Josh Kopel | Award Winning Restaurant Consultant

Restaurant Advertising: The (Uncertain) Future of Tipping

Tipping is as American as the stars and stripes. 

5 Day Restaurant Profitability Challenge

It is deeply embedded in our culture to tip our service staff in almost all situations. 

The coffee shop.

The fine-dining restaurant. 

The hotel valet.

5 Day Restaurant Profitability Challenge

The bag-checker at the airport.

The guy that dries your car at the carwash.

They all have that layer of expectation that, at the end of your interaction, you’ll reach into your pockets for the extra 15-20%.

It has been incredibly interesting to talk to folks on their differing perspectives of how the tipping system could change and the results they have found in their own businesses. Today I want to talk through some alternative solutions to tipping. Even if I don’t choose to integrate these systems myself, it’s well worth thinking about and discussing.

The Fair Service Framework

Jon Strader, founder and owner of Hatchet Hall, talked me through his thought process for installing a service fee. “A minimum wage of $15.25 is just unsustainable for a restaurant running on 10% margins like ours. I think now is the perfect time to reconceptualize into a service fee model that the whole building can benefit from. We can then pay all staff a liveable, workable wage then we won’t have a line cook being paid $17 an hour and the servers getting $50-60.”

I think Jon raises some very valid points here. A service fee could, in some ways, democratize how staff are paid and relay that cost back to the customer. That way it’s possible to parse out the service fee in a way that rewards every member of the team proportionately. 

This is a strategy that is often applied in Europe. Many high-end London restaurants operate this way, while still enabling patrons to leave behind some cash for their server if they so choose.

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The Gratuity-Free Zone

Joelle Parenteau, founder and owner of Wolf Down, has a completely different approach. For her, the tipping system was just antiquated and in need of reform. 

“It creates so much inefficiency in the model. I don’t think the tipping system actually works. People usually have a certain tipping amount they tip every time and never change it so it doesn’t really incentivize anything. It is expected so it doesn’t really improve service either” she told me. 

For Joelle, the only option was to take tipping off the table…literally. She adopted a non-tipping system at Wolf Down by raising her menu prices to cover higher wages for her staff. 

Potential Issues

Both Joelle and Jon reflected that, as a tipping culture, it is tough for their patrons to adjust. 

“Some people were very upset about it and demanded that they have a way to tip,” admitted Joelle, “So finally we had to put a tip jar by the counter to appease the very pushy, angry customers who want to tip.”

This is the sticking point for me. How would customers take to this a drastic change? 

It is such a force of habit in American culture, that it would be quite revolutionary to abolish tipping in restaurants altogether. 

Though service fees and raising prices to cover wages are sound ways to operate your business, it is the customer that could find it most difficult to adjust. 

Looking into my own processes of pricing my menus and paying my staff, removing tipping from the equation could be an intriguing step. 

To tip or not to tip? I’m not sure yet but these discussions show me that the hospitality industry is revising, rethinking, and remodeling in a way we have never seen before.

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