10 ms·

A Tipless Restaurant is a Well-Run Restaurant?

124 points by pyduan 13y ago

maaaats 13y ago
> The other has refused to accept them, instead charging a fixed percentage service fee. Why not just show the real price in the menu? I feel offended when I've gotten shitty service and have to pay a "service fee". I also hate when my tip is what's paying the wages. Just set the price higher to cover the wages!
- apaprocki 13y ago
  To me, this is what Uber did (one of the things) to car service. I just opened up OpenTable the other day and it appears they're experimenting with the "dine and walk out" model that mimics the Uber approach in a restaurant. That might be as close as you can get to what you want right now.
- throw_away 13y ago
  There was a planet money podcast recently which discussed the effects of including a tax in the price or adding it at the register. Even though the net cost was exactly the same, including the tax in the sticker price resulted in 8% less consumption. While, as consumers, we'd probably prefer products to include the all-up cost in the price tag, from the seller's perspective, it's still in their interest to add it at the register.
  - maaaats 13y ago
    I live in a country where the tax is always included in the price, and tipping is not seen as mandatory. So the price on the tag is what you pay. So I may be a bit biased in my "hate" for how it's in some countries, because I'm always taken by surprise at the register.
    - throw_away 13y ago
      Yeah, I'm not saying that I like it, just that I understand the motivations involved. On a purely rational basis, it should make no difference (as the end-price ends up the same), so sellers should opt for customer preference, but sadly, we are not fully rational creatures.
      - mpyne 13y ago
        And on that note I think part of the difference in reaction is down to expectation. Americans don't like being "surprised" at the register either, but in the case of sales tax and tipping there is no surprise; it is assumed that will happen and factored accordingly. But if you surprise me with a $.99 dessert on my bill that I didn't actually ask for, you can bet your ass I'd raise a problem about that at the register.
      - vacri 13y ago
        It does make a tangible difference in the cash economy though. When the price tag includes tax, the prices are generally set to easy multiples of the currency. Fewer coins to cart around and manage (and no give/take a penny trays). I found it amusing in the US when I went to McDonalds and ordered three things from the 'dollar menu'... and was charged $3.24. I also found it odd that a few Americans, despite living in this system their whole lives, had trouble in predicting their costs at the register. Here in Australia there's a 10% sales tax, included in the original price. For anything above a few dollars, most prices are whole dollar amounts, and the vendor sets aside 1/11th of the price for the sales tax. What you actually pay is easy to manage and predict, though you get a receipt specifying the tax with odd numbers (due to the 11ths). Go into a supermarket and buy a carton of Foo for $2.69? It's $2.69 at the register. My gut tells me that this is why Americans are so much more vocal about tax - sales tax is a stone in their shoe. It's addition at the register makes things unpredictable (not to mention any sale that crosses a border somewhere). Here it's streamlined away, and there's no cognitive weight borne by the consumer at all.
        tbyehl 13y ago
        What really makes sales taxes fun in the US is that they are variable in many states. If I go to my local Walmart at the start of the school year, some items I pick up may be tax-free because they are considered school supplies and there's a "sales tax holiday", others items are considered "Groceries" and will be taxed at a reduced rate, but prepared (hot) foods, booze, and non-food items are taxed at the full rate. Then there are the cities and counties that have additional sales taxes. When I lived in Germany it took me about 5 minutes to fall in love with prices being listed inclusive of taxes.
  - Spooky23 13y ago
    Amazingly enough, other industries survive. I just bought a bunch of stuff from a deli, and somehow they appear to stay in business without tips. Tips are just a way for restaurants to displace the risk of paying labor during slack business periods.
    - kenrikm 13y ago
      This! No customers no tips, cost of running the restaurant without customers is less. If tips as a way of paying employees were ever outright banned I'm sure there are plenty of smaller restaurants that would have to close.
    - dghughes 13y ago
      Supposedly tips are common for jobs which rich people didn't do such as cutting hair, taxi, restaurant service. I know I often tip my butler.
      - clem 12y ago
        I find that with my household servants a Christmas bonus of passing down our secondhand possessions on Boxing Day is sufficient.
  - neverminder 13y ago
    Where is this being practiced? I've been to pretty much every country in Europe in the last 20 years and in a conventional shop the tax (VAT) is always included in the price.
    - maaaats 13y ago
      It's common in USA, because there are different sales taxes in different states. So advertised products are advertised without tax included in the price.
      - relix 13y ago
        Why are the price tags universal across all stores and all states, and centrally produced? Or if they aren't, surely each shop can print out their own price tags and add the appropriate tax then.
        techsupporter 13y ago
        Price tags are one thing. The region-wide ads for Kroger saying "milk is on sale for $1.99/gal this week with your Kroger Card" are another. A broadcast TV ad like that might be visible in 10 or more different sales tax areas. Having worked in retail, I have several anecdotes from customers getting annoyed over even the smallest pricing discrepancies. I had one shopper complain about being charged less than the price in the mailed circular on the theory that the chosen product was of lesser quality than the advertised product.
      - FancyCashews 13y ago
        It goes further than that; a county or even a town can have a separate sales tax. You can have 9% in one county, 10% in a city inside the county, or 8% the next county over.
        kelseyfrancis 13y ago
        And even beyond that, some governments levy different taxes on different items (e.g., lower tax on groceries), while other nearby governments may levy the same tax on everything. Further, some governments charge tax on the pre-coupon/pre-discounted price, while others tax only the actual final price. Further still, some entities like public schools are exempt from paying sales taxes in many states/municipalities. In this case, the price sign would have to show both a pre-tax and tax-included price on it, which may be the best solution anyway. Regardless, these differences are probably easiest to account for at the point of sale.
  - TorKlingberg 13y ago
    This is because other sellers are printing the price without tax, so the price with tax appears expensive. If all prices had to include tax, then people would get used to it, and the total consumption would be same in the end.
- larrys 13y ago
  "Just set the price higher to cover the wages!" For a few reasons. First the amounts won't end up nice and round at particular hot button price points. ($5 drinks all day!) [1] Second, the price will have to be displayed higher and in theory this will make it less likely for someone to get a particular dish. If the restaurant could get more money for the same disk in theory they would already be doing that. Bottom line is the same way that autos are sold (or airline tickets where you now pay separately for baggage) advertising a lower price and having add on's sometimes (but not always) works in your favor in generating sales. Because you are able to price below magic numbers floating around in people's head. [1] In the same way pricing an item at $4.99 will in general generate more sales than $5.25. (Example not restaurant pricing but to prove a point).
  - Bockit 13y ago
    I think the counter argument is that in other places where tipping isn't mandatory or even common, reataurants are still able to do fine.
    - dagw 13y ago
      However, based on my own personal and rather unscientific experience, going out to dinner is less common in much of Europe and restaurants employ fewer front of house staff. So while the restaurants that exist might do fine (or as 'fine' as any restaurant does), there are quite probably less of them and they certainly employ less people. Which I guess is the real problem. Removing tipping will increase unemployment.
      - me2i81 13y ago
        That hasn't been my experience at all--I see tons of restaurants filled with plenty of people in most European cities, and they seem to have adequate numbers of efficient waitstaff.
  - genofon 13y ago
    >First the amounts won't end up nice and round at particular hot button price points Why? The price is designed to end up that way, if people will have to add 15% on every item they will modify their cost structure. >airline tickets yes if I want to add a service I pay, but in a restaurant I don't have the option to be served without the waiter, so it's not fair to the consumer that has the right to know how much he has to pay when he orders something. When a book a ticket the full price is displayed before I make the purchase, not after I used the service. Also for the waiter lobster and champagne require the same effort of soup and tap water, so it's not like adding a language of 15 or 20 kg.
- ExpiredLink 13y ago
  > Why not just show the real price in the menu? because the real service costs would be higher than the price of the meal? I have no experience in gastronomy but I guess you pay for being serviced in a restaurant (including table, dishes ...). The 'real' price of the meal is of minor significance.
  - maaaats 13y ago
    I meant that the price for an item should have those costs baked in.
- dannypgh 13y ago
  Because then you'd need different menus for takeout, in-restaurant, and delivery.
  - Istof 13y ago
    save 15% if you takeout and avoid inflated drink prices? takeout and in-restaurant could still be the same price...
nraynaud 13y ago
And you don't even create a service charge, you just include your staff costs (and your taxes while you're at it) in your food prices. What's written on the menu outside the restaurant is what you pay at the end of the meal the customer can shop around comparing the prices (like deciding between 2 restaurant, but also between a restaurant and a movie), and your market is healthy.
userisme 13y ago
I hate when I get takeout pizza or etc and the hostess asks for a tip. I would be more than happy to tip the chef if the pizza is good but that isn't the case. The tips go to the hostess. Sometimes the hostess shares tips with chefs at the end of the night but still.
