For many bar professionals, tipping provides the lifeblood of their paychecks. It’s not extra money, it is the money. In our industry, $0.00 paychecks are common, with the entirety of an employee’s wages coming solely from tips. It’s been that way for more than 300 years (more on that later), and this mostly-American practice has always seemed like an industry mainstay. Five or six years ago, though, abandoning tipping in restaurants seemed to be the hot topic. Several high-profile establishments went ahead with the idea, perhaps hoping to spark industry-wide change. Since then, the debate has relaxed to a light simmer and the dust has settled. Many of the bars and restaurants that went tip-free have since reversed their decision, and the tip-free structure no longer feels like an inevitability. Today, we’re going to examine this tip-free movement, what happened to it, and if it’s something we should consider revisiting.

 

Before any of that...how did we get here in the first place? Well, tipping is a uniquely American sort of practice, with some very sordid and unfortunate roots. The practice of paying someone for work done hardly needs explaining. But, the concept of an additional gratuity paid to an employee, in addition to the money paid to the employer or proprietor...well, there’s an origin story for that. Unfortunately, it begins in America with slavery. After the Civil War, freed slaves were limited in their professional options. As a way to virtually continue slavery, businesses like restaurants and railroads would not actually pay their new workers, under the condition that guests would offer a small gratuity instead. Finding this both classist and condescending, Europeans were quick to abandon the practice of tipping altogether. A century-and-some later, here we are.

 

With all of that in mind, perhaps it’s no surprise that the No-Tipping movement gained steam in the mid-2000s. High end and mid-range establishments alike took pride in doing away with tipping, opting instead for a living wage and employee benefits. Typically, that living wage was sourced from slightly (or not so slightly) increased menu prices. It was an ambitious and idealistic concept, to be sure. World-renowned establishments like Tom Colicchio’s Craft and Claus Meyer’s Agern were amongst those bold enough to ditch tipping altogether. Joe’s Crab Shack also went tip-free, in a remarkably high-profile instance of the new tipless paradigm. The arguments against tipping were convincing (and still are).

 

Inconsistent earnings do very little to keep your employees around, for one. Those employees can often feel underappreciated by their employers, as well. Understandably so when you consider that their bosses aren’t even technically paying them. If your establishment has a food program, then you’re also looking at mounting tensions between the back-of-house and front-of-house. Specifically, your back-of-house staff may be at a disadvantage: even though they service every customer in the restaurant and are required to work harder when business is strong, they don’t see any rewards for that extra effort.


Aside from the ethical appeal that comes with eliminating tipping, there could be some savvy business benefits to the idea. The minimum wage is on the rise, with many states already moving to a $15/hour minimum. The minimum tipped wage is likely to follow suit. If tipping remains in place, restaurants and bars will have to raise menu prices just to accommodate the new minimum wage. Then, you’ll have servers benefitting from a higher base wage, while their tips also continue to increase with menu prices.

 

Unfortunately, the ‘no tipping’ thing didn’t work out for many places. The aforementioned restaurants (Craft, Agern, Joe’s Crab Shack) have all gone back on the idea. These restaurants found a decreased turnover for back-of-house, but the exact opposite for front-of-house staff -- service staff was coming and going like never before. In addition to this, these establishments also saw significant decreases in business, finding themselves with a new disadvantage in their competitive marketplace. Tom Colicchio, after turning back on his ‘no tipping’ policy, came to the conclusion that it only works if everyone does it:

 

At Craft, if I were going to pay my servers an hourly wage that is on [a] par with what they’re currently making, it would be in the neighborhood of $34 an hour. So back waiters or bussers in the range of $22. They’re making a good wage because of tips. Now, we do away with tips. The only way to fund that would be through raising prices. If the average tip is about 20 percent, we still have to raise prices 23 percent, because then you’re going to push up wages for everyone else. If I were to do it tomorrow, it puts me at a competitive disadvantage to someone who is just shopping online looking at prices. If everyone does it, then I think we’ll see some change.”

 

So, what now? It looks like tipping is here to stay (for now). Surely there are some kind of benefits to the ages-old system. For one, the act of tipping makes a customer’s experience feel more personal. Many people take comfort in leaving a generous tip, as evidenced by many American’s experiences when traveling overseas - leaving no tip at all can feel strange and ‘just wrong’. As well, despite many studies that show no connection between quality of service and amount of gratuity left, tipping presents an opportunity for upselling. Because tipping is a percentage of the total cost of the experience, bartenders stand to earn better tips if they are upselling. Lastly, as we discussed, eliminating tipping requires that you raise your menu prices. This can be a tough pill to swallow for many customers, despite not having to leave a gratuity.

 

All in all, it’s hard to say that the industry is ready to eliminate tipping. But, as we move forward, it’s an issue that we all need to consider. The demand for a living wage is (rightfully) on the rise, and our industry needs to adapt to that. While we often focus on evolving to suit the needs of our guests, we should spend the same effort adapting to the needs of our staff. 

Tags: Insider