out. Being a career cook can earn high pay later and/or you can even start you're own restaurant.

Front of house can be rude and pushy in US and abroad. The one difference I've seen in the US is they are slightly more attentive but its also not really needed. The customers demand it at this point. Latin America was much much slower than US or EU. Italy had a decent balance between too little or too much attention. EU were not as friendly but it wasn't necessarily a bad thing.

This is a state-by-state thing in the US. In my state, there is no alternative minimum wage for waitstaff - they make the same wages as the kitchen staff.

The justification of tipping is that it incentivizes good service. Tipping the kitchen staff makes absolutely no sense because the pay structure isn't set up that way, and because you don't interact with them. Think about what it would mean for tipping to incentivize the quality of the food prepared for you.

It makes sense when you think about it from the perspective of a culture that is focused on image and the perception of image. With that point of view in mind, why would you prioritize those working behind the scenes?

Because it perpetuates that culture. I'd really rather not perpetuate it.

No tipping is tricky when it's not mandated, because prices always look and feel more expensive comparatively, even if it works out the same in the end. People are very impressionable to their initial sub-conscious impressions. Hence pricing like $9.99. It seems marketers have been aggressively going the other way over the last few years: do whatever it takes to minimize the sticker shock, then siphon as much as possible from the relationship.

- new car for only $149! (every two weeks)

- cheap tickets, but charge for seat-choice, blankets, bags, etc.

- collect hundreds of tiny taxes instead of one equivalent (simpler) income tax

- loss lead then recoup on servicing and insurance

- cheap plans with punitive overages

- access fee, upgrade fee, change fee introduced at the cash

I'm personally finding it more and more difficult to calculate total cost of ownership of products and services.

If your prices are advertised at 20% higher than everyone else's, I can't see this working except at the most inelastic high-end restaurants.

On the other side, it reduces cognitive overhead. For this, see unlimited plans (e.g. all you can eat, all inclusive holidays, unlimited streaming like netflix, etc) which may or may not be more expensive than paying as you go. Even bags of veg costing more than individual items in the UK is common.

It reduces the effort of making the decision, and so makes it the easiest path.

All you can eat restaurants are probably the simplest counterexample for your list.

It can remove the decision between places from "Well X is a bit less than Y but then the service is better, what's 20% of that vs 15% of ... added..." to just "It costs $X".

This transition (from a tipping system to a "service included" system) happened in France in the 70s.

I'm personally, as a French and as a customer, much more confortable with the new system, and I always a bit ill at ease when dining out in countries that still use the old system: fear of making a miscalculation, of forgetting the tip, of not giving an amount that would be satisfying for the waiter/waitress, of the money not going to the actual person who would deserve it (especially when paying with a credit card), etc.

I hate tipping for all the awkward situations that can arise, when there is confusion about the expected amount for the "average" tip. Recently I attended a dinner for which the attending group had gotten a food voucher and only had to pay the drinks. Which we did with a nice tip - for the drinks. Neither we nor the giver of the voucher had preempted, that the waiter expected a tip for the food too. Which of course is debatable, as here in Germany, service is considered to be included in the prices. So, at the end, no one was happy, without any malicious intends on our side.

Traditionally, there was little tipping here in Germany, as service is included in the prices. One would usually just round up the cents. But with growing internationalization, tips started to grow - while technically still not required, there is now a strong expectancy of some tipping, adding to the confusion about the right amount.

At least, as long the basic service is included in the posted price, one can use the tipping as a feedback instrument. Rarely, I cut the tip to zero when I was very unhappy with the service provided, while I am happy to pay a generous tip, if I thought I had been serviced very well.

Surprised it doesn't mention the somewhat unspoken agreement that at least some of tip wages go unreported by those that receive them, although, I guess that is possibly disappearing with the increase in credit card tipping perhaps?

If you really like your server, pay the bill with a credit card, but leave no tip on the card, then pay the tip with cash.

