Why doesn’t that apply to huge majority of the service industry that does not receive tips?
And why doesn’t that apply to the segment of the service industry that does get tips, but nevertheless provides crappy service?
It does. I get waaaaay better service from my regular bar tenders and wait staff then I do from some random schmo in the generic service industry.
There was never a time when the UPS guy comp’ed me a drink.
No system is perfect?
As a general rule I’d say a restaurant closure isn’t really a bad thing for anybody but that particular owner. The local market for restaurant meals and of restaurant labor presumably stays about the same, which means another restaurant will take its place (or an existing one will grow). The new one may be as flawed, or worse, in which case it too will go away–or it will be better, and thrive.
So do you support broadening the tipping culture to the rest of the service industry? Would you appreciate the expectation that you must bribe cashiers, bank tellers, DMV bureaucrats, and police officers to get acceptable service? Where would you draw the line and why?
Here’s what I think. Only a small percentage of people actually adjust their tips based on the level of service received. Some old curmudgeons refuse to tip regardless, and the rest tip no matter what. It’s simply not a big incentive to provide better service because it rarely matters.
As was already pointed out, this is only true in some states. Montana, where I live, requires everyone to be paid at least minimum wage, including people in tip industries.
Bragging about cheating on your taxes on a public message board probably isn’t the best idea.
Yes, I read your disclaimers, but back up a minute here. When my daughter got her first serving job, the busy shifts were allocated on a seniority basis. As the “new kid,” she ended up working the afternoon shifts, where most of the tables were empty most of the time, and the typical meal was around $10. The restaurant had a mandatory tip-sharing system, so over half her tip was taken away and distributed in the kitchen and to the busboy. Even with 20% tips, that gives her about a buck per meal. There were times she’d put in a full shift and leave with $15 in tips.
That’s the whole problem with a tip-based system, of course. The server that serves a $20 meal in Wyoming works just as hard as the server that serves that same meal for $60 in New York, but gets paid a third as much to do it.
I don’t want to get involved in a tipping thread, but just to keep the facts straight, “server costs are a fairly small portion of overall costs” is completely and utterly incorrect.
In the food industry, labor is typically the second highest cost that the business has to deal with. The only bigger expense is the cost of goods sold. Labor will run between 15-20% of what the restaurant brings in (COGS will be about 30%).
The fact that they’re so high is why people get sent home early on a slow day or employees are fired if business is down. When expenses start getting too high, the first thing you try to do is cut back payroll, since it makes a much bigger dent, before you start working on cutting other costs (not related to COGS). It’s also easier to say “Amy, why don’t you take the rest of the night off?” and has a much more immediate effect on the bottom line then re-writing your insurance policy or turning the thermostat down in winter.
TLDR:Employee costs aren’t small, they’re huge.
Also, I don’t know the ratio of servers/all employees so I kept it generic on purpose.
Lowering your COGS, takes time and is a lot more work then just sending someone home. Also, most small businesses have already done everything they can to get their food cost down as low as possible (and the chains have as well).
Server costs are not labor costs. Depending on the size of the restaurant, waiters may make up less than half of the direct and indirect employees. Yes, restaurants phase out servers on slow days, but that is mainly because it is the main variable cost that can be easily managed, not because its the largest chunk of what it costs to run a restaurant in total.
Once again, the point was paying servers full minimum wage doesn’t seem to have such deleterious effects, nor does it seem to force restaurants to significantly raise prices.
Is there any information on how much tipped servers actually make? These threads always bring out the anecdotes of making dozens of dollars per hour in tips, but is that actually typical for most servers?
What do you define labor costs as? Something other then what the employer pays the employees?
Here’s what I don’t get about the “tipping” system and the “it makes service better” argument (and, again, I am not stingy with tips, this is not a personal complaint, and I don’t “have it out” for service staff).
Let’s say my acceptable range for tipping is 20% +/- 5% (which, basically, it is). So I could tip 15%, meaning “try harder next time”, or 25%, meaning “great service, please treat me this well again in the future”.
How is this any different from a world where the base salaries are better but my tipping range is 0% to 10%? The amount of pressure I can exert is still the same, but my server doesn’t have to deal with wild swings in income. About the only downside I can see, from the server’s and perhaps employer’s perspective, is reduced opportunity for tax evasion.
