Less than a year ago, restaurateur Danny Meyer of Union Square Hospitality Group announced that he would be eliminating tipping at 13 of his New York City restaurants. He implemented this shift by raising menu prices and informing his guests that these higher prices now include a charge for hospitality. While some establishments had already eliminated tipping and some social advocates had been for some time calling for its elimination, Meyer’s decision was like a shot across the bow of the entire industry. Meyer is one of the most successful restaurateurs in the nation and an icon among operators. His advocacy made an industry-wide shift in the way we compensate our employees seem possible … or even inevitable.
At the time, we published a comprehensive summary of the issues likely to have an impact on the establishment of public policy, as well as on the decisions being made by operators about their own futures. We drew some conclusions, but we were hesitant at the time to draw too many. There is plenty of research regarding the efficacy of tipping from the perspective of the consumer, but this research needed to be evaluated and synthesized. We found significantly less research regarding server attitudes toward tipping and its elimination, a real problem considering this is the group most impacted by this change. We felt the passage of time would also provide some clues about how things would work as the results of early adopters were revealed.
We decided to tackle these issues head-on in an effort to best understand the implications of the widespread elimination of the tipped wage. Time has taken care of itself, and we have seen results from early adopters. We have noted these results, as well as common circumstances where they exist. We have undertaken a review of existing research and evaluated it for application to the current environment. Where we found a gap in the research, we surveyed hundreds of tipped employees and managers of tipped employees to see where they stood on the issue.
This first installment will summarize the original research we conducted to assess the attitudes of industry managers and employees toward the elimination of tipped compensation. The second will combine existing research and information with our own original research and the lessons from the passage of at least a little time to assess the implications of such a change on the industry and for hospitality managers and employees.
We undertook our own research to get to the heart of the feelings of tipped servers and their managers. Asking these folks how they would feel about tip elimination and what they would be most likely to do should this change come to pass provides important information about how eliminating tipping might change the nature of food-and-beverage service and perhaps even who would be most likely to provide this service moving forward. While our overall survey respondents provide for an excellent pool of data, we were careful to ask questions that allow us to segregate out the responses of tipped workers and managers of tipped workers. Their opinions and possible actions provide the best information about the results of future change.
In order to gather the necessary data, we devised a 10-question survey with the intention of distributing the questionnaire to professionals in and around the hospitality industry. The survey was posted on the Nightclub & Bar website and the Johnson & Wales University College of Online Facebook page, and was shared on a variety of social media sites. Hard copies of the survey were distributed to attendees at select seminars at the 2016 Nightclub & Bar Convention and Trade Show in Las Vegas. We hoped for a large response. Perhaps demonstrating the significance of the topic to those within the industry, the response rate was overwhelming. In the end, we collected 369 surveys.
The questions included on the survey were designed with two purposes in mind. First, we wanted some information about server attitudes toward the tipped wage and its elimination. We asked three questions in this vein. The first was in regard to the general favorability of tip elimination, “How favorable would you be to the elimination of tips?” The second addressed tips as a motivating factor, “If tips were eliminated at your establishment, you would be most likely to (keep working there or leave the establishment)?” The third was designed to predict future action if tips were eliminated, “If tips were eliminated, you would be likely to provide (what level of service moving forward)?”
Second, we were looking for some demographic information that might have a significant impact on the respondents’ attitudes. For example, would managers feel differently than tipped servers, in general, about the elimination of tips? Would highly compensated tipped employees be more likely to work for an hourly wage than tipped employees compensated at a lower rate? Would men be more likely than women to provide a poorer level of service if tips were eliminated? We therefore included seven questions on the survey designed to gather some characteristics of our respondents and how they answered questions concerning favorability, motivation, and action. We asked about position type, establishment type, percent of compensation derived from tips, total compensation, age, hours worked, and gender.
With the assistance of Dr. Robert Gable and the Center for Research and Evaluation at Johnson & Wales University, we entered the data and ran a series of statistical analyses.
It wouldn’t be an exaggeration to characterize the results of the survey as being overwhelming…as in, the overwhelming majority of respondents to the survey, regardless of their demographic characteristics, have a strongly negative impression of the elimination of the tipped wage. It might be expected that people doing a thing might not like it if they couldn’t do that thing anymore. It might be unexpected that their feelings are so strong.
How favorable would you be to the elimination of tips?
Nearly 77 percent of total respondents indicated that they had a generally unfavorable opinion regarding the elimination of tips. Approximately 64 percent of respondent’s opinions were extremely unfavorable. Interestingly, the only statistically significant difference among different demographic groups for any of our attitude questions was within this category. Put in layman’s terms, tipped employees really hate the idea of eliminating tips (89 percent unfavorable), managers just hate it (72 percent unfavorable).
If tips were eliminated at your establishment, would you be most likely to (stay or go)?
We asked if the elimination of tips would result in our respondents “moving on.” One in four of our respondents indicated that they would stay in their current position if a tipped wage were eliminated; 40 percent indicated they would seek out an establishment with tipping, while another one in four would simply leave the industry. The responses to this question hold significant information for operators who eliminate tipping and especially for those who might choose not to. We’ll explore the ramifications of this set of responses in greater detail the next installment of this series.
If tips were eliminated, you would be most be likely to provide (what level of service moving forward)?
The opinions of the tipped employees who responded to our survey were split in one regard—but they agreed in another. Half of these respondents indicated that the elimination of tips would have no impact on the quality of service they provide their customers. An almost equal number, 46 percent indicated that the elimination of tips was likely to result in a lower level of service provided. The area of agreement? Only 3 percent of tipped employees indicated that the level of service they provide would be likely to improve. This is another significant finding that we will explore in greater detail a future post.
This article originally appeared on Nightclub.com. Paul Bagdan, PhD, also contributed to this post. For more articles by Professor Brian Warrener that appeared on Nightclub.com please click here.
The authors wish to acknowledge the support and guidance of Robert Gable, EdD, and Felice Billups, E.D, at the Center for Research and Evaluation at Johnson & Wales University and Kristen Santoro and Ashley Garceau of Nightclub & Bar.
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