Because that facilities tax evasion?

Yes

It seems crazy to me that you're doing this as a kind of social service for the waiter or waitress, while helping to withhold owed tax revenue that could be used for other people who may be in need of social services.

Why would one prefer to pay for abstract social services extended to people who are TBD instead of rewarding a specific person to whom one is actually grateful?

Because of the law? You can still reward them as much as you want, but the law says that some of that reward has to be sent to the government. I can understand not agreeing with that law, but I can't understand justifying helping someone to breaking it in a non-emergency situation.

I don't think most people would comply with the law (at the expense of even minor personal gratification) unless there is a possibility of penalty.

Crazy? Come'on, that's a bit strong, no?

I have philosophical disagreements with a large portion but not all of my governments spending. Giving it to a waiter seems like a much better use of my money.

The tax money would be spent on nukes, not public services.

You really shouldn't believe whatever you hear: whoever told you that grossly misinformed you. Even if we assume that "spent on nukes" is hyperbole for "spent on the military", the military is 16% of the federal budget, absolutely dwarfed by the rest of the budget (which mostly consists of items fairly described as public services). And that's the federal budget alone: state taxes obviously don't even have _that_ small proportion allocated to military spending so are even more heavily predisposed to social services.

Imagine you are not required to pay taxes and everything is voluntary. Would you donate to an entity, that spends just 16% of donation on killing people?

Why do you feel different when this entity is your government?

I'm not interested in your irrelevant pet political issue: FWIW, I'm far from an advocate of reflexive govt action or high military spending. Neither of those views warrant misleading implications about tax dollars going to nukes and not social services.

The US Department of Defense has received about 19% directly and that amount doesn't include defence related spending by other departments nor does it include spending in Iraq and Afghanistan (or other overseas adventures).

16% is small? what would be considered big?

Uh, the 84% that does go to services? I should have known that correcting an inaccurate insinuation would only bring out those who are incapable of thinking without their preferred political lens.

If someone says "taxes go to social services" and is responded to with "no they go to nukes" it's entirely relevant to point out that something like 6x the spending goes to services than to the military.

For those of us who aren't desperately trying to pattern match everything into a tired old political script that they have a hope of comprehending: I didn't say anything about whether I think it _should_ be higher or lower.

Do real, flesh and blood people actually in real life wring their hands over the indeterminate effects of their miniscule mundane daily decisions?

I'm not sure I "wring my hands" over it, but when I make a decision I do tend to think about what would happen if everyone did what I'm about to do.

At one restaurant I worked at you would be flagged in the system if reported tips were less than 15% of total sales. The managers would ask you and make sure you are reporting accurately. 20% is the norm in my area.

I'm not sure about it, but I think a restaurant owner I once knew told me that the German "Finanzamt" (tax authority) calculates what the average amount of tips should be for any given restaurant based on the data they have (adjusting for location, type, prices). If you report less than that amount in income they'll go after you.

Even if these restaurants succeed, one risk is that 'no tipping' is just something that upscale restaurants in rich areas adopt because only they can afford to.

Waiters in those restaurants are already compensated much better than your average waiter on a roadway diner -- this would literally only be helping the already better off.

In a lot of European countries restaurant tips are completely superficial and not expected, because wait stuff is already properly salaried. This includes all restaurant and cafe sizes.

Yeah, but switching from a tipping to no-tipping equilibrium is probably hard.

It's hard for a no-tipping restaurant to compete because the advertised menu prices will simply be higher, and you'd need consumers to mentally adjust all prices ~13% downward.

"But some restaurants that adopted a no-tipping policy in 2016 have already revoked it: The New York restaurateurs David Chang, Tom Colicchio and Gabe Stulman all found it unworkable in the small-scale experiments they tried. “We continue to be supportive of the no-tipping movement,” Mr. Colicchio said, “but we’ve heard from our customers and team that they just aren’t ready for it yet.”"