- drpgq 13y ago
  I find it annoying that more and more takeout places have a tip jar. How much are you supposed to tip on a sub?
  - bodyfour 13y ago
    I think the most common answer is "whatever coins you happen to receive as change"
  - kennywinker 13y ago
    Under $8, whatever small change I have... $0.50 or so usually. Often enough, nothing. After that, approx. 10%.
dm2 13y ago
I hate the idea of implied mandatory tipping. Pay your staff sufficient wages please. Whatever laws allow the below minimum wage loophole should be eliminated or overwritten, or whatever you do to laws to make them invalid.
- larrys 13y ago
  "Pay your staff sufficient wages please." In theory means that expenses go up and restaurant then need to charge more on the menu which will in theory result in lower sales and profit (see my other comment).
  - dm2 13y ago
    The amount the customers pay should stay the same, unless the service is excellent, then a tip would be given to the wait-saff. Unfortunately the mindset of required tipping won't go away anytime soon. It's not going to happen until the laws that allow below minimum wage pay are abolished, then wait a few years for people to get into the habit of tipping primarily for quality of service. If there aren't enough customers that are willing to pay the "higher" cost then there doesn't need to be that many upscale restaurants. Sometimes I'd prefer to save a few dollars and walk to the kitchen window and get my own food. If the profit margin is that low for restaurants then they either need to go out of business or reduce expenses, having hidden fees (tips) isn't the answer.
    - anigbrowl 13y ago
      The amount the customers pay would stay the same. But you will get fewer customers because people react more to the up-front price than the future final price. People tend to look at the price of he entree and double it, reflecting the additional cost of a starter, drinks coffee, etc. Only in fast food restaurants do people go in with a clear expectation of paying a specific amount. If the profit margin is that low for restaurants then they either need to go out of business or reduce expenses, having hidden fees (tips) isn't the answer. Most restaurants don't make it to the age of 2. It's already a hyper-competitive business because dining at restaurant A is not a straight economic substitution for dining at restaurant B. People have strong and sometimes irrational preferences about where they dine.
nsxwolf 13y ago
I'm more annoyed with the normalization of tipping for behind-the-counter service.
- sergiotapia 13y ago
  I agree with you. You scooped ice-cream for me and you want me to tip you? The gall of some people is just too much. Why should I just give you money?
  - jmccree 13y ago
    This is why the rest of the world hates us in the tech industry. We get to sit in $1,000 chairs, which we easily justify, and in offices where catered food, massages, game rooms, etc are common. Yet you want to complain about the tip jar for an extra $1 that you've already made in the time you waited in line, for the ice cream scooper who has to stand on their feet for 8+ hours and may be lucky to get a bathroom break during lunch rush, and is going to make less all day than you make in an hour, all while they are just trying to mentally study for their econ 101 exam tomorrow. It's totally the people making minimum wage working the counters who are happy for an extra $20 per day that have all the gall, not the tech industry folks making six figures complaining about spending a couple extra bucks per day on tips.
    - doublerebel 13y ago
      Yep, my tipping habits cost me maybe a few hundred extra dollars per year? But to the worker just that extra dollar or two might make their entire night. Considering the free-market slant of HN, these comments are remarkably obtuse. Let those who do not care to tip choose any of the countless options where tipping is not involved. The rest of us who tip will continue paying a bit more and getting a lot more in return. Tipping makes my life easier and more enjoyable, and continues giving returns, for a very small investment. Compared to the $1000s (millions?) thrown away on kickstarter-startup life-improvement possibilities, tipping should be an easy choice.
    - walshemj 13y ago
mseidl 13y ago
In America I generally tip pretty well regardless of service, just because in some states their pay is so low. In some states when you receive tips, you can be paid as low as 2.xx$ an hour. Which should be against the law. In Germany a tip is not percentage based, but usually only 1-2€. But pay tends to be a little better, everybody has health insurance , sick time and vacation.
- smackfu 13y ago
  Your pay with tips has to be above minimum wage. I'm not even sure why they have that lower minimum wage for tipped employees, since it's pretty pointless.
  - SixSigma 13y ago
    You can thank the "other NRA", National Restaurant Association; employs 750 staffers and spent nearly $4 million on lobbying and campaign donations in 2012 alone. http://www.huffingtonpost.com/michele-simon/national-restaurant-association-policies_b_4782261.html http://www.huffingtonpost.com/michele-simon/national-restaur...
- learc83 13y ago
  >In some states when you receive tips, you can be paid as low as 2.xx$ an hour. Which should be against the law. But if the server doesn't make at least minimum wage, the employer has to pay the difference. So it already is against the law.
  - nathos 13y ago
    Of course in reality, if that server doesn't make at least minimum wage in tips and tries to claim it from their employer, they'll simply get fired.
    - learc83 13y ago
      I've had plenty of server friends who've had to do this and didn't get fired. In larger companies where payroll is handled by software, they'll do it automatically.
jokoon 13y ago
The first time I heard about the importance of tips as a french guy, I thought waiter's only income were tips, so in my brain it implied waiters worked for free unless you give them tips !
- drabiega 13y ago
  At tipping establishments where health insurance is offered it's not uncommon for servers to lose all of their paycheck to healthcare and then have to give the company some of their tips to cover the rest.
- fatjokes 13y ago
  This is almost true. The minimum wage laws do not apply to waiters, so they are often paid $2-3/hr.
  - nathos 13y ago
    Las Vegas casino hostesses (the ones that bring you "free" drinks while you gamble) work exclusively for tips.
    - vacri 13y ago
      I've heard that at some high-end restaurants, waitstaff actually pay to work tables, since the tips on the high bills are high themselves.
gkop 13y ago
The premise of the article may be valid, but the author's top source is not sound. The piece quotes Jay Porter extensively and links to his blog post. Jay Porter is a failed restaurateur whose restaurants have all shut down [0] [1], not a source to be trusted on the subject of well-run restaurants. [0] http://www.yelp.com/biz/el-take-it-easy-san-diego http://www.yelp.com/biz/el-take-it-easy-san-diego [1] http://www.yelp.com/biz/the-linkery-san-diego http://www.yelp.com/biz/the-linkery-san-diego
- tveita 13y ago
  I found his blog posts to be well-argued and sourced. I think they stand on their own even if his restaurants weren't ultimately successful.
- kennywinker 13y ago
  The high failure rate in the restaurant industry means these businesses could have failed for entirely stochastic reasons unrelated to Jay Porter. If 80 of all restaurants fail, then he's got to start 8+ before we start to find out if he's the common denominator.
  - gkop 13y ago
    That's not how probability works [0]. Say we assume a more realistic 40% success rate figure [1], given Jay's 2 trials: Probability of 1 success: (2 choose 1)(0.4^1)(0.6^(2-1)) = 0.48 Probability of 2 successes: (2 choose 2)(0.4^2)(0.6^(2-2)) = 0.16 0.48 + 0.16 gives us a 64% of at least one of Jay's restaurants succeeding. So the odds were in fact in his favor. [0] https://en.wikipedia.org/wiki/Binomial_distribution#Cumulative_distribution_function https://en.wikipedia.org/wiki/Binomial_distribution#Cumulati... [1] http://www.businessweek.com/stories/2007-04-16/the-restaurant-failure-mythbusinessweek-business-news-stock-market-and-financial-advice http://www.businessweek.com/stories/2007-04-16/the-restauran...
    - kennywinker 13y ago
      My apologies! I'm a long way out from stats class now, but I've been doing some light A/B testing so I've been thinking about things from the perspective of statistical significance rather than simple probability. So with that in mind, only having two trials, can we really determine a deviation from the norm? The odds were in his favour (slightly) but not so much that we can say with any certainty that he or his tipless restaurants were the issue. I'm rusty on the math or I'd actually calculate statistical significance (p value?) of 2 tries 1 success vs two tries 0 successes. I suspect it's below 95% though.
adamzerner 13y ago
I think that this is missing the biggest critique of all - it doesn't make sense to allocate 15-20% of the payment to something that is only like 1% of the value you're receiving. The real value in going out to eat, in roughly decreasing order of importance: - The quality of the actual food and drinks that you consume. - The convenience of not having to spend the time and effort to shop, cook, and clean. - The atmosphere and joy of "going out" (with your friends). - The fact that someone takes your order and brings your food to you. There's no way that the fact that someone takes your order and brings your food to you consists of 1/5th of the value of your experience. An efficient market should then adjust to this by offering the option of not tipping, having all the consumers go to that restaurant because it's a better value, and then the other restaurants would have to adjust. Unfortunately, this doesn't happen, probably for a variety of reasons. 1) People don't have enough information when choosing where to eat. 2) There are biases where people don't really consider the cost of tipping when they consider the cost of going out to eat. 3) People have gotten used to it, and "don't mind" tipping.
- robotresearcher 13y ago
  I disagree. Good service is a pleasure to receive, and adds a lot to the value of the experience. When your water glass never gets quite empty, and the flat bread never quite runs out, and you're not sure how that happened because your conversation was not interrupted, and your food arrives hot and when you look around to get the bill and it arrives just like that. When service is really good the restaurant feels like magic. That's worth a lot.
  - deleted 13y ago
    [deleted]
- joshreads 13y ago
