Tipping: Let’s talk about it

The hospitality world continues to adapt to their mid/post-pandemic reality, as arguably one of the most hard-hit industries in the country. New waves of turmoil seem to be unrelentingly impacting the everyday lives of service and hospitality workers in ever-evolving ways. Last night, my wife and I were watching a news story on UberEats drivers discriminating against taking smaller, cheaper orders, due to the recent spike in gas prices. We wound up discussing the way that tipping influences the customer –> server (or in this case, customer –> driver) relationship, and she pointed out that a lot of people don’t understand the nuances, finances or etiquette of tipping, so I figured I’d try to shed some light on the subject.

First of all, let me clear up some things: there are lots of industries whose professionals rely on tips to make their fully expected income, and I’m not meaning to denigrate or diminish the importance of those professions. However, my area of expertise is in the foodservice industry, so that is what I’ll be implicitly referring to here. Second, I understand the cultural reality of tipping in the US is very different from how it is in Europe (and other parts of the world), and I know the current US model doesn’t make much sense. I’ll be touching on all that later, and I do think the US should abandon this model in favor of servers being paid like regular workers, but at present there’s no mass movement to shift to the European model. So as US diners, we all are subjected to the current model. All that being said, here we go!

Tipping is basically a way of showing appreciation for someone performing a service that involves direct interaction and customer service. Restaurant servers do things like take your order (subsequently communicating it to the kitchen), bring you beverages, napkins, water, condiments, and basically do everything they can (within reason) to accommodate your dining experience, so that you don’t have to even get up. I hope we can all agree that anyone who does these things for you deserves to be paid for it. Furthermore, having a person doing all these things for us is probably a big reason why we all enjoy dining out!

In the US at present, restaurants typically don’t pay their servers any more than minimum wage. In fact, in some cities/states, there is a different minimum wage for “tip-based income” employees, which can be (no joke, literally) around 25% of the standard minimum wage in that same municipality (I think back to the last time I was living/working in one major US city, where the minimum wage was $7.50/hr, but for tip-based workers, it was $1.90/hr). This is why it’s customary to tip your server a particular percentage of your total bill at the end of your meal. If you want to know how much fiscal responsibility you as the diner have to the upkeep of the waitstaff, please do research what the minimum wage for tip-based employees is in your locale.

The nationwide standard tip amount is 18% — don’t ask me how that number was decided upon, just accept it and move on. This isn’t a strict technicality though. Like when ordering from a bar, it’s customary to tip the bartender $1 per beer/wine, and $2 per cocktail. Likewise, if you have a particularly expensive meal — maybe you splurged and bought a <$100 bottle of wine — and your bill is upwards of $300, you aren’t necessarily expected to tip $54 (though it would be polite).

The 18% also is a median for the general population. As an industry professional (we tend to look out for one another), 18% is what I’ll give if the service was terrible. Normally, I’ll tip closer to 25%, and if the service was exemplary or if it’s a place I frequent with staff I know, I’ll usually come in close to 33%. Others on the other hand tip like, a max of 15%, a median of 10% and sometimes won’t leave anything if the service was poor. This is why the median is 18%: it is right there between people like that, and people like me.

Let’s consider the poor tippers, because I think it’s those people who are most in-need of this explanative essay: I don’t think people tip poorly because they’re generally assholes — I think it’s just a lack of situational understanding.

Many people hold a position on tipping that is something like, “I’m already paying an up-charge for the food and drinks. Why should I pay extra out-of-pocket just for the server? The restaurant should be paying the servers with some of what I paid for the food.” This isn’t an unreasonable perspective to have. After all, why is it that of all the things a restaurant offers as a part of a dining experience that are presumably financed out in the menu cost, wait service is the one thing unaccounted for? That is after all, how they do it in Europe (more or less).

If you don’t know how the finances of restaurants work, this is a super valid perspective. But when you get a glimpse behind the curtain of where that extra money you pay for your food at a restaurant actually goes, it starts to make a lot more sense. In a standard restaurant business model, the food itself should account for roughly 1/3 of the menu cost (meaning if the actual food of a given dish costs the restaurant $3, the dish should cost around $9). Some of the other 2/3 goes to things like paying the other staff (kitchen, bar, managerial, host, busser, etc.), The rest will go toward paying for all the other things needed to make a building/physical structure operate: water, gas, HVAC, insurance, etc. Things like linen service (napkins, tablecloths, kitchen towels, etc.), garbage/recycling fees (public taxes usually don’t cover private business’ waste-removal), and mechanical maintenance (dishwashers, ovens and POS systems have all been known to need repairs), are only some of the things that need to be paid for — just for the restaurant to break even! This speaks nothing of what the manager (and the owner, if they aren’t involved in the day-to-day running of the place) of the restaurant needs to charge in order to turn a profit. So while the server(s) could be paid more by the restaurant directly, that would result in your bill being higher anyway.