EDIT: It looks like just tacking on a service charge doesn't necessarily work either [1]. Probably diners hate being 'forced' to tip?

These high-end restaurants are able to counteract that with their 'we're helping our waiters' newspaper PR blitz, by banding together, and because rich consumers are probably a bit less price-conscious. But I don't think that approach scales well at the lower end, where most wait staff actually work.

[1] http://www.huffingtonpost.com/entry/momofuku-nishi-tipping_u...

When I was in the US, I also had to mentally adjust for the incomplete, tax-less, pricing at places.

At the airport, I thought I could buy one last thing from my last few coins and bills of change. Quite a bummer at the register when it turned out it was actually more expensive.

In Europe, sometimes prices even list both the VAT included and excluded prices.

What's the point of even having a price sticker if what's charged is more than what it says? Are some people exempt from the sales tax added? Is it dynamic depdending on the total amount charged?

> What's the point of even having a price sticker if what's charged is more than what it says?

It's because cities can have local sales tax, but advertising campaigns are national, or at last wider than a single city. So it's impossible to advertise the final price unless you micro-target a single area.

Because of this it became the custom not to include tax on any prices.

Unlike Europe there is no sales tax on a national level in the US (except for gasoline), so there is no tax that could be listed that applies to everyone.

(And gasoline, it should be noted, is always advertised with all taxes included.)

> Are some people exempt from the sales tax added?

Yes, certain non profits do not pay sales tax. You can show the sales person a document with your tax free status and it won't be added. (You'll have to sign something attesting you will not use it for personal use, but only for the purposes of the non-profit.)

> Is it dynamic depdending on the total amount charged?

Only for some luxury items, where below a certain amount it's not considered a luxury and the tax is lower.

> It's because cities can have local sales tax, but advertising campaigns are national, or at last wider than a single city. So it's impossible to advertise the final price unless you micro-target a single area.

Yeah I was thinking about actual price tags on products or store shelves. Not billboards or tv ads etc. Doesn't explain why something would be marked $1.00 and charged $1.10 at the register (for example). I see how it could be advertised as $1.00 (+VAT) in a national ad though.

> Yes, certain non profits do not pay sales tax.

If 99% of the customers do pay the tax, wouldn't it help the customers most to mark the products and store shelves with what they will be charged?

You can generally return a product to an arbitrary store.

With a receipt from the same chain, yes. And on the receipt you always have both the with/without VAT prices listed. So when returning there should be no confusion.

Still doesn't explain what the point would be to display $1.00 on a shelf, if I will be charged $1.10 at the register with VAT.

I assume they use this excuse to show the price as the lowest possible and its not the actual reason any more.

Yeah, but even bodegas and NYC-only restaurants do this.

States have different sale tax in the US, you can't realistically know where your goods end up when manufacturing them.

Then don't print the price on at manufacture time.

In any case, why is it any more reasonable to presume or mandate that the price be the same everywhere before tax and different after tax, than it would be to presume or mandate that the price before tax be adjusted to be the same after tax? Surely sales tax is not the only cost that varies between sales channels.

That's the reason you don't put prices on products, you put a bar code. The price is usually displayed on the shelf where the product is.

Tax-free sticker price is good for making you aware how much you are paying for the product and how much goes to the tax man.

Why is this useful? You can argue for both, but to argue for only showing the tax free price is just hiding the price; It's not like you can ask for the tax to be taken off.

In the UK we have a default all included price on items for example in supermarkets, but in wholesale shops targeting businesses prices will be shown as with and without VAT as businesses can reclaim it. Makes perfect sense, reduces cognitive load, makes comparison of prices easier, means the consumer doesn't need to understand the implications of the tax system on every purchase.

There are other ways to do this.

When I buy groceries here in Norway, there is VAT: 15% on most food, 25% on most other items, and none on newspapers, magazines, and books. It is common for me to buy a mix of items at the store.

