The practice of tipping in a restaurant is ingrained in the American consciousness, and with good reason: We’ve been tipping since the late 1800s.
Despite the rocky start (it was initially frowned upon), tipping became the norm in America.
Now, more restaurants are moving away from tipping in an effort to streamline their business and improve the environment for both employees and guests.
The decision to move from a tipping restaurant to a non-tipping one is not easy. There are many pros and cons of both to consider.
Pros Of A Tipping Restaurant
One of the first pros of a tipping restaurant is that guests pay what they feel is fair based on their perception of the quality of service in addition to the total on their bill. Called “equity theory,” many believe this is the most efficient way to incentivize servers to work harder and provide better service.
Tipping also leads to reduced menu prices, allowing owners to keep their menu prices low, which increases guest demand for their service.
Cons Of A Tipping Restaurant
And while there are many advantages to tipping, there are also plenty of cons for the tipping model that have been debated over the years. The main argument is that tipping lends to unpredictable server income and unequal staff income.
Since servers depend on tips to make a living in addition to their base wage, which is often the minimum (or even lower), leaving tipping in the hands of guests means that their income can vary significantly from night to night.
In addition, non-server workers who do not receive tips like kitchen staff and managers see a wage disparity. In fact, in some states like Washington, Oregon, and California, employees cannot share their tips with “back of the house” staff, adding to the problem.
Pros Of A No-Tip Restaurant
By moving to a no-tip model, there may be the removal of wage disparity among staff. More often than not, tips left by guests go directly to the servers, leaving kitchen staff, bar backs and managers with the scraps or nothing at all.
By removing tips and modifying their wage system, some restaurants have been able to remove the pay disparity by devising a “one house” model. In other words, there is no distinction between the front and the back of the house.
In addition, with the raised menu prices that come with a no-tip system, employers can raise wages for all of their employees.
A no-tip restaurant can also lead to a better diner experience. Many guests do not like tipping, as they feel pressured to leave a good tip or perhaps even guilty if they cannot leave one. Including the tip in the bill as a service charge takes the pressure off of guests.
Cons Of A No-Tip Restaurant
One of the main concerns of no-tip restaurants is rising food costs. In order to compensate for the lack of tips, restaurants have to raise their menu prices, which may put off guests who don’t want to pay more for their meal (even if they would be paying the same amount in the end were a tip included).
Going back to wages, another con of moving to a no-tip system is that some servers may not like the new system since their hours may not be as flexible as they were before. They may also have to work longer hours since everyone gets paid the same.
Another criticism of no-tip restaurants is that without tips, servers won’t be as motivated to provide good service for guests.
The biggest challenge of becoming a no-tip restaurant is getting everyone on board (both staff and guests) and used to the concept. Be sure to consider all the pros and cons of tipping- vs. non-tipping restaurants carefully before deciding on what is best for your business.
Did you realize a cloud-based POS system can help you streamline your restaurant regardless of whether you have tips or not?