  Have you ever run a restaurant? By what crazy math is staffing only 1% of the cost of running one? (Keeping in mind that tips aren't just going to the your main waiter, they're also distributed among busboys and other customer-interacting staff.)
Jugurtha 13y ago
Before I even read the articles, here's how it goes: - Where I live, there isn't a culture of tips. Employees are paid by employers. - Some employees though, and businesses, delight me. Like I "really" enjoy it there. So I tip. Look at what happened here: I tip in an environment not used to tips at all. Tips should be a consequence for delight. Not some thing you do. It's just that I can't help tip people who take care of me (and I'm from that culture). Sometimes, they'll offer a discount and I'll insist on paying the full price. It happens I enter a shop only looking for directions to somewhere, and the person there goes beyond it. I buy something. It's natural for me. Now, the very thought of having to tip, as if it is a given, granted thing I have to do, whether the waiter/waitress was good or bad would make me sick. I understand they are under pressure, but I have seen waiters/waitresses under pressure behave with an unimaginable class and composure. With whom things that would piss you off would magically disappear. They exist, you should hire them. Not some snorky bitch waiter/waitress(yeah, there are waiters who are bitches. It's not just waitresses) who'll treat you like crap, and then have the gall to even expect a tip (I mean, you screw up, you go incognito and pray you even get to keep your job, not ask for a tip and have an attitude). So I say this: - Their revenues are mainly from tips and they are not very well paid: It's not the customer's problem what your employer does. But you can delight a patron, and most people who are delighted pay beyond reason for service beyond "normal". - If you're a waiter and think this is unfair, look around you. I am sure there are other waiters who get tipped regularly and fatly. What are they doing you're not ? Humans are generally not assholes. If a patron gets treated really well, only a small percentage will be assholes. I help my friend with his business (car accessories, installing alarm systems, etc) and people just don't believe the length we go to. They just are shocked. They've never seen that. The welcoming, the explanations, the garantees, etc. I have a friend who sells computers and repairs them (and some other stuff like flash drives, etc). People would drive 30 miles to buy a flash drive from him. They could buy it anywhere, but they buy it from him. People came to him from 400 miles away, because of reputation and service and referrals (his regular clients vary from normal dude, to senators). Your behavior matters. I once called customer service of my crappy ISP, as usual, and that day, a tremendous guy answered the phone. This is something I have never seen before. I was literally in frigging bro love with him. I mean, I asked him if there is any way I could like give feedback to his supervisor or something. He treated it with grace saying he was flattered, and he was only doing his job. And no, he wasn't just doing his job: He went the extra 100 miles. I've eaten in many places. Some places I wouldn't let them keep a 5 cents change because they were cunts. Some places I'd have no problem leaving 30% to even 50% at times because they were simply surreal and treat people like royalty.. Like really, really, really cater to you. And it's no difference of small restaurant, big restaurant, or someone just outside grilling rabbits. Behavior matters.
switch007 13y ago
Tipping in Canada prevents you getting rude reminders from staff. We Brits find it truly baffling having to leave 50c-$2 for a drink you fetch yourself from a bar. Canada is all smiles and great service (sincerely) until you forget to tip.
ciupicri 13y ago
> 5) We don’t tip doctors Not in Romania and probably other former communist states. Though this is more like a bribe than a tip.
bitsoda 13y ago
There's nothing that grinds my gears like that blank tip line staring back at me when I pay for my takeout or counter order. The soured rapport is palpable when I hand back the signed receipt and the cashier glances at the striked-out tip space. It leaves an unpleasant taste in my mouth after what should have been a simple transaction. Ugh.
- kennywinker 13y ago
  Perhaps you should tip. You may not like the system, but if it ruins your day it's probably worth paying just to keep yourself happy and optimistic. Not to mention the person you just declined to tip is likely making minimum wage or even a "server wage" (lower than minimum in some regions) and depending on tips to make the job worth doing.
- lnanek2 13y ago
  I think you are just making that up in your head. I've never tipped for counter or takeout, never heard of anyone else doing it either. I don't think anyone expects it. The person still has to look down there, but there's nothing more to it than that.
  - judk 13y ago
    It is trivial for register software to not print a tip line when the takeout button is pressed, if the businesses wanted to support customers and not press for tips there.
personlurking 13y ago
Why not install ipads in the tables and do away with waiters? All one needs are food runners. Pay them normal working rates so no tips needed, even for them.
- venomsnake 13y ago
  Yeah tablets will be great at providing anything other than dry facts about the food. At least 40-50% of the times I go out to eat I have just a vague idea what I want and it is up to the waiter to match my desires with the menu. Just to prevent shrieks from the chefs that lurk here - I never do special requests on the tickets but sometimes a person needs a guidance trough the menu.
  - judk 13y ago
    You are describing a very high end dining experience. In most restaurants the server "recommends" the highest margin item (bonus commission) or whatever they like or is easier for their friends in the back to prepare. It's dinner, not a bespoke ball gown.
- kennywinker 13y ago
  This will probably happen eventually for lower end places. Middle and higher end places I suspect already rely on service staff to differentiate themselves. Either by being friendly, helpful, and knowledgable, or by being a draw for other reasons. I'm sure you can think of at least one restaurant in your area renowned for it's young, attractive, flirty female staff. People who dine out are often doing so for a chance to socialize a bit... talk about wine with a knowledgable waiter, etc. not just dink around on an iPad.
  - personlurking 12y ago
    "People who dine out are often doing so for a chance to socialize a bit" Agreed, though dining with others also allows them to (socialize).
- TorKlingberg 13y ago
doublerebel 13y ago
This article is clearly not written by anyone with service industry experience. 1) Tips are unrelated to good service...good tips are mostly good luck False, I could rely on 25%+ tip average, and as a server/bar trainer I trained my staff to receive the same, by giving excellent service. Being able to rely on tips for income (as most of the industry does) is by definition not luck. 2) It's un-American Tipping is a direct way for the consumer to reward and punish a worker or market based on perceived value. If being capitalist is an American trait, tipping is very American. 3) Economists don't get it Where is the source cited for this? I know plenty of people who work in finance, and tip very well. Professors however, seem to value service workers differently... 4) It’s borderline racist Because more minorities receive tips? The service industry gives countless minorities and other disadvantaged groups (criminals, drifters, youth) opportunities for employment and advancement not found in any other industry. Most people who work in the kitchen do so by choice, anyone who desires and has people/sales skills can just as easily get a front-of-house job. As a service worker I was generally hired by and reporting to a minority. 4b) "it's usually illegal to redistribute tips among the staff." False, tip pooling is extremely common between service workers and even back-of-house (kitchen). Only tip sharing with managers is not practiced, because they have higher guaranteed pay and it would be a conflict of interest for all involved. 5) We don’t tip doctors, flight attendants, and any number of occupations where service is important. This is a personal anecdote of the writer. I tip flight attendants anywhere they still take cash. And a surprising number of occupations are happy to accept tips if you try. Tips don't have to be monetary, they can be free tickets to a show or food or a vice (i.e. cigarettes or alcohol). Doctors don't get tips because of the high pay of their job, but many industries have bonuses provided by the buyer in exchange for a job performed beyond expectations. 5b) [Workers practice tip-sharing] according to a culture called “tipout.” But as this is not obligatory, it is inefficient and can foster cheating, resentment, or worse. False, and this clearly shows the writer does not have service industry experience. Anywhere tipout is practiced, it is required as a percentage minimum of sales. However, often workers "tipout" above and beyond the required percentage, to anyone and everyone who earned it. In many service jobs your co-workers are like family and you all take care of one another. Priceonomics usually writes great articles, but this one should be taken with a grain of salt.
- 13y ago
ebol4 13y ago
This article is very poorly written, and many of the points made in it are unfounded or irrelevant. I completely support abolishing the practice of tipping, but using bullshit arguments like "it's un-American" and "Economists don't get it" don't lend any credence to your stance on the issue. The only point that directly cited actual data was the first point. This article shouldn't be voted up as much as it is.
baby 13y ago
That's one thing I never understood with the US. When you need a haircut, or you want to take a cab, or go get a drink... you always have to tip. Whereas the tip should be something you want to give to show appreciation. So every time I went to the restaurant, I knew that the prices displayed were NOTHING like the prices I'd have to pay in the end. They would add taxes and if I didn't tip I would be seen as an asshole.
rm999 13y ago
This is an old article - Jay Porter's tipless restaurant, The Linkery, has since failed. This is my comment from the last time the Linkery came up on hackenews (https://news.ycombinator.com/item?id=6127536 https://news.ycombinator.com/item?id=6127536): >Back when I lived in San Diego I took my parents to the Linkery. The service was so bad it actually reversed my opinions against tipping. The servers clearly didn't care much about making us happy, messing up almost every aspect of the order. They put meat in my food - I'm vegetarian. My father got his food 20 minutes after my mother and I did. The waiter forgot one of my drinks. We called over the manager who offered us a free dessert to make up for it. Guess what? The dessert was on the bill. I'm always happy to tip 20+% for good service, but being forced (yes, we asked) to pay the service charge added insult to injury. This is just one data point, but the Linkery was infamous around San Diego for having much worse service than other places in a similar price range. I'm convinced their experiment with tipping was correlated with this.
