Questions re: Tipping

Having just read the completely derailed thread My husband’s grandmother doesn’t want to leave a tip started by Lillith Fair
my executive summary of the derailment is as follows:[ul]
[li]Servers in the US get paid below living wages and rely on tips to make ends meet. This is general knowledge.[/li][li]This means that patrons should add about 20% onto the total of the bill to ensure the tip is adequate.[/li][li]It is generally assumed that in countries without tipping, service must be poor because the server doesn’t need your money.[/li][li]Whether a country works on a tipping system or not, it all comes out equal in the end.[/li][/ul]However, I’ve got a couple of questions.

**Does it all *really * come out equal in the end? **
In Australia, an employer must make a contribution towards an employees superannuation. This contribution is based on the actual wage paid by the company to the employee, and is a fixed percentage thereof. Does this also occur in the US? It seems to me that the waitstaff working primarily from tips would end up poorer in the long term, regardless of how their week-to-week finances appeared in comparison to waitstaff paid a full living wage. I don’t know how superannuation works in the US, but this is just something that struck me as a big problem.

Why would providing a living wage negatively affect the quality of service?
I’ve rarely encountered poor service from servers, regardless of whether the experience was Fine Dining or Takeaway. On the contrary, most of them have been very friendly, professional, non-intrusive and efficient. Perhaps it has something to do with the fact that most places hiring serving staff insist on a prerequisite of some kind of certificate study in bar & waitressing at the very least - there’s not a lot of unskilled labour available in the food and beverage industry. Maybe this means that people tend to be in those jobs because they want to be? I’m just theorising here; I really don’t have any answers. All I can definitively say is that being paid a real wage doesn’t decrease the quality of the service. You’ll still get occasional bad employees, but when a restauranteur is paying that person $14+ p/h (plus overtime, plus superannuation), they’re not likely to retain a bad individual for long.

So, given that it works here, why wouldn’t/doesn’t it work elsewhere?

Why would paying full wages make meals unreasonably expensive?
It’s been quoted by a number of people that if servers were paid real wages, the food would become exorbitantly expensive. I don’t get this, honestly. I don’t consider the prices I pay at restaurants to be excessive. As an example, assuming a restaurant range between ‘slightly upmarket’ and ‘silver service’, main meals go for something in the range of $14-$28.

Example: If my husband and I go out to dinner at say, a nice Indian restaurant, the bill will usually come to about $50 for the pair of us, including drinks (he’ll usually have a beer; I stick to coffee and juice or lassi ). Mains are about $14 per each.

It’s my belief (again, just a theory and I don’t know for sure) that restaurants work more at getting in volume of customers, through a combination of great food, great service and good prices, than they do on making profit off individual meals. I’m guessing they make a fair bit off alcohol, too, but anyone who’s working in that industry who could give me a yea or nay on this theory - please chime in! I want to know!

So, what’s your take on it?
I’d like to hear from anyone who can answer my questions regarding superannuation, etc, or who’d like to put in their 2c. Ideally, I’d prefer to keep it out of the pit, as threads like this just tend to degenerate into a slanging match instead of ‘fighting ignorance’ once they move down there.

Most restaraunts of the Mass Chain variety have meals in the 8 dollar range. A dinner for two and a drink, after tip is usually about 20-25 dollars. That includes Bennigans, Chilies, TGIF, Ruby Tuesday, etc. Outback gets a little more expensive, as do many others. And this says nothing about the “nice” restaraunts.
But these places are popular for quick stops and get togethers. When you’re just going somewhere to eat and not to make a whole spectacle out of the dinner - with wine and fany waiters n shit.
The wait staff at these places, depending on size, is generally somewhere around 20-30 waiters and 15 hosts/hostesses. With 15 servers and 4-6 hosts working on any given night.
These employees are paid 2.15 an hour. Maybe more now, but less than 2.50 an hour. I don’t see how a place could possibly pay all these people 8-9 dollars an hour and still keep food costs the same.

