Anyone who frequents restaurants (and that means most of us), should have their antennae up on the issue of tip elimination. After all, the trending practice impacts how much you could pay for your meal — and higher prices are hard to swallow.
That said, no one would be more impacted by the practice than servers. What do they think of the idea? Read on for four reasons why we thought they’d find it unfavorable, what we discovered when we polled those in the industry, and our study’s ultimate conclusion.
Question: How are servers likely to react to the elimination of tipping?
Answer: Not well!
For tipping to be eliminated on a grand scale, this population will need to buy in. Our new research and what is already known about the general characteristics of servers provides some insight into their likely reaction.
- Servers are motivated by money. Serving and bartending are tough. The work can be physically demanding, the hours are long, the workweek is unconventional, and the public can be difficult. The primary motivation for doing these jobs is that they pay well. Yes, you need a passion to provide great service, but you could do that at Target without having to clock out at 2am on a Sunday morning. The sacrifice warrants a reward.
- Servers are risk takers. We surveyed some of our students at Johnson & Wales University who are professional servers, asking them if they would prefer a steady hourly rate over the uncertainty of tips. All of them indicated they preferred tips, with many mentioning the actual amount of money they can make on a busy Friday. When asked about a dead Tuesday, they again mentioned the bonanza on Friday.
- Servers are entrepreneurial. This same group of our students indicated that they worked hard to provide great service and to upsell because of the direct financial benefit to them. They preferred working alone and expected to benefit from their effort. They didn’t expect the house or their coworkers to take what they had earned.
- Servers are transitory. So many servers are really something else: students paying their way through school, out-of-work accountants looking to make ends meet until the next accounting job comes along, teachers looking to supplement their incomes or stay busy during the summer. Point is, they are on their way to something else and serving or bartending is a part-time gig or temporary weigh station. They want to make as much money as they can until they can move on. This is reality. They are not likely to be interested in professional development, promotion, specialized training, or 401Ks. These items motivate careerists, not transients.
These factors surely help explain the preference for the tipped wage we found among respondents to our formal survey.
- Eighty-nine percent of tipped employees indicated an unfavorable opinion of its elimination.
- Perhaps even more significant, we asked if the elimination of tips would result in our respondents “moving on.” One in four would stay in their current position if a tipped wage were eliminated. Forty percent indicate they would seek out an establishment with tipping while another 25 percent would simply leave the industry.
These results have significant ramifications for operators considering the elimination of tips at their establishment. You can expect a significant number of your staff to leave. If tips were eliminated industry-wide, one-in-four servers indicate they would move on from the industry. An unintended consequence may be a resultant shortage in servers and bartenders to go along with the one in the kitchen currently plaguing the industry.
What’s the bottom line?
The evidence above seems to indicate that an organic shift away from the tipped wage for service employees is unlikely. The great majority of industry-constituent groups — consumers, operators and managers, and tipped employees — don’t like the idea.
Thus far, a few operators in a few locales have adopted a no-tipping model. These early converts have tended to be in cities and states with a unique set of conditions, especially a higher than average minimum wage and shortage of skilled kitchen employees. They have also tended to have average guest checks at the highest end of the industry, where their customer base displays less price sensitivity and is therefore more likely to accept the higher menu costs associated with the elimination of gratuity. If the elimination of tipping is driven by industry forces, it is likely to come slowly and be driven by increased consumer acceptance at all industry segments.
If the elimination of tips is to come anytime soon, it is likely to be driven by policy makers increasing minimum wage and eroding the tip credit, making it difficult all over to attract skilled hourly employees to work in the kitchen. Many operators will look to the front of the house to find the increased money needed to pay those working in back. The shift could result in at least a temporary shortage of servers until the industry adjusts and a new normal appears.
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.