- jarrett 13y ago
  If tipping is necessary in restaurants to promote good service, why isn't it equally necessary in other contexts? In businesses without tipping, managers have an incentive to please customers, so good managers[1] encourage employees (by various means) to provide good service. Why can't the same be done in restaurants? I'm not claiming tipping is certainly useless. Just questioning the argument in its favor. [1] Not all managers are good, and so we encounter businesses that provide poor service. Sometimes the market weeds those out, sometimes not. According to the parent commenter, that's what happened at the restaurant s/he visited.
  - Crito 13y ago
    > "If tipping is necessary in restaurants to promote good service, why isn't it equally necessary in other contexts?" Maybe it is. No Tips vs Tips: Delivery: Package/Letter (no tips): constant missed deliveries. poor to non-existent delivery scheduling. crushed boxes. Food (tips): reliable delivery within the hour. delivery person knocks on the door more than once. never found a pizza carelessly thrown into the bushes beside my door. Luggage handling: Checked luggage (no tips): constantly lost. Porter/redcap (tips): the people you go to if you *actually* want your luggage taken care of. Service/Repair: Cable (no tips): only able to schedule service during inconvenient hours a week in advance, with service windows so large that I need to take a day off work. Plumbing (tips/negotiable pay): I have gotten plumbers to my home in the middle of the night. Apartment repair guy (no tips): Ahahahahaha.... The one counter-example that I can think of is cab/uber service. There is a hell of a lot wrong with the cab industry though.
lnanek2 13y ago
I think averaging out all the numbers and reporting service doesn't matter may be missing those rare occasions when the restaurant really does screw up and you want to punish them with no tip. I want the waiter to go work hard and get me the right thing, etc., after a screw up or to know not to ignore my table for an hour. I don't have that option with an enforced service charge.
- judk 13y ago
  You can tell the manager why you aren't coming back.
mwfunk 13y ago
Mildly tangential, but I'm always surprised when people express so much anger about being expected to tip in restaurants (in America, at least). Not people who come from other places where the conventions are different, but people who have lived here their whole lives. I'm not surprised (and empathize with) people who are reacting to the inefficiency of The System ("why don't restaurants just charge more and pay their employees reasonable wages?"). This is correct, but as others have pointed out, in the US at least we seem to be stuck at a suboptimal local maximum in this area. It would be impractical (and maybe catastrophic) for any one restaurant to suddenly adopt this policy, so that's not going to happen anytime soon. Rather, I'm always amazed at the portion of people who have a visceral reaction to tipping due to what appears to be just plain lack of empathy. These aren't the people who are saying, "why doesn't the restaurant just pay better?". That totally makes sense. These aren't the people who tip less (or not at all) when they've had a really bad experience with the server. That makes sense too. Specifically, I'm talking about the people who deep down inside just always have a reflexively negative reaction to directly giving their money to the person who just served them. These are the people who feel happy about themselves when they say things like, "my tips start at 0% and go up from there", or who seem to put way, way, way too much mental energy into grading the level of service that they've received and coming up with a number that reflects that level of service each and every time they go to a restaurant. If anyone posting is that kind of person, please just shut up and start being a better person already. I encounter these people all the time in SV. These aren't poor people for whom the tip is ever a meaningful amount of cash. These are people making many times the annual income of their servers, getting continually worked up over a few dollars, supposedly because of "the principle of the thing". These are always people who have never worked in a restaurant, and are almost always people who never even had a job until after they got out of college. If anyone posting here is posting for this reason, please just get over it and find more constructive things to get worked up over. Ideally something that doesn't directly impact the income of people making way the hell less money than they do.
- mpyne 13y ago
  What surprises me of the visceral reaction of those who say "why doesn't the restaurant just pay better?" is that by that logic you'd still be paying essentially the same price. It wouldn't actually be cheaper if you were charged for food + good service separately, so why are you getting so inflamed about it?
ghx 13y ago
> We tip barbers and coat checkers along with waiters, but not doctors, flight attendants You don't tip people who already get paid really well. I guarantee that you would tip your doctor a lot if doctors usually only made $8/hour.
- krzyk 13y ago
  It doesn't matter how much given person earns, I have no idea I don't see his/hers pay slip. You pay for the service if it is good you can pay more, if it is bad you would like to pay less (if at all).
doesnt_know 13y ago
Tipping isn't a requirement for good service. Plenty of countries don't have a culture of tipping and restaurants still exist. Tipping is just a convenient way to dance around the concept of minimal wage and exploit workers, almost to the point of slave labour.
caycep 13y ago
OT, an aside, but from when I last ate there ~ 2.5 years ago, Sushi Yasuda was probably the best sushi restaurant in NYC. Maybe Masa, the famous place at $300/head minimum was technically "better" in terms of the sushi you got, but Yasuda was up there in terms of the quality of the fish and preparation, at a much more reasonable price. (not cheap, but not outrageous like Masa). Yasuda can probably get away without tipping, I am assuming, because the wait staff is probably higher trained and more professional than your average student or aspiring actor trying to pay the rent at the Denny's down the street... Heck, I now live in LA, and I can't find sushi that good.
MrMeker 13y ago
As a dishwasher who makes $8/hr, tips are very important. Mine are based on a percentage of sales, like the "tipout" mentioned in the article. I don't know where the author gets their information or if they have ever worked in a restaurant. Some of the information is ridiculous. In California, everyone is payed at least $8/hr before tips. Tips only add to take home pay. Without tips, I can't imagine making more than minimum wage. Last night I made $15.50/hr, nearly double what I or someone else would be payed without tips. The market clearing price for a dishwasher is much lower than minimum wage.
SethMurphy 13y ago
A great (for the owner) side effect of tipping is it allows restaurants to remain open even during times they are slow (weekdays, off-season) by passing much of the financial burden to the waitstaff instead of the owner. Otherwise hours would probably be much less convenient for the customer. This may not be the case in a large city but in smaller towns the weekday shifts are also a rite of passage to earn a good night where you can make some money.
stefan_kendall3 13y ago
I feel like there's a business opportunity here. There is a large group of people who don't want to think about tipping, and would always just tip 20%. Could a payment system or card do this automatically? Or perhaps legally signal to the server that they should take 20%? This doesn't seem impossible, and I think the idea has a reasonable market.
abalone 13y ago
Mandatory Reservoir Dogs clip: https://www.youtube.com/watch?v=V4sbYy0WdGQ https://www.youtube.com/watch?v=V4sbYy0WdGQ
rch 13y ago
Tipping extra sometimes encourages behaviors that are materially detrimental to the business itself. This effect is pretty well known in the industry, so I can't imagine many restaurateurs would complain if tipping were universally ended for everyone. But are restaurant owners ready to start employing servers and bartenders on professional terms? The article alludes to the practice of tipping out the bussers and dishwashers, but is a bartender more or less likely to do that with a $60-80K salary? Maybe the back of the house could see a percentage of sales instead... Or just food and wine, but not cocktails. There are really too many corner cases and caveats to work through up front, but if this becomes a trend it could open new opportunities for POS providers who might appreciate the shot at staying relevant.
arjie 13y ago
I always tip a reasonable amount (15 to 50 percent) because it's what Americans expect and I've already factored it in. One thing that bothers me, though, is the view that's prevalent among wait staff (if reddit posts by them are to believed) is that black people and Indians don't tip. Well, the tip comes after the service. No person is going to provide equal service to a perceived good tipper and a perceived bad tipper. If, after providing inferior service, they receive a bad tip, it just reinforces the view. If they get a good tip, it is too late for me to receive good service. Well, they'll still get the tip, but it makes me seethe when people say that.
balladeer 13y ago
You ever tip the chef? The guy who cleans the table after you? The lady who cleans the dishes? Or the guy sits at the cash counter? Or the guy who opens and closes the door after you? Or the guy who walks around taking everyone's orders? So why do we start making a noise when it comes to tipping a waiter? Is it only him/her in a restaurant who deserves to make some extra money? Or others are well paid? Well, then why not pay him well too? I have always found this attitude, that not tipping means you get the service what you pay for, disturbing. This is regressive. The worse are the people who chime in with their moronic "if you can't tip, stay at home". All the good restaurants I've been to, the ones which are famous for both the food and service, offer good food and service and food whether you tip or not. If there's an exception that restaurant needs to have a closer look on its policies and staff.

