Tipping doesn't make any sense
bernardi.me
bernardi.me
Tips in serving and other interaction-heavy professions (doormen, barbers, delivery people) allow a much more immediate feedback loop for poor service than the traditional "If you suck, you'll get fired in a month or two" system.
The reason there's a standard tip amount is because that gives people something to deduct from for particularly bad service. If the default were no tip, customers would have to fall back on the traditional feedback mechanisms (that are both slow and considerably more effort) like complaining the the manager.
Personally, I'd say the biggest argument against tipping is that it tends to reflect many things that are largely outside the server's control: food quality, food preparation time, atmosphere, general dining experience.
This is tangent to your argument, but to this end, good servers have sense enough to leave bad restaurants. Servers are also the gatekeepers for feedback. If they aren't telling the cooks "this isn't coming out fast enough, my tables are getting hungry" or the manager "the silverware is filthy, who'd eat with this?", then they aren't doing their job. I'm not saying they should necessarily be penalized for poor cooking or management, I'm saying they are smart enough to take their services elsewhere, because good servers might be harder to find than you think.
So it is for your doctor or your cab driver.
> Tips in serving and other interaction-heavy professions (doormen, barbers, delivery people)
Are either reserved for beyond flawless service or are basically bribes.
For a server, the interaction is the primary thing I care about.
Really? Why would you do that? My primary measure of a server's quality is how fast he brings my food and how absent he is when I have no need for him. So the primary thing I care about would really be how close he is to the minimum amount of interaction necessary for service.
* It creates a spectrum of competition for server spots; service staff at fine dining restaurants make significant amounts of money but must hustle to secure those jobs; service staff at diners make reliable but low amounts of money and can easily find work.
* It functions as a commission system; servers who sell higher-priced products get superior returns from those tables, which suits the aims of the restaurant itself. Servers who can move wine make significantly more than servers who can't, and in good restaurants, wine is where the restaurant makes its money.
* It obviously helps ensure that servers are polite and helpful, which, restaurants being in the hospitality industry, is obviously a core part of the value proposition.
* More importantly, it incentivizes servers to increase table turnover.
These are all functions that could be managed at varying levels of effectiveness by other compensation schemes, but those other schemes don't actually improve outcomes for consumers; they raise prices and reduce transparency.
This doesn't impact me much (nothing wrong with a leisurely dinner), but it is murder on the small business owners of restaurants; below $50USD/table or so, success or failure in food service is all about turnover.
Some alternative takes:
* A spectrum of competition can also be created the way it's done in any other industry: Expect a higher level of professionalism and competence from holders of higher-paying jobs, and attract more qualified employees by paying them more.
* A commission system can be handled the way it's done in any other industry: The employer sets the commission, and builds it into their price structure. This would be more transparent, since it means the consumer is being directly told how much the item will cost rather than being expected to do mental math to acquire its true price.
* Studies have shown there's not really a lot of correlation between the server's quality of service and the tip they get. It has a lot more to do with the temperament of the tipper, etc. It's not an incentive if it doesn't incentivize. And a basic demand for professionalism and courtesy works anywhere else. There's something fundamentally broken about a customer service philosophy that assumes your customer-facing employees need financial incentives to be nice to people. For one, it implies a poor opinion of the people who are doing the job.
* An straightforward commission would also encourage increased table turnover. Again, with more price transparency for the consumer, and more respect afforded to the server.
Help me understand how tipping is customer-unfriendly, and jacked up menu prices and backend commissions aren't. I'm just not getting it. Is it just the requirement to do math?
Perhaps we're talking past each other on the wording of things. I'm drawing a distinction between "transparent pricing" and "flexible pricing".
You can rail against wine markups too, I suppose. Of course, since most restaurants work on razor thin margins and most fail, there's not much point; they're charging what they need to succeed in their market.
[1]But don't get me started on the extortion of $1.50 for a fountain drink.
If servers were paid more (and tipping were no longer required), people could still tip on top of that. This still creates your "spectrum of competition."