And I also get the benefit of a 0% tip for shitty service, which certainly feels like more tangible feedback than “Ha! I’m only giving you $15 for spilling water on me!”.
Server costs + management cost + dishwasher costs + … + benefits + taxes.
Or as was said before labor costs are not the same as server costs.
A restaurant employs more than just servers. At various restaurants I’ve worked at in the past, they have had multiple levels of managers, runners, expediters, busboys, dish washers, napkin folders, sommeliers, bar tenders, etc. Not everybody who works at a restaurant is a server, thus labor costs, which include all those people, are not solely comprised by people making less than full minimum wage.
Although it’s worth noting that even some non-servers are paid less than minimum wage and “tipped out” by servers and bartenders.
I see what you’re saying then. I suppose I just misread it. It’s not that “server costs are not labor costs” it’s that “server costs are only a portion of labor costs”. But like I said at the end of my post, that’s why I used the word ‘employees’ throughout it and not servers, since I didn’t know the ratio of servers to everyone else.
Eitherway, unless you know the percentage of income that the employer pays to the ‘servers’, it’s not fair to say it’s fairly small.
I only jump on this stuff since so many people don’t understand the costs involved in running a business. I’ve heard too many people that literally think all the money in the register goes right in the owners pocket every night (when a cashier says that, we tend to catch them stealing not too much later). Customers that, truly, don’t understand why we can’t sell things at cost. Employees that, when turned down for a raise, come back with “Why not, I know you can afford it.” A)Maybe I can’t right now and B)Your pay isn’t based on what I can afford. People that bitch about how high their insurance premium is, but have no idea that we’re covering more then half of it. And also don’t stop complaining about the ‘crappy insurance’ but probably don’t want more of their paycheck taken out to have slightly less crappy insurance.
A friend of mine, that owns a huge business, got so tired of everyone complaining about the insurance that he finally stopped carrying it. He gave them all a raise to match how much their insurance cost and told them to go find their own.
Can’t speak for 350 million people, but personally:
Because pizza delivery paid my bills (including a whole lot of tuition) for a long time, and I dig the golden rule.
Because an individual decision to stiff the server does fuck-all to change the system, while simultaneously screwing over a person who needs and deserves the tip income.
Because the expectation of lower tips will eventually cause the most competent employees to work elsewhere, or drive them out of the serving business entirely, leaving only the least skilled/motivated workers.
Because the poorest guys in the room shouldn’t be the people taking one for the team. If one wants the laws changed, but can’t bear the thought of tipping, then stop eating out and use the money saved to pay off politicians to do your bidding.
Because stiffing people in order reform the practices of the restaurant industry is an insincere political/economic/moral position that just happens to coincide with the interests of its proponents. A half clever smokescreen for free-riding shitheels, if you will.
I think this is a situation where tipping benefits both servers and employers. Employers get to have relatively cheap labor, and the servers get generous tips.
If you increased server wages to minimum wage but took away the social tipping convention, that would be higher costs to the employer (but probably not all that much) and slightly higher food costs so slightly higher menu prices, and much lower income for the servers. The big winners would actually be consumers, who trade paying 15-25% on top of their bill for “service” in exchange for probably a 1-3% increase in menu prices. The biggest losers would be the servers by far, I’ve never known anyone who waited tables who thought working at a non-tipped minimum wage job like entry-level retail or fast food was better. Most of them had also worked those jobs and knew waiting tables meant a significantly higher income.
Here is the change that needs to be implemented with regard to tip-earners and wages:
There should be no income tax. It should be replaced with a Wage Tax. Wages should be taxed (appropriately) and tips should not. Tips are gifts, they shouldn’t be taxed. Neither should comp meals for employees be taxed, or free lodging.
waiters/bartenders in oregon make minimum wage…which is frustrating for someone in the kitchen…when i worked at pf chang’s the bartenders and better servers made upwards of $60,000 a year when i was making $10 an hour and busting ass 9 hours a night.
Tips are wages, because it an employee does not make the minimum wage in tips the employer has to compensate them up to the level of minimum wage.
That needs to be changed at the same time. They should make minimum wage AND not have their tips taxed.