All of the prices listed on the shelf include this VAT tax, which is similar to the sales tax in the US. I can always figure out what I'm going to pay, save for guessing some prices for weighed goods.

On the reciept, there is a line telling me how much of the total bill was taxes. Therefore I can always know how much goes to the tax man.

Even if I was living in the states, it isn't so hard to figure out so long as you have calculator access and know the local sales tax amount.

The way we do it here in Brazil is better for that: the price includes the taxes, but the receipt has a field which shows how much of the total was for the municipal, state, and federal taxes.

Yeah, I can see how it would be useful just like the regular price is informative if you have a sale. But still - if I want to see one price I want to see what I'm being charged at the register.

No, it is meant for those who can deduct the tax (e.g. self employed).

Advertise the lower prices and then add a flat 'staff service fee'. That way you can advertise the same prices with a similar tip difference.

this is exactly that happens in india. it's called "service charge". you dont have to tip extra unless you really want to.

Most restaurants in india clearly mention "we charge X % as service charge"

Restaurants need to calculate the equivalent "pre-tipping" price and leave it there for comparison

In Europe, or everywhere in the world except for the states?

As the article says, waiters at upscale restaurants are worse off in this system, because the system is now less unequal in their favor.

If this became a trend at lower end restaurants, waiters that don't make much in tip would make more money (and more stably).

So this actually has the opposite effect; it reduces inequality.

Or you know just pay people minimum wage at least. I am not sure why certain service based jobs in America attract a tip and some do not.

Unfortunately, in a lot of states in the US, there is a huge gap in minimum wages. $7.25 per hour for normal jobs, yet it is only $2.13 for tipped workers. For the lower end, this usually means that their paycheck goes mostly to taxes and their entire living money comes from tips.

Legally, the employer is supposed to ensure that the wages plus tips equal out to the $7.25 per hour. Legally, they are paying minimum wage. We need the laws changed to fix this issue, but the government doesn't seem primed to make these sorts of changes.

As far as why some jobs attract a tip and others don't, I think it has to do with a combination of custom and what sort of work one does: On top of this, some service sector employers prohibit employees from taking gifts or tips from customers (retail, for example, generally prohibits this and you can get fired for accepting). This obviously has an impact on the norms.

Presumably it A) benefits the worker, since they make extra if they provide good service, B) benefits the employer, because the worker is motivated to provide good service, and C) the service level is highly visible to the customer, who they interact closely with.

I tip my hair cutter, but not my car mechanic, mostly due to C, I guess.

> Presumably it A) benefits the worker, since they make extra if they provide good service, B) benefits the employer, because the worker is motivated to provide good service, and C) the service level is highly visible to the customer, who they interact closely with. I tip my hair cutter, but not my car mechanic, mostly due to C, I guess.

Interesting you should mention. I've seen evidence where this was tested in a local consumer right program. Someone would disconnect their spark plug, and then act as if they're an innocent driver who's car is broken. Or a piece of rubber of < 5 EUR was removed. Some car technicians were honest (mostly those who were part of trade organisation BOVAG), don't get me wrong. But some also deceived/lied about the problem, and made the customer pay insane prices to fix a simple problem. They also tested if technicians would fix an additional, obvious problem. One even fixed the problem, but made something else worse. In short, I'm not going to assume anymore that car technicians are honestly going to fix all the problems my car has.

That article indicates that there are both tipped, and untipped minimum wages - i.e. tipped staff earn less at minimum wage.

If they earn less than minimum wage, the restaurant has to actually compensate them up to the minimum wage. They only earn a lower nominal wage because it's expected they get more from tips.

In some states. Washington and a lot of the west coast states require all wages to be paid the same minimum. Not sure why the other states aren't pressured into doing the same.

I understand this, what I dont understand is why.

"The already better off"?