I dont understand Superannuation, but the employer makes no contribution to the waiters salary, other than the 2 dollars per hour. Unless the server fails to make minimum wage (5 something, but less than 6 an hour) for that pay perioud. Which almost never happens.
Paying real Servers - who make a career out of being a waiter - a decent wage, would not negatively affect the quality of service. These people are in the customer service industry and are trained in such. It’s like receptionists or hotel lobby clerks. They don’t need to be tipped to be happy and nice. That’s their job and they seem to like it.

But that’s a whole different concept. Chain Restaraunts are not that type of thing. Nobody works hard to become a server at a chain restaraunt. They do it while going to college, or maybe needing a second job. I did it for a couple months this last winter to make extra cash. These people generally are not planning to stick around, they really have no pride in their job or concern for the business. They’re just out to make some money. There are a few who would like to get into management and do a really good job. But the rest are just there for the quick easy cash.

Paying the servers a real salary they could live off of, would change the nature of the job. It would be more like a career. Not as many people want to make a career out of serving as those who just need a temporary job. So basically you would shrink the job markey for quality servers and make staffing a restaraunt nearly impossible. There are SOOOOO many chain restaraunts, it would be impossible to staff them with truely quality servers.

But as it is, waiting tables is a pretty respectable job for a college student or second job for someone. You don’t need any formal training and you can make a pretty decent amount of money every week. Plus, it’s all Cash in your pocket. You dont have to wait around for a paycheck. The system works well here. (Or I should say THERE, since I’m not in the US right now)

I’ve tried comparing US restaraunts to their franchises in Korea. But there’s no way to tell what causes the stores in Korea to be so much more expensive. It may be do to the fact that the employees are not working for tips, but it may also be a million other things. Like food prices and such.
Plus, the price hikes are not uniform. For instance, an 8 dollar item at a US Bennigans costs about 18 dollars at a Korean Bennigans. But an 8 dollar item at a US Outback costs about 10-11 dollars at a Korean Outback. So, while Outback is more expensive than Bennigans back home, it is cheaper than Bennigan’s here.
… Well anyway. That should be enough random nonsense for you. I dont even know if any of it is relevant. But instead of deleting the whole thing, Ill go ahead and submit it.

Is superannuation a retirement plan? If so, it’s highly unlikely wait staff gets this.

Paying wait staff below minimum wage and letting the remainder be made up in tips isn’t about service, at least not 100%. It’s also about payroll taxes. A lower salary saves the establishment on many types of payroll taxes, which are based on salary. As restaurants are highly competitive, especially casual dining restaurants, any savings means lower prices and, of course, increased bottom lines. If wait staff were to be paid by the retaurant what they actually make per hour, the cost to the restaurant wouldn’t just be the extra $5.00 or so an hour - it would nearly double. It would increase the price of a meal more than it currently costs plus 20%.

Another one who would like to know what is superannuation raises hand

I have lived both in Spain (waiters get living wages) and the US of A (waiters get shit for knuckles); I have also traveled quite a bit. When I compare the prices you get in Spain and the prices you get in the USA including the tip, for the same dish, I come up to pretty much the same price. Variations are more linked to €/$ rate movements than to any actual change in prices. By “the same dish”, I mean something like “Hard Rock Cafe BBQ Ribs” or “a plain burger from BK, McD, local Spanish chains and Spanish MomnPop places” — still haven’t found any American places where I could get the American price for a “pincho de tortilla”, you know :smiley:

There’s a huge amount of shoddy service in the UK, where they minimum wage applies to service staff. But I don’t think it’s anything to do with tipping - with near-full employment, it’s extremely difficult to find staff for these jobs. Plenty of employers and agencies simply require a basic grasp of English, and you’re in the door. When you do encounter somebody who actually wants to do the job, you get good service.

