To Tip or Not to Tip…

Source: Getty Images.

Source: Getty Images.

The recent trend among restaurants to eliminate tipping—opting to raise menu prices and distribute the profits more evenly amongst the staff—has produced a number of mixed results.

Thad Vogler eliminated tipping in his restaurants—Bar Agricole and Trou Normand in San Francisco—raising menu prices by 20% and paying servers a salary. In the 10 months the policy was in place, Vogler lost 70% of his service staff who had formerly relied on tips.

On the flip side, Tom Colicchio of NYC’s Craft successfully got rid of tipping during its lunch service, and Danny Meyer eliminated tipping at several Union Square Hospitality Group restaurants including The Modern and Gramercy Tavern, raising menu prices across the board. In cities such as Seattle, restaurants en masse have moved towards a no-tipping policy, often adding a 20% “service charge” to every check, which is distributed evenly among the staff.

Why are restaurants bothering to buck the status quo? And why is it not working out for some?

Tipping, many restaurateurs argue, creates an unequal pay system across the restaurant’s staff. After all, your dining experience does not depend solely on the server. It takes cooks, hosts, busboys and a whole host of other front and behind the scenes players. Why should servers reap the benefit of their own pay system?  

As appealing as evenly distributed salaries for restaurant workers sounds, it turns out diners (and servers!) may actually prefer the tipping system. Diners believe that the prospect of better service is dependent on the private payment system between them and their server. It is, in many ways, the one controllable part of the dining experience. A survey from Horizon Media shows that 81% of restaurant-goers said they would prefer to stick with tipping.  

As Vogler’s experience showed, servers might prefer the tipping system, too. The prospect of a limitless, and sometimes untaxable, salary can be much more appealing than a bi-weekly paycheck. The Horizon study found that 60% of servers would forgo a salary in place of tips.  

Price-fixe and tasting menu only restaurants, such as Eleven Madison Park and Atera have traditionally been more successful in weaving service into the cost. It’s possible when there is no choice to make—and no need to consult a waiter—the relationship between diner and server becomes less driven by economics.

Furthermore, raising menu prices can potentially change consumer dining patterns. Higher menu prices may create less demand for tables or cause diners to choose lower priced restaurants. “It’s a very different emotional calculus,” explains chef Danny Meyer.

What do you think about the movement towards eliminating tipping? Would you prefer to pay more for your meal if you didn’t have to tip? Tweet us @renzell and let us know!