If the restaurants were trying to encourage up-selling (your wine example), then they can give bonuses correlated to how much wine each waiter sells.
If tipping is mandatory, it doesn't ensure servers are polite and helpful! This is common sense. If tips are considered a guarantee, then the incentive to work harder is removed. Additionally, waiters are often rude when they feel they have been tipped poorly. So, again, tipping only when you've received exceptional service, makes more sense.
As for "transparency," I think the most transparent scheme would be customers are expected to pay the list price. No tacit agreements about tipping or service fees. If it's not a listed charge on the menu, it's not required and it is purely optional. How much more transparent and simple can you get?
The tip is the only transparent part about the price of a meal; in addition to its obvious surface meaning, understanding the subtext behind tipping also gives you an idea of what the restaurant wants you to do (eat faster, buy wine, &c) and adjust your behavior accordingly (towards or against the restaurant's interests).
How and why are tips considered a part of 'pricing'?
Here in my country(India) I don't tip anybody, unless service delivered is exceptional. That is very important, because for an incentive to remain an incentive, it must be paid only when good work is done. Else it looses its value. Mandatory tips don't motivate servers, it just makes them complacent that they can do job as usual while they will be tipped anyway.
If tips are compulsory, they should make it a part of the bill. Something like 'Added 15% tip' and ask us to pay it as a part of the bill.
In such cases fast food restaurants will flourish, because no one wants to pay somebody a reward just for doing their job, like everybody does their job.
And please don't tell me how difficult servers are having it. Because every person who is working to make a living is having it difficult a way or the other. I work many hours in a month fire fighting, attending calls, working on late night issues, and sprinting towards deadlines. But I'm assumed to be OK with all that without being paid. I don't go around asking for tips.
Tip is not longer a tip when its mandatory, its more like service charges. I am OK with that, And will try to avoid such restaurants because I see no point in paying a service charge, when I can carry my food to the table.
US tips are not simply an incentive to provide extraordinary service, full stop.
Change is the common denominator. Change is what people have issues with and create excuses not to do.
But, if tipping is mandatory, why not just advertise the real price? Take a cabe ride for example: I pay the driver to take me from point A to B. He (or she) completes this task, and I pay them. Very rarely do I feel like I have received exceptional service, and often the drivers are rude and impatient. But I have to tip at least 10-15% or I'm an asshole.
Maybe we'd all receive better service if we stopped compulsory tipping, and instead only tipped when we receive good customer service.
For whatever it's worth to you, tipping isn't just an incentive scheme to get waitstaff to do their jobs well; it's also a commission and recruiting/retention practice.
I have no strong opinions about tipping cabs. I tip them, but the economics behind cab tips are not the same as for service staff. Cab drivers in Chicago are usually sole proprietors of their own businesses and can select their routes to maximize returns; about the most you could say is that they also have to deal with fixed fare rates, which themselves might be set in anticipation of tipping.
But refusing to tip restaurant servers is from what I can tell morally equivalent to taking money out of their pockets.
How about all of the other service professionals which are paid a decent wage regardless of tips?
Other service professionals are paid a market wage. The bus driver, to continue with the particularly inept example used by this blog post, has in many localities also been compensated with a pension.
So you're saying that in California, Alaska, ..., that waitstaff can't still earn under minimum wage if they report tips? I don't think this is true, at least in CA.
>>Service staff at good restaurants do not, as a rule, make minimum wage.
Yes, they often make more. Not substantially more, but I know waiters who work at good restaurants and they can make 9 or 10 per hour, plus tips.
I don't get what you're saying about bus drivers. We should tip them, too?
My point -- and I think the orignal point of this whole thread -- is that we (consumers) should be aware what we are expected to pay. The final price should be the price we read on the menu. If you feel you have received exceptional service, then feel free to tip on top of the base price. Otherwise, if tips are compulsory, then the price should reflect this!
The blog post asked why we don't tip bus drivers. I've never tipped a bus driver. CTA bus drivers have pensions.