Canada is sort of a middle ground on this issue. As far as I know (reading job ads, etc.) waitstaff make around minimum wage ($6/hr) to around $8 or $9 per hour. Tipping is also expected on top of that in Canada - we tip around 15% in Calgary, but I understand that is lower in rural areas, and probably higher in Vancouver, Toronto, or Montreal. The tip will go down to reflect bad service, though.

Our waitstaff usually have no formal training - it is a usually a student-type job here, too, but there are high end places that obviously have career servers there.

The employer is expected to pay Canada Pension Plan contributions for the employee (all Canadian employers are expected to do that - only exceptions are contract employees). I don’t think there are any other benefits in these type of jobs.

Service in Calgary restaurants is just fine. Food prices are comparable to U.S. prices; possibly a touch higher.

Just as a point of reference, a few years back, I visited the Bahamas, where they had the US system, but with a twist: The tip was usually added to the bill automatically “for your convenience.”*

Service was just plain horrible. Everyone got a tip whether they gave good service or not, so they just didn’t care.

We finally went out to a restaurant that didn’t have that system. The service was fine, and they ended up with a bigger tip than the automatic 15%.

So pure capitalism has its uses. :wink:

*This is where I formulated Rothman’s Rule of Retail: If a store says they’re doing something for your convenience, they are really doing it for their convenience.

Paying wait staff sub-minimum wages is just part of the crap that employers lay on their wait staff.

Many restaurants in the U.S. require that if a customer leaves without paying, the WAITER has to pay the bill out of his/her own pocket. I kid you not. In fact, there was a nasty incident that was discussed on the Dope a few months ago (might have been QUITE a few months) where some well-to-do teens found they didn’t have the cash to pay for their meal, so they tried to stiff her, sneaking off to their car. The waitress followed them out to the parking lot so she could get the car’s tag numbers (anyway, that’s what people think she was doing). The young ripoff artistes then BACKED OVER THEIR WAITRESS, KILLING HER.


What’s superannuation??? In the U.S. we have unemployment insurance, but it’s not very much money at all.

Ask any restaurant in San Franciso. The SF minimum wage is in the neighborhood of $8.25/hour right now. (State minimum is about two bucks less.) Beyond that, the state of California forbids paying sub-minimum wage to servers on the expectation that their tips will bring them closer to the prevailing minimum wage - the term for that is “tip credits in leiu of minimum wage” more commonly just called “tip credits.” The service may not be any better, but the servers here are at least earning a relatively decent wage, plus tips.

So, to partially answer the biggest question in the thread, from the Australian government web page What is Superannuation

Apparently, it’s some kind of retirement plan that employers must pay.

We don’t really have anything like that in the US. There are places that offer pensions, but it isn’t a government mandate. So, tipping or not, the employees aren’t going to get that money.

I find this odd…you’re saying that paying people more to wait tables would make it hard to find people to wait tables? I’d think paying people more would make the job more desirable. That’s how it usually works.

Evil Captor, at least in California, restaurants can’t legally make servers pay for stiffed checks. Restaurants may say that’s their policy to try to rip off their employees, but that has more to do with restaurant managers being jerks than any flaw in the system.

Yeah, I am glad you brought that up. Very good point.

Evil Captor did take care to use the word “many” in his post. However, I want to make this matter clear for non-American Dopers: attempting to make the server pay for a stiffed bill is very much an exceptional practice – a practice more common at a “mom-and-pop” type place where anyone who isn’t family will not be 100% trusted.

The thing is, most people who have waited tables in their lives have waited at one or two places. Their experiences at those one or two places is, in turn, generalized into a “sense” that things are the same throughout the industry.

No, Bear_Nenno is right. But we’re looking at this from the wrong end.

If restaurant server salaries rose to a national average of, say, $18.00/hr, the job supply would dry up – not the job demand. Opening a restaurant and keeping it going would be a substantially more expensive proposition. Fewer entrepreneurs would take a shot at it, and many currently successful restaurateurs would close their doors.