Waiters and waitreses? That's one hell of a way to slice the pie. Where does this kind if thinking end? Do we start to divide up the upper and lower classes of homeless people because of the area they choose to be homeless in?

Wage slavery is especially rampant in the food and beverage industry where low margins and high competition are the norm.

Including "tips" (you could still tip for extraordinary service) as well as sales tax in the price might be the first step towards more transparency and fair pay for everyone involved (owners to waiters) in what essentially amounts to a luxury service anyway.

I am in Thailand now, where the amount you see on the menu is exactly what you pay.

I just spent 10 days in New Delhi, India, where they add between 25% and 33% to your bill, before tips, in the name of VAT, Service Tax and Service Charge.

It's a world of difference. So much trust is lost.

In many restaurants in Thailand they add 10% + 7% (service charge and VAT) to the prices listed on the menu. However, the menu must disclose this, typically in fine print at the bottom.

Paying living wage* for all serving jobs would be a good starting point. It's easier to move to a no-tip equilibrium when it doesn't mean someone has to take a second job.

* meaning e.g. that a single parent can live reasonably well, raise a kid, go on holiday etc.

How is it a luxury service?

You can cook your own food, cut your own hair, park your own cars, and so on. Instead, you are paying another human to do these things for you, sometimes waiting on you in the process. Most of the things we tip for we can go without.

How are these not luxury services?

Most of the things you described are cheaper to pay to a specialist to so than the cost of education and time to perform yourself.

Cooking your own food and cutting your own hair with the same quality is the real luxury. Never driven a car so don't know anything about that.

Cooking is one of those things that you get better with practice, and it doesn't need to be expensive to get fairly high quality. You just might not meet McDonald's pricing. That time thing you are speaking of? Well, that's a luxury if you aren't doing it yourself (or a member of your family), and can be overcome by habit. Poor folks do it all the time.

Haircut? Simple style, doesn't actually take much time or energy and the tools cost about the same as a cheap haircut.

The car is slightly better put another way, then: Taking a taxi instead of readily available mass transit. The first is simpler and easier and often quicker, the second cheaper but takes more work and walking on your behalf.

This Freakonomics episode from 2013 is well worth spending 37 minutes on before commenting. Or tipping...

http://freakonomics.com/podcast/should-tipping-be-banned-a-n...

As is this one from March 2016: "The No-Tipping Point" http://freakonomics.com/podcast/danny-meyer/

I've been to many restaurants here in the UK (and in Europe) where the "service charge" is automatically applied to the bill. You're not expected to tip at these places.

Many people don't realise; If you receive bad service, complain and the charge can be either reduced or waived altogether.

[edit for clarity]

I don't really like the trend of automatically adding a service charge to bills in London. It's a bit dishonest as it's just used as a way to reduce the prices on the menu outside the door to draw more customers in and the staff do not directly receive the money raised.

In a lot of places they don't directly receive the tips either, they all go in to one pot to be shared.

Have you ever tried asking for the charge to be removed if you're not happy with the service?

Tipping is required in the U.K. and Europe?

No, not at all. But when an establishment includes a service charge it's not expected either.

P.S. Nice username. https://en.wikipedia.org/wiki/Too_Much_Coffee_Man

slightly related: I've never been to the US but have been aware of the mandatory tipping situation for a fair while. I'm curious though; when I was first made aware of it (2 or 3 decades ago), I am sure that the 'standard' tip was supposed to be closer to 10% than 20%. Is this correct? Has the actual % amount changed?

Two or three decades ago 15% was modal (and it might still be), but I hear the mean crept up to 18% sometime in the past five years.

Interesting. I wonder why. Maybe compensating for stagnating wages? Or maybe falling food and beverage costs (in relative terms)?

I live in the US and have noticed the same phenomenon. I assumed it was just social pressure and growing awareness of inequality and poor living conditions of some wait staff. Giving an extra $2 is an easy way to feel good about yourself. Then more people started doing it, and to keep feeling good about yourself you had to tip more and more. I'll give exactly 15% if the service is bad, 20% if it's good.