You are expected to tip 15%-20%. This is not hard information to come by. You should assume that tips are compulsory, unless something very bad happened with service. I've never undertipped for service issues.
Which is the whole point, if pretty much every other service professional is paid a market wage, how are waiters different?
City bus drivers are surly and, at least in the case of San Francisco, obviously not even properly incentivized to properly stop the bus and pick up passengers. But because you have virtually no role in determining the compensation of a bus driver, the fact that buses are driven poorly has little bearing on how much the drivers make; instead, public sector unions play the largest role in establishing wages.
I'm pretty sure even in Europe they teach kids, young kids, about what two wrongs add up to.
Seems like the only start toward doing so would be to force minimum wage standards to be applied to all workers. This would benefit some but cause significant hardships to some others, so it seems to me unlikely to be achievable.
The chief advantage of tipping is that it encourages people who are skilled at providing customer service to stay in the industry and those who are not to leave. Other feedback mechanisms might be possible, but they'd be much more complex.
You said that it wasn't money -- that it was just not knowing the cost. If that's true, I don't understand at all -- the cost is 20% more than the listed price. If you see a burger at $10, that's really $12 -- it's the same problem as dining in a foreign currency -- the exchange rate for $ to R$ (restaurant dollars) is 1.200.
That being said, I am really bad at tipping $10 for a $5 beer... :(
From my perspective, I spent a year working as a barista and bartender part-time when I first moved to New York, and I would estimate that 80% of those who work as a waiter, barista or bartender do it to support themselves as they pursue whatever it is they do (the usual suspects: acting, art, music, writing, school etc.). This is what kids do to get by--they're not committed in any way to the place they work.
At my coffee shop (not at restaurants or bars) I got paid minimum wage plus tips, which at the time was something like $8 + on average $4 to $8 an hour. I can't say I agreed or disagreed with the system at the time, or that I even thought about it, but from my experience the lure of tips greatly outweighed any set amount of (low) salary I would have received. For example, I've gotten a couple $100 tips from Wall St. ballers, or one time $40 from a man just for pouring a cup of coffee! If you work at any number of restaurants, the odds are much higher that on any given night, you will win the tip lottery. And the more a man drinks, the more he will open his heart (and wallet) to the young, struggling artist behind the bar.
For the waiter/bartender/barista, I would guess that the average wage comes out to about the same as a respectable working wage for the skills involved (maybe $15-$20/hr). If you work at a Michelin rated restaurant, you would have to get a much much higher starting salary to compensate for a lack of tips, at least in NYC.
I think this is the source of a lot of the animosity around this issue- debating the merits of tipping is fine, but not tipping at a restaurant where it's expected takes out your frustration with a system by punishing a person (the server) who has no control over that system.
I believe to avoid any ambiguity you simply have a all or nothing policy.
If they've decided what they're worth, who am I to argue?
Transparency - I want to know what expenses make up the final price I pay.
Simplicity - I just want to pay one single figure.
This may explain the anger over airfares. People complained airfares cost too much. Then companies like Ryan Air broke down the costs. Then people got angry that the individual costs were unfair.
Dammed if you do, dammed if you don't?
When I was a server I would work hard to make sure I got every dollar. The tip is always on your mind, all night.
The other good thing about tipping is that it also makes the job a sales job. The higher the bill, the higher the tip and therefore it properly aligns incentives with the restaurant. The exception to that is fraud where a server provides free items to attempt to get a larger tip.
I get that it must be extremely irritating for people from outside the US to get a price and then have to do the math to figure out what it really costs, but that is a small price to pay for superior service all the time.
Waiters come bother you every 5 minute asking if everything ok, if they can refill your water, etc. I just like to enjoy my food and have conversation with my tablemates without being interrupted every 5 minute. In France, the waiter comes to take your order and give you your food, and that's it. You usually have a caraffe of water and a basket of bread on the table so that you don't have to wait on the waiter's good will to refill your glass.
