The practice of gratuities in restaurants

Jasmine Lopez
Capstone 480
October 18, 2015

Problem:
Gratuities are affecting
restaurants

Proposed
The banning of tipping in a
solution:
restaurant

dication of tipping for a restauran

1. increase customer satisfaction
2. create consistency throughout the frontline staff
3. and improve managements bottom line.

Lets define some uncommon

terms:

Gratuities

(more commonly known as "tips")

voluntary monetary contribution received by the employee directly from a guest for service rendered.

started in Europe

The word

TIP

stood for

ns ro
ur m
pt
e

ne
ss
wealthy Americans brought the
custom to show off class

increases customer satisfaction

Tipping provides incentives for poor service
Employees reduce their service quality if they believe
a customer will tip poorly.
Employees focus on behaviors that lead to tips at the
expense of other tasks.
Cooperation and teamwork may suffer if employees
become too focused onearning their own tips.
(Toister, 2011)

working for tips encouraged selfishness rather than

teamwork. Furthermore, good service isnt

rewarded with a big tip, and most

importantly, a bad tip for poor service.
(Wachter, 2008)

In fact, studies show that service is not the

primary reason why people tip
- Related to gender
- Attractiveness
- Friendliness
- Race
- Clothing and Accessories

"People tip regardless. It's more societal pressure that

weighs on the decision.
-Martin O'Neill, Hotel and Restaurant Management program director at Auburn.

create consistency throughout the frontline

staff

Servers can make up to $25 an hour.

"Right now I prefer the hourly just because you know how much you are
going to get paid, one server said. It's a very fair wage.
(WFSB, 2015)

No one argues about what section

Wages are consistent
Paying state and federal Taxes are
reported fairly along with benefits and
meals
morale

of their restaurants were up

increased

in

efficiency.
(Antell, 2014)

improve managements bottom

line.
Evens the pay gap in employee wages
Simplify bookkeeping
Not subjected to confusing tax laws
Keeping employees happy means that dont want to leave
your establishment
Savings in time and training

This will help cut your labor cost

Scenario #1
A couple is debating on which restaurant they
want to patronize. They are stuck in a
crossroads
-both restaurants have your favorite food: beef
bourginon
they both have your favorite wine: cabernet
sauvignon
The difference: the restaurant on the right
refuses to take any gratuity for the meal
Which restaurant would you favor in going?

improve managements bottom

line.

Customers feel like the have the power when the have the
opportunity to tip their servers
Customers tend to think that leaving a poor tip gives the server the
impression that they need to do a better job next time

Servers do not connect a low tip with

service

poor

By eliminating tipping, customers are urged and

forced to vocally complain about their service.

This helps management to continually

improve

The National No-tipping movement:

Restaurant Riki, New york
Sushi Yasuda, New York
French Laundry California
Alinea- Chicago
Per se New york
Atera, New York City
Thomas Keller Napa Valley
The Linkery- San Diego
Church Lounge New York City
Popular high-end restaurants are
doing it!!

How to implement this process?

Increase menu prices

Add service charge to cover the
overhead
Increase revenue to offset labor
cost

Rebuttal:
Hesitation of staff and consumer

Some waiters can make up to six figures annually at high-end

restaurants

Customers feel like the have the power when the

have the opportunity to tip their servers

Bar Marco:

Founded in 2013. owner decided to eliminate tipping

starting in April. In two months, profits and revenues increased while
cutting expenses nearly in half.

profit

Revenues

Water bill

Tipping
no tipping

Overhead cost
0%

50% 100% 150% 200%

(Weiss, 2015)

Conclusio
n
With such fierce competition and slim profit margins,
restaurants need to think of non-traditional ways of
cutting costs while keeping their staff and customers
happy. One way to help with this problem is to ban
tipping. Change is never easily, but it is inevitable.
Owners and managers need to be innovators of our
industry and not hide behind the paradigms that
plagued us for so long.

References
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-industry-considers-moving-away-tipping-avoid- service-charge-lawsuits/
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