No-tipping restaurants: A new trend in the US
Tuesday, June 07, 2016
More U.S. restaurants are opting in the no-tipping policy, according to a new CNBC report. The report also cited the results of an American Express Restaurant Trade Survey with 503 random restaurateurs:
- 18 percent of restaurant professionals admitted they had already adopted the no-tipping policy.
- 29 percent indicated they would adopt a no-tipping policy soon.
- 17 percent would follow the trend if their competitors also introduce the same policy.
- 10 percent remained undecided.
- 27 percent stated they would not follow the no-tipping trend.
While no-tipping is a common practice in many other countries with great hospitality, such as Japan and New Zealand, it is a relatively new concept in the U.S. because most consumers here are still expected to leave 15-20 percent of the restaurant bill for tips.
It was not until recent years that I heard hotels and restaurants in the U.S. were adopting the no-tipping policy. The Elysian Hotel in Chicago was the first example that caught my attention back in 2010. Since then, I have heard more and more restaurants in New York City are implementing the no-tipping policy as well.
It seems to me there are some pioneers in the hospitality industry who are pushing the wheel for no-tipping service. Then, as more places refuse to accept tips, will the U.S. eventually become another no-tipping country in the future?
Possibly, but for now, I would like to remind those pioneers they must communicate the right messages with their stakeholders. Some consumers might take a restaurant's no-tipping policy the wrong way and thus start forming bad impressions of the business.
A friend of mine, for example, is the one who always makes sure a server gets a good tip. When we go out, I usually leave an $8-10 tip for a meal of $50 or so because that seems to be the right amount for most Americans.
My friend, however, always wants to double my tips. More than once, he has questioned me: "Don't you know how hard those servers are working? Yet many of them are making way below the average wage. So, we must tip them really well to make it up."
I feel good for my friend because I know he has a good heart, and I understand it is not easy to wait on tables, but I also know servers in California will get paid minimum wage plus tips. Therefore, servers working in a busy restaurant should be making a reasonable income in California.
Then, my friend would often repeat the same story about his wife who used to work as a waitress in a restaurant. She knew it was a demanding job, and she realized how little she got paid. From then on, my friend and his wife always leave a tip of 30-40 percent.
I doubt consumers like my friend and his wife would think positively about a restaurant if they were asked to leave no tips at all. Therefore, it becomes critical for no-tipping restaurants to communicate the following messages with their consumers and employees:
- Educate consumers and employees on how things "work" and are calculated in a no-tipping restaurant.
- Show a competitive wage of the servers working in a no-tipping restaurant as measured against the wage in a tipping restaurant.
- Demonstrate that the servers working in a no-tipping restaurant actually receive better or the same benefits as those working in a tipping restaurant.
- Document workers' satisfaction in a no-tipping restaurant, showing how it compares to the workers' satisfaction in a tipping restaurant.
Do you expect to see more no-tipping restaurants in the U.S.? What advice will you give to the restaurateurs in coping with such changes?
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