Additionally, in the US, you tend to be escorted out as soon as you're finished eating because the more tables the waiter serves, the more money he makes. This is extremely irritating— after I'm done eating, I like taking the time to talk with people and hangout without having the bill shoved in my face and the waiter asking us to leave (happened a few times). In France, you leave whenever you want to (unless the restaurant is extremely busy I assume, but it never happened to me).
So no, I wouldn't call the service "superior"— rather more irritating and intrusive because that's the best way to get a good tip, while pretending to be superior.
As an example, when I (an American) visited France and Italy, I couldn't stand that it took 30+ minutes after finishing our meals to pay the bill and get out of there.
But that's not really linked to tipping or the lack thereof; tipping's unusual in Japan, and yet they're the gold standard for getting out of a restaurant quickly once your meal is done.
Interesting about Japan.
This seems to lend more support to the inference that you personally have atypical preferences than it does to the inference that the American tipping system as a whole doesn't result in greater aggregate satisfaction with service.
You acknowledge that most people tip more when their servers do things that you find "irritating and intrusive." To me, this suggests that most people don't find those things irritating and intrusive, and in fact like them, and that's why they're willing to surrender more money when they experience them.
Pure curiosity here, have you ever been waiting to get into a restaurant, wishing some people would leave so you may be seated? Wouldn't you be more comfortable hanging out in a lounge?
When I enter a restaurant, I see a price on the menu and this is what I intend to pay. When I order the food, this is my agreement with the restaurant: pay what is asked. The server might be angry at me for not giving any tip, but as with the previous example, I have nothing to do with any contract the restaurant owner and the server might have. He accepted to work for a given salary. I might give a little extra if there's a parade for me or something, but not for just doing your job.
I worked a couple of years as a lifeguard making essentially minimum wage and saved two children during that time. I received a thank you and appreciated it, but think there should be room for a ten spot.
The waiter brought us a bill with a 10% service charge and I asked whether a tip was expected. I don't remember why I asked, perhaps the service charge seemed low or maybe I was just curious.
The waiter told me that of course the tip was expected... on top of the 10% service charge. This is because the service charge covers the staff in the kitchen while the tip covers the waiter :D.
Tips are money that doesn't come out of the restaurant owner's pocket. Restaurants tend to run on pretty thin margins, so let's treat this as a zero sum game and assume that any increase in wait staff wages is necessarily passed on to the consumer. I know next to nothing about what a waitress earns or how a restaurant is run, so I'd appreciate if anyone wanted to shoot holes in my reasoning here. I'm genuinely curious, so treat this as a proposition of method, rather than proof.
Florida minimum wage for tipped employees is $4.65/hr. I live in Florida, so I'll go with that.
$4.65 x 40 hrs a week x 52 weeks a year is $9,672.00
I've known local waitresses who claim to take home around $30k a year (with tips).
$30k annually works out to a wage of $14.42/hr given the same 40 hrs x 52 weeks work schedule.
$14.42 is about 3 times $4.65
So in a general sense, the restaurant owner would have to pay his wait staff (around) three times as much in order to meet their tipped wage. Not having run a restaurant, I have no idea how that would affect the price of a meal. Can anyone with more knowledge pick it up from here?
Why isn't 5% standard for OK, but rushed service?
Also, your objection to paying a percentage of the bill is not the strongest point in the article. It’s true that Fedex charge me the same money to deliver an envelope containing a contract worth $10,000 as they do to deliver a birthday card worth $5. They would probably love to charge me more for the contract, that would help them with price discrimination. But since they can’t peek at the contents of the envelope, they try to find a proxy for value in the form of speed of delivery. Rush service costs more, ostensibly because the sooner you need it, the more valuable it is and the more you’re willing to pay.
Sometimes, that’s way off like with a birthday card you’re trying to get delivered in time for a birthday, but on the whole the system is good enough. Likewise with tipping. Forget about trying to value the service by the cost to deliver it. The system is trying to charge you what you can afford, and the amount you spend on the food is close enough to make things work out most of the time.
