What We Wish Restaurant Guests Knew About Tipping
This story is part of The New Rules of Dining Out. Read the rest here.
Tips have a thorny past. Tipping was first popularized in the United States after emancipation, when formerly enslaved people working in the hospitality sector were expected to work for tips in lieu of wages. Since then, tipped workers have continued to depend on the whims of customers for their income. In one recent study, the Economic Policy Institute found that in states like Virginia, Texas, and Alabama, where restaurant owners can pay employees the federal tipped minimum wage of $2.13 an hour, 18% of hospitality workers live in poverty, a rate double that of non-tipped workers in those same states.
Whether you're settling in for a prix fixe dinner or grabbing an espresso to go, your tip has a huge impact on restaurant workers' lives. Still, according to Michael Lynn, a professor at the Cornell University School of Hotel Administration and tipping expert, only about 70% of the country knows that it's customary to leave a 15% to 20% tip. Ultimately, because tipping is so widely varied based on city, state, and restaurant, the best version of the system may be the one that is largely agreed upon by everyone, from servers to chefs to dishwashers: Do away with the subminimum wage, and pay everyone a full minimum wage. Until we get there, tip with empathy, certainly no less than 20%—especially if your check is small.
Can Tipping Be More Equitable?
Here are the ways restaurants are trying to even the playing field when it comes to tipping:
Pooled Tips Among All Workers
"I don't know any other industry other than sales where so much of your wage is dependent on the customer," says Sean O'Connor, general manager of Dóttir in Portland, Oregon. At Dóttir, staff make the full state minimum wage, which will be $14 on July 1st. On top of their hourly pay, O'Connor uses a practice known as "tip pooling." This means that every dollar of the tip is put into one pot of money and distributed between staff based on hours worked. Front-of-house workers––servers, bussers, bartenders––get 65% of the tip pool; back of house––dishwashers, line cooks, chefs––split the remaining 35%. "In the best case it builds more teamwork, and a more even playing field for everyone," says O'Conner.
In Kentucky, chef Ouita Michel runs seven locations all with slightly different models, but her most common practice is also tip pooling. At her counter service locations, every single employee shares the tips. On average, tips add between $3 and $5 per hour to each employee's hourly wage. "We try to work with what makes each staff the most comfortable," says Michel.
"Only about 70% of the country knows that it's customary to leave a 15 to 20% tip," says Mike Lynn, a professor at the Cornell University School of Hotel Administration and a tipping expert.
Pooled Tips, But Only for Front of House
Cristina Schenk, CEO of Merriman's Hawaii, oversees four locations with over 200 employees. In addition to a minimum wage of $10.10 an hour, front-of-house (FOH) workers pool their tips for each shift, which are then distributed among FOH staff. "It really evens out their earnings," says Schenk. "If they're unlucky, and get a table that sits for three hours, they don't get dinged." Back-of-house (BOH) staff earn between $16 and $24 an hour plus another $3 to $4 an hour that comes from a 2% service charge applied to every bill. "I think it's important for guests to realize that tips are rarely shared with kitchen staff," says Schenk.
At La Luna and Tree House in Chicago, Samantha Sanchez doesn't distribute tips to the back-of-house staff, either. Tipped wages allow small businesses like hers to remain open. "As a restaurant owner, it's very upsetting to have tables walk out tipping less than what I consider the appropriate amount," says Sanchez. "Many industry workers consider this their full-time career, rather than a temporary job."
A third proponent is Max Stampa-Brown, beverage director for The Garret Bars in Manhattan, New York. Through the pandemic, he ensured that everyone at The Garret Bar's three locations learned the different service roles. Once this happened, it was actually the staff that suggested they split their tips evenly. In addition to an hourly wage of $15, staff "average anywhere from $400-$600 per weekly paycheck," says Stampa-Brown.
Studies have shown that guests tip the same regardless of how tips are distributed. "But they like thinking that servers are keeping their tips," says Lynn.
A Service Charge, Instead of Tips
Life is much different at Petite León in Minneapolis, Minnesota. No tips are collected, and in its place is a mandatory service fee of 20% on all checks. Jorge Guzman, chef and co-owner is optimistic. "It's kind of a big idea but I think that we've done the math, and it will succeed." After subtracting payroll taxes and employee benefits, the remainder is split by the employees. Everyone, including the owners, are paid $22 an hour. This was the number Guzman, and his partner Travis Serbus, came up with after determining a living wage ($45,000), then dividing it by 40 hours a week, and 52 weeks in a year. Extra money, Guzman hopes, will be paid at the end of the year in the form of a bonus.
In a 2018 study by Lynn, he found that transitioning from tips to service included harmed the online reviews of mid- to lower-priced restaurants. When expensive restaurants converted to service charge there was no downside.
What About Delivery Drivers?
One thing that went up during the pandemic was our food delivery habits. DoorDash, a 3rd party delivery provider, says it gives its drivers 100% of the tips they earn. This comes on top of an hourly wage that ranges from $2 to around $10. Slice, a tech and delivery platform that supports independent pizza shops, charges owners a flat fee of $2.50, and then passes 100% of the tips over to drivers. "These drivers are making somewhere between $100 - $200 a shift," says Slice CEO Ilir Sela.
This explains how drivers get their tips, but what about the kitchen staff back at the restaurant? At Square Pie Guys, in Oakland and San Francisco, tips are pooled and split evenly no matter the job. When the pandemic hit, wages plummeted because dine-in eating disappeared, and tips went to drivers. Marc Schechter, and his partner Daniel Stoller, quickly discussed how to make up the difference. "We guaranteed staff $4 an hour in tips even though we didn't have tips from our customers," says Schechter. But sales were up, so instead they took the money from their own sales.
Research into tip recommendations—when specific numbers are suggested at the end of a meal—shows that when you give people a larger tip recommendation, the more that guests will tip. "Fewer people will tip," says Mike Lynn. "But the higher number is so much more."
One positive outcome of the pandemic is that it shined a light on the industry and given us a glimpse into how difficult it is to run a restaurant. As much as we've missed our favorite places, they've missed us too. When we're all back to indoor dining, take time to ask your server how they handle tips. There's a good chance they'll want to share exactly how it's done. One thing universally agreed on by everyone we talked to was that the smaller the check, the more money you should tip.
President Joe Biden failed to get the minimum wage to $15 in his recent stimulus bill, but if the Raise the Wage Act of 2021 is passed, it will gradually increase the federal minimum wage to $15 by 2025. It will also phase out the subminimum wage for tipped workers by guaranteeing that they are paid at least the full federal minimum wage, ensuring decent, consistent pay for every server in the U.S. To support a full minimum wage for all, visit fightfor15.org.