124 points by pyduan 13y ago

> The other has refused to accept them, instead charging a fixed percentage service fee. Why not just show the real price in the menu? I feel offended when I've gotten shitty service and have to pay a "service fee". I also hate when my tip is what's paying the wages. Just set the price higher to cover the wages!

apaprocki 13y ago
To me, this is what Uber did (one of the things) to car service. I just opened up OpenTable the other day and it appears they're experimenting with the "dine and walk out" model that mimics the Uber approach in a restaurant. That might be as close as you can get to what you want right now.
throw_away 13y ago
There was a planet money podcast recently which discussed the effects of including a tax in the price or adding it at the register. Even though the net cost was exactly the same, including the tax in the sticker price resulted in 8% less consumption. While, as consumers, we'd probably prefer products to include the all-up cost in the price tag, from the seller's perspective, it's still in their interest to add it at the register.
- maaaats 13y ago
  I live in a country where the tax is always included in the price, and tipping is not seen as mandatory. So the price on the tag is what you pay. So I may be a bit biased in my "hate" for how it's in some countries, because I'm always taken by surprise at the register.
  - throw_away 13y ago
    Yeah, I'm not saying that I like it, just that I understand the motivations involved. On a purely rational basis, it should make no difference (as the end-price ends up the same), so sellers should opt for customer preference, but sadly, we are not fully rational creatures.
    - mpyne 13y ago
      And on that note I think part of the difference in reaction is down to expectation. Americans don't like being "surprised" at the register either, but in the case of sales tax and tipping there is no surprise; it is assumed that will happen and factored accordingly. But if you surprise me with a $.99 dessert on my bill that I didn't actually ask for, you can bet your ass I'd raise a problem about that at the register.
    - vacri 13y ago
      It does make a tangible difference in the cash economy though. When the price tag includes tax, the prices are generally set to easy multiples of the currency. Fewer coins to cart around and manage (and no give/take a penny trays). I found it amusing in the US when I went to McDonalds and ordered three things from the 'dollar menu'... and was charged $3.24. I also found it odd that a few Americans, despite living in this system their whole lives, had trouble in predicting their costs at the register. Here in Australia there's a 10% sales tax, included in the original price. For anything above a few dollars, most prices are whole dollar amounts, and the vendor sets aside 1/11th of the price for the sales tax. What you actually pay is easy to manage and predict, though you get a receipt specifying the tax with odd numbers (due to the 11ths). Go into a supermarket and buy a carton of Foo for $2.69? It's $2.69 at the register. My gut tells me that this is why Americans are so much more vocal about tax - sales tax is a stone in their shoe. It's addition at the register makes things unpredictable (not to mention any sale that crosses a border somewhere). Here it's streamlined away, and there's no cognitive weight borne by the consumer at all.
      - tbyehl 13y ago
        What really makes sales taxes fun in the US is that they are variable in many states. If I go to my local Walmart at the start of the school year, some items I pick up may be tax-free because they are considered school supplies and there's a "sales tax holiday", others items are considered "Groceries" and will be taxed at a reduced rate, but prepared (hot) foods, booze, and non-food items are taxed at the full rate. Then there are the cities and counties that have additional sales taxes. When I lived in Germany it took me about 5 minutes to fall in love with prices being listed inclusive of taxes.
- Spooky23 13y ago
  Amazingly enough, other industries survive. I just bought a bunch of stuff from a deli, and somehow they appear to stay in business without tips. Tips are just a way for restaurants to displace the risk of paying labor during slack business periods.
  - kenrikm 13y ago
    This! No customers no tips, cost of running the restaurant without customers is less. If tips as a way of paying employees were ever outright banned I'm sure there are plenty of smaller restaurants that would have to close.
  - dghughes 13y ago
    Supposedly tips are common for jobs which rich people didn't do such as cutting hair, taxi, restaurant service. I know I often tip my butler.
    - clem 12y ago
      I find that with my household servants a Christmas bonus of passing down our secondhand possessions on Boxing Day is sufficient.
- neverminder 13y ago
  Where is this being practiced? I've been to pretty much every country in Europe in the last 20 years and in a conventional shop the tax (VAT) is always included in the price.
  - maaaats 13y ago
    It's common in USA, because there are different sales taxes in different states. So advertised products are advertised without tax included in the price.
    - relix 13y ago
      Why are the price tags universal across all stores and all states, and centrally produced? Or if they aren't, surely each shop can print out their own price tags and add the appropriate tax then.
      - techsupporter 13y ago
        Price tags are one thing. The region-wide ads for Kroger saying "milk is on sale for $1.99/gal this week with your Kroger Card" are another. A broadcast TV ad like that might be visible in 10 or more different sales tax areas. Having worked in retail, I have several anecdotes from customers getting annoyed over even the smallest pricing discrepancies. I had one shopper complain about being charged less than the price in the mailed circular on the theory that the chosen product was of lesser quality than the advertised product.
    - FancyCashews 13y ago
      It goes further than that; a county or even a town can have a separate sales tax. You can have 9% in one county, 10% in a city inside the county, or 8% the next county over.
      - kelseyfrancis 13y ago
        And even beyond that, some governments levy different taxes on different items (e.g., lower tax on groceries), while other nearby governments may levy the same tax on everything. Further, some governments charge tax on the pre-coupon/pre-discounted price, while others tax only the actual final price. Further still, some entities like public schools are exempt from paying sales taxes in many states/municipalities. In this case, the price sign would have to show both a pre-tax and tax-included price on it, which may be the best solution anyway. Regardless, these differences are probably easiest to account for at the point of sale.
- TorKlingberg 13y ago
  This is because other sellers are printing the price without tax, so the price with tax appears expensive. If all prices had to include tax, then people would get used to it, and the total consumption would be same in the end.
larrys 13y ago
"Just set the price higher to cover the wages!" For a few reasons. First the amounts won't end up nice and round at particular hot button price points. ($5 drinks all day!) [1] Second, the price will have to be displayed higher and in theory this will make it less likely for someone to get a particular dish. If the restaurant could get more money for the same disk in theory they would already be doing that. Bottom line is the same way that autos are sold (or airline tickets where you now pay separately for baggage) advertising a lower price and having add on's sometimes (but not always) works in your favor in generating sales. Because you are able to price below magic numbers floating around in people's head. [1] In the same way pricing an item at $4.99 will in general generate more sales than $5.25. (Example not restaurant pricing but to prove a point).
- Bockit 13y ago
  I think the counter argument is that in other places where tipping isn't mandatory or even common, reataurants are still able to do fine.
  - dagw 13y ago
    However, based on my own personal and rather unscientific experience, going out to dinner is less common in much of Europe and restaurants employ fewer front of house staff. So while the restaurants that exist might do fine (or as 'fine' as any restaurant does), there are quite probably less of them and they certainly employ less people. Which I guess is the real problem. Removing tipping will increase unemployment.
    - me2i81 13y ago
      That hasn't been my experience at all--I see tons of restaurants filled with plenty of people in most European cities, and they seem to have adequate numbers of efficient waitstaff.
- genofon 13y ago
  >First the amounts won't end up nice and round at particular hot button price points Why? The price is designed to end up that way, if people will have to add 15% on every item they will modify their cost structure. >airline tickets yes if I want to add a service I pay, but in a restaurant I don't have the option to be served without the waiter, so it's not fair to the consumer that has the right to know how much he has to pay when he orders something. When a book a ticket the full price is displayed before I make the purchase, not after I used the service. Also for the waiter lobster and champagne require the same effort of soup and tap water, so it's not like adding a language of 15 or 20 kg.
ExpiredLink 13y ago
> Why not just show the real price in the menu? because the real service costs would be higher than the price of the meal? I have no experience in gastronomy but I guess you pay for being serviced in a restaurant (including table, dishes ...). The 'real' price of the meal is of minor significance.
- maaaats 13y ago
  I meant that the price for an item should have those costs baked in.
dannypgh 13y ago
Because then you'd need different menus for takeout, in-restaurant, and delivery.
- Istof 13y ago
  save 15% if you takeout and avoid inflated drink prices? takeout and in-restaurant could still be the same price...