The entire system is sitting in a local maximum that’s good enough for most purposes. If you try to deviate a little, you’ll end up with worse outcomes for everyone. You need a dramatic and disruptive change to the entire thing to move it to another local maximum.
I encourage you to think of this as an exercise in startup business planning. Imagine there was a YC company that “fixed” the system. What product or service would it provide and how would it extract value from the current inefficiencies?
Tipping compensates for a restaurant owner's lack of information about the quality of her staff's effect on her business. If she were certain that a particular server was repeatedly producing highly satisfied customers who were likely to return or recommend the establishment to their friends, it would be in her best interest to pay that server more to retain his services.
The trick would be getting this feedback in a way that saves the customer from a 10-20% markup. Yelp reviews occasionally capture servers' names, but that's not likely to produce a useful sample, even putting aside all the usual problems with social review sites.
One could imagine some sci-fi mood monitoring technology that could tell the owner in real time which patrons were satisfied or agitated, and that data could be correlated to the server, the chef, the size of the bill...
The middle ground would be creating a low-friction, high-reliability scoring mechanism. But it can be hard to get honest feedback when the customer's money isn't on the table.
It really isn't that hard: remove "tipped staff" exceptions to US labor laws and everybody will adjust quite fast.
> The entire system is sitting in a local maximum that’s good enough for most purposes. If you try to deviate a little, you’ll end up with worse outcomes for everyone.
Do you really? That seems to be an assertion based on absolutely no foundations.
You could try opening a restaurant, paying higher wages, and telling patrons they needn’t tip. It might work out for you. What I personally think will happen is that someone will notice that you charge approximately 15% more than your competition to cover your higher labour costs. In effect you’ll be just like those places that impose a mandatory “service charge” on meals.
So someone will figure it out and write a blog post saying how much they hate mandatory service charges and you should let them decide whether to pay less than 15% if the service is terrible. And we’d be back to square one.
Many waiters in high end restaurants are paid more than minimum wage, but you're still expected to tip.
I can't easily imagine a system where this makes sense.
IMO, a 10% service charge without expectation of a tip makes much more sense and is much fairer.
The entitlement culture in the service industry is so great that servers will angrily say things like "if you can't afford to tip on a bottle of wine, don't order it or stay home." Yikes. How about I just don't tip you.
Tips are part of the way the market for restaurant service is organized. The expectation that you're going to participate in the full market by tipping is universal and an implied part of the US social contract. If this offends you, that's fine: just don't dine in places that expect you to tip. You'll be sending the message to the appropriate target, the business owners, and not to the servers who have no control over the way the market is arranged.
How does that work? By telepathy?
> and not to the servers who have no control over the way the market is arranged.
It's _exactly_ the servers that need to unionise and get this archaic system outlawed.
My suggestion: next time you eat out at a nicer-than-average restaurant, ask the server what they think of your idea. I make a point of talking to servers, not because I'm particularly nice (I'm not) but because it's an easy way to get much better service in the future, access to tables on crowded nights, &c. I think you're going to find that restaurant servers do not see tipping as a cosmic injustice that they should pay union dues to stamp out.
> next time you eat out at a nicer-than-average restaurant, ask the server what they think of your idea
Waiters in my country make a living wage, no matter what the weather is. And they get tips, too.
Waiting in the US sounds like a great deal - go work for a start-up on commission, if the business thrives you'll still be an employee, if the business falters you'll miss your rent payment.
I'm not sure what you think is supposed to happen when businesses falter. Are the taxpayers supposed to subsidize them?
Fortunately, since we live somewhere where you can fire, downsize, and go bankrupt, there are companies willing to hire you for some period of time between when they need you and when they don't need you anymore. Otherwise, who would hire anyone if they could never fire them (here's looking at you France)?
The possibility of losing a job is inherent and essential to the concept of employment.
I personally have no problem leaving a 5-10% tip of the sub-total at a restaurant for basic service, but feeling entitled to it is, I repeat, stupid.
Think of tipping instead as a commission, except instead of the provider paying it, the customer pays. When a car salesman moves a car, we don't think of his commission as an "extra". Base pay for car salespeople is commensurately reduced on account of commissions.
