The tipping point for restaurant tips?
One New York restaurateur is trying to end the famous US tipping culture by increasing wages and menu prices
New York City restaurateur Danny Meyer is calling time on tipping across his 13 restaurants in favour of higher wages for all staff, funded by significantly higher prices on all his menus. Photograph: Sonia Moskowitz/Getty Images
I don’t tip because society says I have to. All right, if someone deserves a tip, if they really put forth an effort, I’ll give them something, a little something extra. But this tipping automatically, it’s for the birds. As far as I’m concerned, they’re just doing their job,” says Mr Pink in a memorable opening monologue of Quentin Tarantino’s Reservoir Dogs.
The film made it clear that someone refusing to tip is less sympathetic than one who is planning a diamond heist and only slightly further beyond the pale than someone who parts a police officer with his ear. But maybe Pink was ahead of his time, 20 years ahead of his time in fact.
In the United States of 2015, a momentum is growing which could see the gratuities in restaurants soon going the same way as cigarettes. A nationwide debate has been sparked in the country which has embraced tipping like no other in recent weeks by New York City restaurateur Danny Meyer. He is calling time on tipping across his 13 restaurants in favour of higher wages for all staff, funded by significantly higher prices on all his menus.
And Meyer is no lone wolf. What he does makes a difference – he was the first restaurateur in New York City to ban smoking – almost a decade before it became law. And he owns some of the most highly regarded dining establishments in the US. He has three Michelin Starred restaurants in Manhattan alone including a three-star, a two-star and a one-star.
Mind you, it is is not the first time he’s been here. In the mid-1990s he wrote a piece for his newsletter, calling on America to switch to a European-style system where menu prices were – and still are – largely all-inclusive. Back then he described the American system of tipping as “awkward for all parties”.
He said diners were expected “to have the expertise to motivate and properly remunerate service professionals”. Waiting staff had “to please up to 1,000 different employers” while owners “surrender their use of compensation as an appropriate tool to reward merit and promote excellence”.
“Imagine, if to prompt better service from your shoe salesman, you had to tip on the cost of your shoes, factoring in your perception of his shoe knowledge and the number of trips he took to the stockroom in search of your size.
“As a customer, isn’t it less complicated that the service he performs is included in the price of your shoes?”
In an interview with New York Eater magazine published last *month, Meyer talked about his past efforts. He spoke of nights in the 1990s “where waiters were crying because somebody from Europe, where they don’t have a tipping culture, would walk out without leaving a tip”.
Ironically his plan failed back then because “the same people who were crying on a bad night” wanted to stay on commission. “We might have been 21 years too early.”
He might still be too early. A poll of New York diners published last week found that almost two-thirds think that he is making a mistake.
He is not, however, for turning. He was in Dublin earlier this month and was adamant that his plans to scrap tipping would happen whether people liked it or not.
As of this week he has added 23 per cent to price of food at his top end-restaurants. Already he is feeling the impact. While the dining jury is still out, it has won favour among potential kitchen staff – when he announced his plans, he saw the number of applicants for chef positions increase by 4,000 per cent.
Meyer is setting the agenda based on earnings but the tipping debate is not just about money. Its consequences could be much more profound than a few dollars more. Women’s rights advocates in the US believe tipping is responsible for “rampant” sexual harassment in the industry.
According to a survey carried out by Restaurant Opportunities Centers (ROC) United last year, 80 per cent of women in the sector said they had been sexually harassed by customers with three-quarters reporting sexual harassment from colleagues.
The ROC says that in US states where the minimum wage for tipped staff falls below the federal minimum, women are twice as likely to be sexually harassed at work they are in places where the tipped minimum wage has been eliminated.
“When you live off the tips you have to tolerate whatever the customer might do to you, however they might touch you or treat you or talk to you, because the customer is always right. The customer pays your bills, not your employer,” ROC co-founder and co-director Saru Jayaraman has said.
It is not the first time America has examined its appetite for tipping. In 1897 the New York Times carried a report about an anti-tipping movement who said it was the “vilest of imported vices”. And in 1916, author William Scott wrote the Itching Palm in which he claimed tips were “democracy’s mortal foe” and created “a servile attitude for a fee”. He suggested the “every tip given in the United States is a blow at our experiment in democracy. The custom announces to the world . . . that we do not believe practically that ‘all men are created equal’. If tipping is un-American, some day, some how, it will be uprooted like African slavery,” he concluded.