nraynaud 13y ago

And you don't even create a service charge, you just include your staff costs (and your taxes while you're at it) in your food prices. What's written on the menu outside the restaurant is what you pay at the end of the meal the customer can shop around comparing the prices (like deciding between 2 restaurant, but also between a restaurant and a movie), and your market is healthy.

userisme 13y ago

I hate when I get takeout pizza or etc and the hostess asks for a tip. I would be more than happy to tip the chef if the pizza is good but that isn't the case. The tips go to the hostess. Sometimes the hostess shares tips with chefs at the end of the night but still.

drpgq 13y ago
I find it annoying that more and more takeout places have a tip jar. How much are you supposed to tip on a sub?
- bodyfour 13y ago
  I think the most common answer is "whatever coins you happen to receive as change"
- kennywinker 13y ago
  Under $8, whatever small change I have... $0.50 or so usually. Often enough, nothing. After that, approx. 10%.

dm2 13y ago

I hate the idea of implied mandatory tipping. Pay your staff sufficient wages please. Whatever laws allow the below minimum wage loophole should be eliminated or overwritten, or whatever you do to laws to make them invalid.

larrys 13y ago
"Pay your staff sufficient wages please." In theory means that expenses go up and restaurant then need to charge more on the menu which will in theory result in lower sales and profit (see my other comment).
- dm2 13y ago
  The amount the customers pay should stay the same, unless the service is excellent, then a tip would be given to the wait-saff. Unfortunately the mindset of required tipping won't go away anytime soon. It's not going to happen until the laws that allow below minimum wage pay are abolished, then wait a few years for people to get into the habit of tipping primarily for quality of service. If there aren't enough customers that are willing to pay the "higher" cost then there doesn't need to be that many upscale restaurants. Sometimes I'd prefer to save a few dollars and walk to the kitchen window and get my own food. If the profit margin is that low for restaurants then they either need to go out of business or reduce expenses, having hidden fees (tips) isn't the answer.
  - anigbrowl 13y ago
    The amount the customers pay would stay the same. But you will get fewer customers because people react more to the up-front price than the future final price. People tend to look at the price of he entree and double it, reflecting the additional cost of a starter, drinks coffee, etc. Only in fast food restaurants do people go in with a clear expectation of paying a specific amount. If the profit margin is that low for restaurants then they either need to go out of business or reduce expenses, having hidden fees (tips) isn't the answer. Most restaurants don't make it to the age of 2. It's already a hyper-competitive business because dining at restaurant A is not a straight economic substitution for dining at restaurant B. People have strong and sometimes irrational preferences about where they dine.

nsxwolf 13y ago

I'm more annoyed with the normalization of tipping for behind-the-counter service.

sergiotapia 13y ago
I agree with you. You scooped ice-cream for me and you want me to tip you? The gall of some people is just too much. Why should I just give you money?
- jmccree 13y ago
  This is why the rest of the world hates us in the tech industry. We get to sit in $1,000 chairs, which we easily justify, and in offices where catered food, massages, game rooms, etc are common. Yet you want to complain about the tip jar for an extra $1 that you've already made in the time you waited in line, for the ice cream scooper who has to stand on their feet for 8+ hours and may be lucky to get a bathroom break during lunch rush, and is going to make less all day than you make in an hour, all while they are just trying to mentally study for their econ 101 exam tomorrow. It's totally the people making minimum wage working the counters who are happy for an extra $20 per day that have all the gall, not the tech industry folks making six figures complaining about spending a couple extra bucks per day on tips.
  - doublerebel 13y ago
    Yep, my tipping habits cost me maybe a few hundred extra dollars per year? But to the worker just that extra dollar or two might make their entire night. Considering the free-market slant of HN, these comments are remarkably obtuse. Let those who do not care to tip choose any of the countless options where tipping is not involved. The rest of us who tip will continue paying a bit more and getting a lot more in return. Tipping makes my life easier and more enjoyable, and continues giving returns, for a very small investment. Compared to the $1000s (millions?) thrown away on kickstarter-startup life-improvement possibilities, tipping should be an easy choice.
  - walshemj 13y ago

mseidl 13y ago

In America I generally tip pretty well regardless of service, just because in some states their pay is so low. In some states when you receive tips, you can be paid as low as 2.xx$ an hour. Which should be against the law. In Germany a tip is not percentage based, but usually only 1-2€. But pay tends to be a little better, everybody has health insurance , sick time and vacation.

