Business,  Social Media

Tipping Points

There has been a great deal of social media rage about restaurants keeping tips. But in their defence, the establishments say they are paying much higher than minimum wages.

It used to be the case that social justice campaigners complained that restaurants only paid minimum wages and left the wages to be ‘topped’ up by ‘arbitrary’ tips, which meant that staff could sometimes go home almost empty handed on a bad night, or some waiters did better than others depending on the lottery of what tables they got on a particular night. The argument was that waiting staff could not plan financially under this uncertain arrangement.

Now the argument seems to be the opposite: that restaurants are ‘cheating’ staff out of tips by keeping service charges and paying higher wages.

Keep in mind the social changes. People no longer explicitly leave tips because people no longer carry cash. In most cases, the tip is added on to a credit card payment which has to go through the business’s bank account. It is becoming more usual for a “service charge” to be automatically added to the bill (whether or not marked as “discretionary”).

So the question to ask is: are the waiters at these establishments paid more – and paid more consistently – than their colleagues at establishments following the old model. Until we have an answer to this question, it is foolish to rage on on social media and threaten boycotts.

Yes, there will be sensational stories of a party of brokers leaving a £100 tip, but these are rare. My guess is that many people’s idea of a tip is rounding up the bill to the nearest fiver, though the average person will leave between 10 and 15%.

But perhaps it is a reasonable business model for a establishments to work out what the average monthly takings from an added ‘service charge’ are and then to convert that into a consistent and guaranteed regular wage. It may mean that an individual waiter loses out on an overly-generous tip on a rare occasion, but on the up-side the waiter has a regular and reliable monthly income even if business has been slow.

Another question to ask: Is it also the case that this ‘service charge’ income is equally distributed to kitchen and cleaning staff, who have just as much of an input into making a patron’s evening a pleasure than the one who simply took the order and carried the plates to the table?

But most importantly, to repeat the question: How does the income of the staff at these named-and-shamed restaurants compare to those in the industry?

Note: I am not saying it is better, or this practice is fair – only that we should be asking these sorts of questions before flying off the handle on Twitter and Facebook.

Thoughts? Facts? Stats? Views?