I don't live in the US, but have started rounding prices up to roughly 10%. I hope this tipping isn't going to drive wages down. Should I stop?

I heard it's "double sales tax" as 'normal' tip, or at least that's what NYC waiters were telling me.

To avoid the sticker shock: List the prices minus a service charge of 15%. On the menu prominently display that a service charge is added. Perhaps it's a bit confusing but at least the prices are comparable.

I don't see why they can't just keep prices the same and add a "mandatory 20% service charge" at the bottom.

Because then you're just adding a mandatory 20% tip, when a tip is supposed to reward good service. Of course, it really doesn't mean that any more (they're more or less expected/required) but I usually get pretty annoyed when I see a "Mandatory 18% gratuity for parties of 6 or more" thing at the bottom of a menu (even though I usually tip 18-20%). If you're going to require a 20% gratuity, increase all prices by 20% instead of making me multiply every price by 1.2.

At least when tipping is "optional" restaurant owners can pull the "Well you can tip whatever you want, including nothing" card, but if you require 20% then you're just adding a hidden fee.

If you went to walmart and there was a sign at the front of the store saying all prices would be increased by 20%, that wouldn't be acceptable. Why should it for restaurants? If you really want to give 20% of every bill to the wait staff, then increase the prices of everything by 20% and give it to them automatically.

I much prefer "everyone pays the same" rather than "(the most aggressive and able-to-rationalize why they can tip less this time) get subsidized by people with qualms".

The case of Walmart would seem to go against your point; they're much closer to the tip-free model. "You see this price? That's what you pay." (With the caveat that some items are taxed.)

If anything, modern/Western retail stores closely parallel the transition that tipless restaraunts are making: there used to be an ad-hoc, inefficient, confusing, anti-introvert system for vending goods. It was called "haggling". It was replaced by a higher-volume, fixed price system that provided greater assurance that customers weren't getting ripped off or subsidizing those who were better at the dance.

Lots of parallels to how tipping works.

Edit: A closer parallel would be if Walmart replaced pretax prices and "you just have to know that some of these are taxed at whatever-the-current-local-rate is" with tax-inclusive prices.

People will get even more angry with that, as they will feel they have been slighted by a "hidden cost".

That happens all the time at many restaurants for larger groups.

I know, I was a waiter for years. We had to get rid of that policy because we were losing business.

My problem with mandatory tip (usually I see 18%), especially when it is just applied to people redeeming a groupon or something and not everyone, is that I then view it as both a floor and a ceiling, and so does the waiter.

According to the article, tips must go only to front house staff by NY state law.

Do service charges count as tips?

Yes, if they meet certain reasonable conditions (e.g. they're identified separately on the bill).

In Italy you pay extra service charge...

I know that I would avoid no-tpping restoraunts as a customer - losing ability to give direct feedback on the quality of service is not something in my interest at all.

i'm curious to know if abolishing tipping reduces performance? it seems like there's no reason to put in extra effort if all of them are paid the same and that the worst performer could be paid the same as the best.

If a restaurant has bad service, people will eat elsewhere. That means restaurants will hire waiters who provide good service and fire waiters who provide bad service. It seems to work out well enough in countries where you don't normally tip.

I have long since lost the link, but I think it actually improves customer experience and improves the job atmosphere, leaving people less stressed. This is mostly because servers now share duties.

You say there is no reason to put in extra effort: I disagree. This doesn't seem to be a problem at other jobs. Some people simply try more or put in the extra effort. They also generally enjoy better chances for promotion, good references, and so on.

It might reduce competition within the restaurant, but competition between restaurants remains. certain restaurants can prioritise service by paying their servers more if that's their focus.

Theres also a perverse incentive in that, like a good UI, good service shouldn't actually be noticed, so how does a server make themselves noticed (to receive a tip) while not being noticed?

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