When Bear-Nenno wrote “So basically you would shrink the job market for quality servers and make staffing a restaraunt nearly impossible”, he’s right on the money. Consider that the restaurant wouldn’t be harder to staff because they couldn’t find the labor. It’s because they couldn’t afford the labor.

Raise prices, you say? Fine, but do you have the kind of food that can go for (very conservatively) 25% more than it’s going for now? Keep in mind that restaurants are almost invariably a low-margin business – money can certainly be made, but expenses are nipping at the heels of profits every step of the way. Their’s a delicate balance of labor cost, operating expenses, and revenue. What happens when that 25% food price hike leads to a 50% decline in business?

Are you forgetting about Social Security? Every employer has to contribute to that.

This matches my personal experience in a number of countries where tipping is not expected, or a “service charge” is automatically added to the bill. The incentive to provide above-average service is just not there and in many cases we found the servers to be not as prompt and attentive as in the U.S. In addition, where there is a tip to be had, I find satisfaction in being able to personally reward (or not) a person who is an efficient server (or not).

BTW, there ARE people here who are waiters and waitresses as a career. If you are really good, and dedicated, and get into a high-end fine dining establishment, you can make out really, really well. Ditto with bartending. I personally know a bartender who can regularly bring home $300 or $400 dollars a day in tips, and this is in a sports-bar type place in a suburban neighborhood. She’s a perky, attractive, intelligent young woman who also happens to be efficient and honest.

Why would it need to go to 25% more than it does now? To be comparable, wouldn’t it have to increase 15%, which in my case, would not really be any increase in the total bill?

Why does “raise it to the national average” factor into it? Should the question be whether we could do away with tipping if we simply raised the price to include the standard tip?

Of course if we did that, we wouldn’t be able to punish poor service as easily, other than taking it out on the restaurant itself more often by not repeating business.

Superannuation is pretty much a 401k, except that it is required that employers contribute to an employees Super (I think it’s 9% of the salary). Bites When Provoked, in the U.S., a 401k is considered a benefit and, as such, is only offered to employees as sort of an extra incentive. Jobs that are lower on the food chain (serving, manual labor, etc.) are much less likely to include benefits such as 401k or health insurance. Companies that do offer 401ks to their employees usually also match their employee’s contribution up to a certain amount (it’s always been 6% at places I worked). For the most part, saving for your retirement in the U.S. is self-directed. Nobody requires that you save and nobody is required to save for you. If you get to retirement and have to live off of the pittance of Social Security, you’re SOL. This usually shocks the Australians I’ve mentioned this to, but it’s pretty in-line with the American philosophy, IMO.

Bites When Provoked, I’ve also got to say that restaurant prices in South Australia are really cheap. I’m on the Central Coast in NSW (about 1 1/2 hours from Sydney) and our local pub’s bistro prices are $14-$28+ for a main. That’s with no table service. Geez, the carry-out fish & chip shop across the street from me is $6-$10 for a main. Every restaurant I’ve been to here that is actually sit-down with a waiter, etc. has easily set my husband and I back $80+ for a meal, BYO (for my fellow Americans, that means we brought our own alcohol, so that wasn’t included in the meal). Man, I’m thinking we should move! That’s what we get for living so close to the smoke.

I answered that question. Raising salary has payroll tax consequences beyond the extra $5.00/hour. To maintain the same profit margin, then costs will go up beyond 15% of the bill. The ability to pay wait staff small base salaries is a tax benefit for food establishment owners.

from the same website that I linked to. Social security seems like their “age pension” plan. Superannuation seems more like a company provided pension (which are rare) or company matched 401k plan (which are becoming rarer).

Really? I was always under the impression that tips are reportable as wages for tax purposes. Such that increasing the salary, if you remove the tip payment, would have no effect on payroll. What payroll taxes are avoided?