smackfu 13y ago
Your pay with tips has to be above minimum wage. I'm not even sure why they have that lower minimum wage for tipped employees, since it's pretty pointless.
- SixSigma 13y ago
  You can thank the "other NRA", National Restaurant Association; employs 750 staffers and spent nearly $4 million on lobbying and campaign donations in 2012 alone. http://www.huffingtonpost.com/michele-simon/national-restaurant-association-policies_b_4782261.html http://www.huffingtonpost.com/michele-simon/national-restaur...
learc83 13y ago
>In some states when you receive tips, you can be paid as low as 2.xx$ an hour. Which should be against the law. But if the server doesn't make at least minimum wage, the employer has to pay the difference. So it already is against the law.
- nathos 13y ago
  Of course in reality, if that server doesn't make at least minimum wage in tips and tries to claim it from their employer, they'll simply get fired.
  - learc83 13y ago
    I've had plenty of server friends who've had to do this and didn't get fired. In larger companies where payroll is handled by software, they'll do it automatically.

jokoon 13y ago

The first time I heard about the importance of tips as a french guy, I thought waiter's only income were tips, so in my brain it implied waiters worked for free unless you give them tips !

drabiega 13y ago
At tipping establishments where health insurance is offered it's not uncommon for servers to lose all of their paycheck to healthcare and then have to give the company some of their tips to cover the rest.
fatjokes 13y ago
This is almost true. The minimum wage laws do not apply to waiters, so they are often paid $2-3/hr.
- nathos 13y ago
  Las Vegas casino hostesses (the ones that bring you "free" drinks while you gamble) work exclusively for tips.
  - vacri 13y ago
    I've heard that at some high-end restaurants, waitstaff actually pay to work tables, since the tips on the high bills are high themselves.

gkop 13y ago

The premise of the article may be valid, but the author's top source is not sound. The piece quotes Jay Porter extensively and links to his blog post. Jay Porter is a failed restaurateur whose restaurants have all shut down [0] [1], not a source to be trusted on the subject of well-run restaurants. [0] http://www.yelp.com/biz/el-take-it-easy-san-diego http://www.yelp.com/biz/el-take-it-easy-san-diego [1] http://www.yelp.com/biz/the-linkery-san-diego http://www.yelp.com/biz/the-linkery-san-diego

tveita 13y ago
I found his blog posts to be well-argued and sourced. I think they stand on their own even if his restaurants weren't ultimately successful.
kennywinker 13y ago
The high failure rate in the restaurant industry means these businesses could have failed for entirely stochastic reasons unrelated to Jay Porter. If 80 of all restaurants fail, then he's got to start 8+ before we start to find out if he's the common denominator.
- gkop 13y ago
  That's not how probability works [0]. Say we assume a more realistic 40% success rate figure [1], given Jay's 2 trials: Probability of 1 success: (2 choose 1)(0.4^1)(0.6^(2-1)) = 0.48 Probability of 2 successes: (2 choose 2)(0.4^2)(0.6^(2-2)) = 0.16 0.48 + 0.16 gives us a 64% of at least one of Jay's restaurants succeeding. So the odds were in fact in his favor. [0] https://en.wikipedia.org/wiki/Binomial_distribution#Cumulative_distribution_function https://en.wikipedia.org/wiki/Binomial_distribution#Cumulati... [1] http://www.businessweek.com/stories/2007-04-16/the-restaurant-failure-mythbusinessweek-business-news-stock-market-and-financial-advice http://www.businessweek.com/stories/2007-04-16/the-restauran...
  - kennywinker 13y ago
    My apologies! I'm a long way out from stats class now, but I've been doing some light A/B testing so I've been thinking about things from the perspective of statistical significance rather than simple probability. So with that in mind, only having two trials, can we really determine a deviation from the norm? The odds were in his favour (slightly) but not so much that we can say with any certainty that he or his tipless restaurants were the issue. I'm rusty on the math or I'd actually calculate statistical significance (p value?) of 2 tries 1 success vs two tries 0 successes. I suspect it's below 95% though.

adamzerner 13y ago

I think that this is missing the biggest critique of all - it doesn't make sense to allocate 15-20% of the payment to something that is only like 1% of the value you're receiving. The real value in going out to eat, in roughly decreasing order of importance: - The quality of the actual food and drinks that you consume. - The convenience of not having to spend the time and effort to shop, cook, and clean. - The atmosphere and joy of "going out" (with your friends). - The fact that someone takes your order and brings your food to you. There's no way that the fact that someone takes your order and brings your food to you consists of 1/5th of the value of your experience. An efficient market should then adjust to this by offering the option of not tipping, having all the consumers go to that restaurant because it's a better value, and then the other restaurants would have to adjust. Unfortunately, this doesn't happen, probably for a variety of reasons. 1) People don't have enough information when choosing where to eat. 2) There are biases where people don't really consider the cost of tipping when they consider the cost of going out to eat. 3) People have gotten used to it, and "don't mind" tipping.

robotresearcher 13y ago
I disagree. Good service is a pleasure to receive, and adds a lot to the value of the experience. When your water glass never gets quite empty, and the flat bread never quite runs out, and you're not sure how that happened because your conversation was not interrupted, and your food arrives hot and when you look around to get the bill and it arrives just like that. When service is really good the restaurant feels like magic. That's worth a lot.
- deleted 13y ago
  [deleted]
joshreads 13y ago
Have you ever run a restaurant? By what crazy math is staffing only 1% of the cost of running one? (Keeping in mind that tips aren't just going to the your main waiter, they're also distributed among busboys and other customer-interacting staff.)

Jugurtha 13y ago

Before I even read the articles, here's how it goes: - Where I live, there isn't a culture of tips. Employees are paid by employers. - Some employees though, and businesses, delight me. Like I "really" enjoy it there. So I tip. Look at what happened here: I tip in an environment not used to tips at all. Tips should be a consequence for delight. Not some thing you do. It's just that I can't help tip people who take care of me (and I'm from that culture). Sometimes, they'll offer a discount and I'll insist on paying the full price. It happens I enter a shop only looking for directions to somewhere, and the person there goes beyond it. I buy something. It's natural for me. Now, the very thought of having to tip, as if it is a given, granted thing I have to do, whether the waiter/waitress was good or bad would make me sick. I understand they are under pressure, but I have seen waiters/waitresses under pressure behave with an unimaginable class and composure. With whom things that would piss you off would magically disappear. They exist, you should hire them. Not some snorky bitch waiter/waitress(yeah, there are waiters who are bitches. It's not just waitresses) who'll treat you like crap, and then have the gall to even expect a tip (I mean, you screw up, you go incognito and pray you even get to keep your job, not ask for a tip and have an attitude). So I say this: - Their revenues are mainly from tips and they are not very well paid: It's not the customer's problem what your employer does. But you can delight a patron, and most people who are delighted pay beyond reason for service beyond "normal". - If you're a waiter and think this is unfair, look around you. I am sure there are other waiters who get tipped regularly and fatly. What are they doing you're not ? Humans are generally not assholes. If a patron gets treated really well, only a small percentage will be assholes. I help my friend with his business (car accessories, installing alarm systems, etc) and people just don't believe the length we go to. They just are shocked. They've never seen that. The welcoming, the explanations, the garantees, etc. I have a friend who sells computers and repairs them (and some other stuff like flash drives, etc). People would drive 30 miles to buy a flash drive from him. They could buy it anywhere, but they buy it from him. People came to him from 400 miles away, because of reputation and service and referrals (his regular clients vary from normal dude, to senators). Your behavior matters. I once called customer service of my crappy ISP, as usual, and that day, a tremendous guy answered the phone. This is something I have never seen before. I was literally in frigging bro love with him. I mean, I asked him if there is any way I could like give feedback to his supervisor or something. He treated it with grace saying he was flattered, and he was only doing his job. And no, he wasn't just doing his job: He went the extra 100 miles. I've eaten in many places. Some places I wouldn't let them keep a 5 cents change because they were cunts. Some places I'd have no problem leaving 30% to even 50% at times because they were simply surreal and treat people like royalty.. Like really, really, really cater to you. And it's no difference of small restaurant, big restaurant, or someone just outside grilling rabbits. Behavior matters.