While comparing tipping to slavery is – obviously – absurd and offensive, scrapping it has merits. If it were abolished restaurant managers wouldn’t have to worry about divvying up tips between front- and back-of-house staff, while a portion employees income would no longer depend on the skill of the chef or the person plating up or the ambiance of the restaurant or the capricious whims of diners.
And diners would no longer have to perform mental or moral gymnastics at the end of the night by having to work out what 12 per cent of €178.50 is.
While tipping has been part of the American dining experience for more than a century, it is comparatively young in this country. And it can still be a tricky business with many people unsure about whether or not they should tip and, if so, how much?
Some people will leave a gratuity of 20 per cent unless the waiter actually spits in their soup in plain view, while others won’t leave anything even if the waiting staff anticipate their every need and fulfil their every desire throughout the course of a long and pleasant evening.
Then there is confusion over service charges, either discretionary or obligatory. Most restaurants impose such a charge but confine it to larger groups while others impose them across the board. Some are not entirely upfront about what they do with their service charges and owners might pass it on in full, hold back an administration charge or even worse hang on to it.
Donal Doherty owns two restaurants on the northern fringes of Ireland – Harry’s on the Inishowen peninsula and Harry’s Shack in Portstewart. He serves tables in both himself but doesn’t take tips, instead passing them on to employees.
He is aware of what Meyer is doing across the Atlantic but not convinced such a principled stand is necessary over here or that it would work both because we have a minimum wage and we don’t tip.
He says that the average tip left by diners in his Inishowen restaurant is a miserly 3 per cent. Miserly is our word, Doherty is not so harsh.
“I don’t like to call tips of that level mean because we should be grateful if we get anything at all. I reckon three out of every five diners we get don’t tip anything. One in five may leave what would be considered a poor tip in other parts of the world, while the last 20 per cent will tip around 10 per cent of the bill. Anything above that is very rare and will usually come from an American. I don’t complain about that because in Donegal my customers are local and regular and the very important to me.”
It is a slightly different story in the Shack in Portstewart where tips average around 6 per cent and some staff could add over €150 a night to their wages, Doherty says. “I understand what Meyer is doing but it wouldn’t work here. Imagine if I told my staff I was scrapping tips and increasing their wages by 3 per cent? They would think I was such a miser.
“And we are not in a position where we could just increase our prices by a quarter overnight. He can increase his prices because he has people queuing up to get into his restaurants but we still have to be acutely conscious of the recession we have just come out of.”
Adrian Cummins is the chief executive of the Restaurant Association of Ireland – a group which represents employers and he does not think abandoning of tipping in favour of higher, all inclusive, prices is an avenue Ireland should explore.
He says that, in any event, only about 25 per cent of Irish diners leave a tip – the percentage rises to half in urban centres but dwindles in rural areas.
“I think any move by restaurant owners to get rid of tips and increase their prices would be seen by diners as price gouging,” he argues. “And I think it would take away a key incentive for staff. In the US where tipping culture is very advanced customer service is streets ahead of Ireland. I think customer service here is atrocious.
“If we were to develop a tipping culture similar to the one that exists in the US, employees would come out with more money than they do at present but I don’t think unions here would support any moves aimed at dropping the minimum wage for staff in the restaurant industry.”
Irish Times food critic Catherine Clery is also in favour of retaining tips. “I quite like the gesture of gratitude that is involved,” she says. “I don’t think we have the same problems that exist it the US and because of our minimum wage people are not relying almost exclusively on their tips as they are in many places over there. I will always tip in cash however. I don’t trust the card system and I don’t know if restaurants always deliver it equitably.”
Fellow food critic, Tom Doorley agrees. “Tipping can be a very complex field,” he says “It is a real concern when service charges are included in the bill as we, as diners, don’t know where it is going and if it is, in fact being distributed to the staff. There seems to be a lot of caginess about it in some restaurants.”
Another reason for concern about service charges are the tax implications. In 2008, following a ruling from the European Court of Justice, Revenue has had to drop a concession which meant service charges were not liable for VAT if they were distributed in full to staff. Payments made by customers but not included in the bill remain outside the scope of VAT.
Doorley is ambivalent about the merits of scrapping tipping. “I tend to tip myself. To be honest because restaurant staff might know who I am, I tend to go overboard. I don’t want to be known as a mean bastard.
“In France, Spain and Italy they have an entirely different culture. The whole notion of service is not demeaned and it is considered to be a career rather than just a stepping stone to doing something else. I think it would be great if we could get rid of tipping and compensate staff properly but to do so you would have to restructure the whole industry and I certainly can’t see that happening in the short term.”