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From how tipping got started, to global tipping standards, read on to learn about whether the US should continue its tipping practices.
We’ll set a stage for you: Imagine you’re dining at a restaurant in Japan. You’ve budgeted just enough money for tonight’s sushi meal. As the waiter brings you your bill, you feel a ping of delight. You suddenly remember tipping is a faux pas in Japan. You’ll get to keep those extra Yen for another Kirin beer!
The tip-avoidant society of Japan is a far cry from the US’s tip-crazed culture, where the majority of a server’s income is generated through these customer payments. Today the standard rate of gratuity in the US is 15-20% (21% for parties over eight people) and applies not only to restaurants and bars, but to any personal service or on-demand delivery.
Tipping practices vary significantly throughout the world. The African countries of Morocco and South Africa tip similarly to the US but at the lower rate of 10 to 15 percent. Areas in the middle east have also normalized tipping, but require it be done discreetly. In Europe and South America, a service charge is often added to the bill accounting for the tip. Yet, in Australia and much of Asia tipping can be viewed as insulting.
So which country’s got it right? Should we get rid of tipping in the US or go as far as to make it a legal obligation? We explore some of the benefits and drawbacks of tipping below.
With tips, servers make $2-3 an hour with no benefits. When tipping is eliminated it allows for servers to make a living and steady wage. Base salary for hosts and waiters may start at $35,000. On top of this, all staff would enjoy the benefits of healthcare, paid vacation and perhaps shares of company stock.
“You cannot tell me that your business model relies on paying people below the poverty line. You gotta have more pride in your business than that,” says Bob Fry of the restaurant Bar Marco. Fry eliminated tipping and increased servers' wages in 2017. Bar Marco saw profits triple.
Fry goes on to state that switching to a non-tipping business model has not lessened the good service his restaurant provides. “Whether it’s good service or bad service, people tend to tip the same amount,” he said. “When you have bad service, you just don’t go back. So in reality, tipping hides how people actually feel.”
The Labor Department has also brought up concerns about the fairness of tipping-based compensation. “There is a lot of wage theft, tip stealing in restaurants and other sectors where workers depend on tips,” Christine Owens of the National Employment Law Project.
Saru Jayaraman, president of Restaurant Opportunities Centers United, director of the Food Labor Research Center at UC-Berkeley, and author of Forked: A New Standard for American Dining, argues that making employees rely on tips for a livable wage reinforces objectification at work.
"As women earning just a few dollars an hour from their employers, they are forced to tolerate inappropriate behavior—from lewd comments and groping to assault," writes Jayaraman. "Since half of all American women work in restaurants as their first job, they are introduced into a world of work in which sexual harassment is normalized and even encouraged in order to please the customer."
Many servers prefer the tip model of compensation, saying the reliability of a higher base salary would actually mean lower wages. Therefore restaurants who don’t allow tips experience higher staff turnover.
Some waiters and waitresses have been so disgruntled they’ve brought class action lawsuits against their employers. In October 2017, a lawsuit was filed in California alleging restaurant owners were eliminating tips to raise prices as part of an anti-competitive conspiracy. The lawsuit targeted several well-known restaurant executives in New York and the Bay Area, including Danny Meyer and Momofuku's David Chang.
Although levels of customer service are unaltered, customer satisfaction and reviews still take a hit when tipping is eliminated. Michael Lynn, professor of food and beverage management at Cornell University’s School of Hotel Administration, found that banning tips isolates patrons and increases negative reviews. This holds true even if the restaurant compensates service in other ways, like with higher menu prices. “People perceive the service is worse if there’s no tipping,” says Dr. Lynn. To corroborate these findings, another recent study revealed diners are happier when they can leave a tip.
Tipping originated in the taverns of 17th Century England. Drinkers would slip money to the waiter “to insure promptitude” or T.I.P for short.
This practice was not introduced to the United States until just after the American Civil War in the late 1800’s. During this time wealthy Americans traveled abroad to Europe where they saw people tipping in bars and restaurants. Americans brought this aristocratic practice home to “show off” and boast their superior class.
Americans also were opposed to tipping as it seemed like they were paying for a service twice, once for the employer and once for the employee.
Americans outside of the upper classes combatted tipping and movements against the practice, such as ‘Anti-Tipping Society of America,’ formed in the late 1890’s. These organizations claimed tipping went against American ideals. It permitted the financial dependence of a subservient class on a higher class.
These groups were also supported by politicians. State legislators from Wisconsin, Illinois, Iowa, Nebraska, Tennessee and South Carolina created an anti-tipping bill that would outlaw the practice.
Eventually, the practice of tipping became formalized across the United States in the 1960s through a series of congressional regulations passed on minimum wage for tipped employees.
Despite tipping’s entrenchment in the US restaurant and service industry, a few top restaurants in New York and LA have been switching to tip-free policies. Most of these restaurants eventually reinstate the practice of tipping just months later due to high turnover and low perceptions of quality.
So how can these insights on tipping help you run your service business?
There are ways to enhance tipping’s positive effect on deterring turnover, bringing in top talent and increasing customer’s perceptions of quality within your service industry.
One of the best ways to do so is through systems and processes that facilitate consistency and general ease of use at your restaurant. Technology plays a major role in the systems and processes powering your operations. When you consider your tech stack, you may want to implement a robust—yet intuitive—point of sale (POS) platform, like Revel Systems®.
If you remain firmly in the “pro-tipping” camp, Revel seamlessly integrates tipping prompts within the checkout process through pre-calculated tipping options on checkout displays. For non-sit down services like cafés, this is especially helpful as it ensures your employees earn tips even when patrons pay with credit cards. Learn more about Revel’s restaurant POS system and how it can benefit your company.
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