A Tip On Needed Change


Restaurant owners in the United States are evaluating the tipping habits of their customers and their effect on the wages and work of their employees following an announcement by a prominent New York restauranteur that drew responses from the New York Times and the New Yorker. Servers receive a lower hourly rate that is then subsidized by customers’ tipping preference, and customers are essentially trained to tip 15 or 20 percent of their bill’s price, depending on whether their service was good or bad. Generally speaking, the practice of tipping should incentivize servers to perform better in the workplace, but as employees of a company, shouldn’t they be performing well regardless? Why as Americans do we see the necessity of tipping? Danny Meyer, chief executive at Union Square Hospitality Group, will begin eliminating tipping at the group’s thirteen restaurants throughout the city. When customers receive the bill for their meal, there will be no lines to add an additional tip. With this change on the customer’s end, Meyer will increase the hourly wage for kitchen employees and servers alike. To clarify, menu prices will increase to subsidize the previous tipping of the customer, making up for the lost dollars that previously went only to front of house employees. Now the money that would be distributed as tips is instead moved into income and then wages for the whole staff. Meyer is slowly changing the tipping policy, starting with two of the thirteen restaurants. He feels confident that his customers will meet this change, but wonders how this might broadly impact the restaurant industry.

The culture of tipping, so accepted in the U.S., is not present in many other parts of the world. The U.S. does not have a hard and fast policy on tipping but it seems rather a cultural mandate that tipping is necessary for the service industry. However this practice, while seemingly a simple cultural anomaly, may be both exposing servers to unnecessary fluctuation in income, making it hard for them to plan for the future and also devaluing the work of others in the restaurant industry.

On the one hand, servers are essentially stuck between a rock and a hard place. They are responsible to their bosses for their place in the restaurant, their small wages, and their ability to work for tips. However, in practice their income is controlled by the preferences of the customers. This leads to undue stress, with servers having to balance the expectations of customers with the policies of their bosses. Servers live with the uncertainty of their ability to pay for long-term obligations, constantly hoping their shifts will present them with enough work and their customers will deem their work valuable enough, to make ends meet.

At the same time, those in the back of the restaurant, whose workload correlates almost completely with that of the server, must consistently watch as their hard work results in padding someone else’s pockets. A line cook that pulls off a busy service flawlessly can expect only the servers to go home happy with a tangible compensation for their hard work. This cash will not make it back into the business, allowing the business to eventually raise wages for all employees. Though line cooks have stability, they cannot expect their wages to grow as they would in a normal business.

This is not to say that there should not be a system of reward in the workplace, but everyday wages should not be susceptible to the frequent fluctuations of customer preference. An individual’s wage should be reflective of the work they complete. Restaurants may need to majorly change their internal structure for wages to alleviate the necessity for tipping, but Meyer is moving in the right direction.