And when it comes to commissions, the employer adds it on top of your wage, keyword: employer.
But, ironically, solely because you do have the option of not paying the tip, the expectation of tipping is a terrible injustice to consumers.
Baffling.
(I'll choose to ignore the condescension)
It is indeed true that servers expect a 15% tip simply in exchange for competently performing their job. So do their employers, and so do the majority of restaurant patrons.
I'm very unlikely to ever end up eating in a restaurant with you. I mostly do not care whether you tip or not. But the parallels between this thread and threads about software pricing are spooky: it's as if the part of the brain that enables most people to understand pointers-to-pointers and function pointers somehow cancels out some of the part of the brain that enables people to intuit how markets work.
Suffice it to say I am geeking out over this issue, not moralizing about it. Although: there's a moral component, and as a message board nerd, I'll pitch a little fit if we pretend that there isn't one. :)
I'm not saying I don't understand how the market works, I just like to call bullshit when I see it. The market shouldn't be structured in the way that employers can excuse themselves for paying a less than a competitive wage, just because it's an accepted system.
In contrary to my opinions on "expecting/feeling entitled to a tip", I always pay 20%, just because I feel like it.
And I definitely agree, there's a large moral component to it.
I (1) totally agree that reasonable people can disagree about whether restaurant tipping is an economically optimal scheme for compensating front of the house labor. I (2) have a little more trouble conceding that there's "bullshit" involved. I (3) have a lot of problems with the idea that it's reasonable to opt out of the tipping system by simply not tipping (not that you've suggested that, but others here have).
I completely support the tipping system and don't find any bullshit involved with it. My opinion is that it's bullshit that the market is structured this way to begin with, that eventually nurtured the notion that a tip is entitled. But that's just personal bias based on idealism.
Either they are an entitlement - in which case they should be disclosed and added as a fee, or they are discretionary, in which case the servers wages should not be reduced because of the expectation.
But isn't that basically just forcing a 10% tip on everyone with no regard for actual services rendered? While the tipping practice may be flawed, there is at least some built in incentive for the server to aim for more tips. With a mandatory 10% fee, the server has no incentive to go beyond their duty and the customer has no opt out.
Sure, the 10% could be included in the price and wages raised, but it doesn't make much difference. It's the difference between a VAT tax and a sales tax - in the end the amount is the same - sales tax is just more apparent to the consumer.
I frequented a restaurant that did the latter. The problem was that they did a bad job of advertising the fact & would sometimes go as far as to not give an itemized check. I personally felt like I was being duped. This led to customers tipping on top on a tip & when customers found out, there was a lot of rage on Yelp et al. They repealed the auto gratuity.
Point is, if you are going to do this be loud and clear about it.
Infinitely so, as most countries either include staff remuneration in the bill or automatically add a service charge to the bill.
Tips generally aren't expected in any western european country that I know, for instance. Exceptional service is sometimes rewarded, but beyond that there is no tipping apart from people leaving the change "on the table" (because they can't be arsed)
Maybe it'll be 25% for crappy service, 50% for decent treatment in the future if it keeps escalating.
Personally, I don't get tipping either. Aren't they supposed to do their job well in the first place? This probably leads to only having them treat you badly next time if you don't tip them well or at all the first time.
Either way, you shouldn't take this into consideration. If a server decides to (or is desperate enough to) take such a raw deal, that's on them.
Their time can certainly be spent better than hoping customers can subsidize their salary. They'd probably do just as well begging on the corner (begging for tips is still begging just the same).
Take into consideration how well the person is serving you.
Depends on the state you're in, $2.15 is the federal minimum for tipped staff (and the employer is supposed to match standard (non-tipped) federal minimum wage if tips don't bring staff over) but many states have their own labor laws going beyond federal standards. For instance NH has a $3.27 tipped minimum wage (and a federal minimum wage), Washington State has a single minimum wage (no tipped staff exception) of $9.04.