Instead, somewhere along the way, it was left up to the customer to decide how well the server treated them, and pay them accordingly. This in and of itself begs the question, “why don’t cooks get paid in the same model?” The best answer I can give is that there are almost always going to be multiple kitchen workers who contribute to your food, whereas you’ll typically only be engaging with one server (and when this isn’t the case, the waitstaff no doubt pools tips). Again, I’m not saying this is the best or most logical system — it’s just the one we’ve adopted and maintained. Also, the practice was initiated before credit cards were a thing, and every bill was paid in cash, so the extra cash that was left on a table was left to presumably be pocketed by the server, and it was just an intimate gratuity between guest and server — so involving others in the practice wasn’t something that could be reliably counted on or regulated.

Speaking of that, another thing to be aware of is the procedure of “tipping out” and “pooling tips”. There are many different payment formats that restaurants employ when it comes to handling/regulating the tipping system to make it more equitable. After all, many people contribute to your dining experience (both directly and indirectly), and sometimes (if not, frequently), part of your tip will go to those people. As I said, there are several models by which this is achieved, but most of them involve some form of tipping out or pooling, practices by which the servers might share their tips among each other and/or the aforementioned support staff.

The best tip-out model I’ve encountered was at the first restaurant I worked at where I was a food-runner. There, while the food-runners, bussers and bartenders were paid a flat rate by the restaurant, it wasn’t very much (I think it was $10/hr). It was supplemented by tip-outs, and the way that worked was as follows: you took the total food sales of a given server in a given shift, then (if I remember correctly) 5% of that was owed to the bartenders, 2% was owed to the bussers and 2% was owed to the food-runners. These amounts would be paid with/taken out of the tips that server generated during that service.

So, for the sake of this example, let’s say Tiffany is a server, who by the end of her shift had sold $1000 of food, meaning of all the guests this server waited on in a dinner shift, the cost of all the food ordered by those guests totaled $1000. Separately, on that $1000, she generated $180 (or 18%) in tips. But she would need to tip out $90 total: $50 to the bartenders, $20 to the bussers and $20 to the food-runners. So now, her take-home in tips is $90. And every server would undergo this procedure at the end of each night, usually tipping out with their cash tips, and then receiving what was left on credit cards from the restaurant. This is one model of how tip-outs can be handled.

Then there’s tip-pooling. Let’s say that Tiffany still has generated $180 in tips that night, but Jared has only generated $70 (maybe he didn’t have as many guests, maybe they didn’t order as expensive of food, or maybe he just didn’t do a very good job and didn’t get tipped well that night), but Stephanie took in $280! All that pooled adds up to $530, which equally divided three ways (omitting tip-outs for this example) would mean each server would take home $176.77 (this obviously would make Jared and Stephanie feel very differently about this practice). Sometimes in the pool-tipping model, there are hierarchical levels, meaning the tip pool is not divided equally and some servers would get more than others based on seniority (and/or some other factors). Tip-pooling isn’t a particularly popular model, but there are some benefits.

What the takeaway from all this should be, is that deciding to skimp on a server’s tip for one reason or another, probably has a broader reaching impact than just the screwing over of that one person.

What I think I’m trying to say is that the current US model for tipping isn’t ideal, and it might not make sense — to you, to me, or at all! But being a responsible, contributing member of our society means (at least for the moment) putting that behind you. Or, if not behind you, at least put it second to the fact that those who perform those jobs that currently are paid almost entirely by tips, are hard-working people who deserve a living wage. And like it or not, if you are the beneficiary of the work that any of those people do, you sincerely do owe them at least fifteen percent; but until this country gets back on its feet, try to ere on the side of twenty.

2 thoughts on “Tipping: Let’s talk about it

  1. Hi, Glenn, I’ve enjoyed your last two posts. I didn’t know bartenders were tipped a flat rate, which means a carefully crafted artisanal cocktail elicits the same tip as a shot of some bottled liquor poured neat. I’ve always tipped on the price.

    I think I have close to the world’s worst math skills, so I didn’t want to put this in the published comments in case I’m in error (and I’d never put a correction or criticism in public), howsoever, I think your math is off in your tip out explanation. If Tiffany makes $180 in tips one night, isn’t 5% of that for the bartender $9, and 2% each for the busser and food runner (or 4% total) $7.20, for a total of 9% or $16.20 rather than a full 50% of her night’s take in tip out? Just asking and sending Love, Aunt Joan

    Every great writer needs both an editor and a proofreader, reducing the likelihood that they will ere, um, err in print. 😊

    Sent from my iPad

    Like

    1. Your math isn’t wrong, dearest Aunt of mine :); It’s just incorrectly applied. The percentage is applied to the total sales, not total tips. This way, the auxiliary support staff isn’t depending on the server getting a good tip — instead, it’s up to the server to work for the best tip they can get, knowing that (in the example model) he/she will be giving up 9% of their sales — or half of an 18% tip — regardless of how much they themselves are tipped.
      I also might be misremembering the exact percentages that were taken out. It may have been 1% and 2% respectively. Just trying to illustrate the way the model works.

      Like

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