switch007 13y ago

Tipping in Canada prevents you getting rude reminders from staff. We Brits find it truly baffling having to leave 50c-$2 for a drink you fetch yourself from a bar. Canada is all smiles and great service (sincerely) until you forget to tip.

ciupicri 13y ago

> 5) We don’t tip doctors Not in Romania and probably other former communist states. Though this is more like a bribe than a tip.

bitsoda 13y ago

There's nothing that grinds my gears like that blank tip line staring back at me when I pay for my takeout or counter order. The soured rapport is palpable when I hand back the signed receipt and the cashier glances at the striked-out tip space. It leaves an unpleasant taste in my mouth after what should have been a simple transaction. Ugh.

kennywinker 13y ago
Perhaps you should tip. You may not like the system, but if it ruins your day it's probably worth paying just to keep yourself happy and optimistic. Not to mention the person you just declined to tip is likely making minimum wage or even a "server wage" (lower than minimum in some regions) and depending on tips to make the job worth doing.
lnanek2 13y ago
I think you are just making that up in your head. I've never tipped for counter or takeout, never heard of anyone else doing it either. I don't think anyone expects it. The person still has to look down there, but there's nothing more to it than that.
- judk 13y ago
  It is trivial for register software to not print a tip line when the takeout button is pressed, if the businesses wanted to support customers and not press for tips there.

personlurking 13y ago

Why not install ipads in the tables and do away with waiters? All one needs are food runners. Pay them normal working rates so no tips needed, even for them.

venomsnake 13y ago
Yeah tablets will be great at providing anything other than dry facts about the food. At least 40-50% of the times I go out to eat I have just a vague idea what I want and it is up to the waiter to match my desires with the menu. Just to prevent shrieks from the chefs that lurk here - I never do special requests on the tickets but sometimes a person needs a guidance trough the menu.
- judk 13y ago
  You are describing a very high end dining experience. In most restaurants the server "recommends" the highest margin item (bonus commission) or whatever they like or is easier for their friends in the back to prepare. It's dinner, not a bespoke ball gown.
kennywinker 13y ago
This will probably happen eventually for lower end places. Middle and higher end places I suspect already rely on service staff to differentiate themselves. Either by being friendly, helpful, and knowledgable, or by being a draw for other reasons. I'm sure you can think of at least one restaurant in your area renowned for it's young, attractive, flirty female staff. People who dine out are often doing so for a chance to socialize a bit... talk about wine with a knowledgable waiter, etc. not just dink around on an iPad.
- personlurking 12y ago
  "People who dine out are often doing so for a chance to socialize a bit" Agreed, though dining with others also allows them to (socialize).
TorKlingberg 13y ago

doublerebel 13y ago

This article is clearly not written by anyone with service industry experience. 1) Tips are unrelated to good service...good tips are mostly good luck False, I could rely on 25%+ tip average, and as a server/bar trainer I trained my staff to receive the same, by giving excellent service. Being able to rely on tips for income (as most of the industry does) is by definition not luck. 2) It's un-American Tipping is a direct way for the consumer to reward and punish a worker or market based on perceived value. If being capitalist is an American trait, tipping is very American. 3) Economists don't get it Where is the source cited for this? I know plenty of people who work in finance, and tip very well. Professors however, seem to value service workers differently... 4) It’s borderline racist Because more minorities receive tips? The service industry gives countless minorities and other disadvantaged groups (criminals, drifters, youth) opportunities for employment and advancement not found in any other industry. Most people who work in the kitchen do so by choice, anyone who desires and has people/sales skills can just as easily get a front-of-house job. As a service worker I was generally hired by and reporting to a minority. 4b) "it's usually illegal to redistribute tips among the staff." False, tip pooling is extremely common between service workers and even back-of-house (kitchen). Only tip sharing with managers is not practiced, because they have higher guaranteed pay and it would be a conflict of interest for all involved. 5) We don’t tip doctors, flight attendants, and any number of occupations where service is important. This is a personal anecdote of the writer. I tip flight attendants anywhere they still take cash. And a surprising number of occupations are happy to accept tips if you try. Tips don't have to be monetary, they can be free tickets to a show or food or a vice (i.e. cigarettes or alcohol). Doctors don't get tips because of the high pay of their job, but many industries have bonuses provided by the buyer in exchange for a job performed beyond expectations. 5b) [Workers practice tip-sharing] according to a culture called “tipout.” But as this is not obligatory, it is inefficient and can foster cheating, resentment, or worse. False, and this clearly shows the writer does not have service industry experience. Anywhere tipout is practiced, it is required as a percentage minimum of sales. However, often workers "tipout" above and beyond the required percentage, to anyone and everyone who earned it. In many service jobs your co-workers are like family and you all take care of one another. Priceonomics usually writes great articles, but this one should be taken with a grain of salt.

13y ago

ebol4 13y ago

This article is very poorly written, and many of the points made in it are unfounded or irrelevant. I completely support abolishing the practice of tipping, but using bullshit arguments like "it's un-American" and "Economists don't get it" don't lend any credence to your stance on the issue. The only point that directly cited actual data was the first point. This article shouldn't be voted up as much as it is.

baby 13y ago

That's one thing I never understood with the US. When you need a haircut, or you want to take a cab, or go get a drink... you always have to tip. Whereas the tip should be something you want to give to show appreciation. So every time I went to the restaurant, I knew that the prices displayed were NOTHING like the prices I'd have to pay in the end. They would add taxes and if I didn't tip I would be seen as an asshole.

rm999 13y ago

This is an old article - Jay Porter's tipless restaurant, The Linkery, has since failed. This is my comment from the last time the Linkery came up on hackenews (https://news.ycombinator.com/item?id=6127536 https://news.ycombinator.com/item?id=6127536): >Back when I lived in San Diego I took my parents to the Linkery. The service was so bad it actually reversed my opinions against tipping. The servers clearly didn't care much about making us happy, messing up almost every aspect of the order. They put meat in my food - I'm vegetarian. My father got his food 20 minutes after my mother and I did. The waiter forgot one of my drinks. We called over the manager who offered us a free dessert to make up for it. Guess what? The dessert was on the bill. I'm always happy to tip 20+% for good service, but being forced (yes, we asked) to pay the service charge added insult to injury. This is just one data point, but the Linkery was infamous around San Diego for having much worse service than other places in a similar price range. I'm convinced their experiment with tipping was correlated with this.

jarrett 13y ago
If tipping is necessary in restaurants to promote good service, why isn't it equally necessary in other contexts? In businesses without tipping, managers have an incentive to please customers, so good managers[1] encourage employees (by various means) to provide good service. Why can't the same be done in restaurants? I'm not claiming tipping is certainly useless. Just questioning the argument in its favor. [1] Not all managers are good, and so we encounter businesses that provide poor service. Sometimes the market weeds those out, sometimes not. According to the parent commenter, that's what happened at the restaurant s/he visited.
- Crito 13y ago
  > "If tipping is necessary in restaurants to promote good service, why isn't it equally necessary in other contexts?" Maybe it is. No Tips vs Tips: Delivery: Package/Letter (no tips): constant missed deliveries. poor to non-existent delivery scheduling. crushed boxes. Food (tips): reliable delivery within the hour. delivery person knocks on the door more than once. never found a pizza carelessly thrown into the bushes beside my door. Luggage handling: Checked luggage (no tips): constantly lost. Porter/redcap (tips): the people you go to if you *actually* want your luggage taken care of. Service/Repair: Cable (no tips): only able to schedule service during inconvenient hours a week in advance, with service windows so large that I need to take a day off work. Plumbing (tips/negotiable pay): I have gotten plumbers to my home in the middle of the night. Apartment repair guy (no tips): Ahahahahaha.... The one counter-example that I can think of is cab/uber service. There is a hell of a lot wrong with the cab industry though.

lnanek2 13y ago

I think averaging out all the numbers and reporting service doesn't matter may be missing those rare occasions when the restaurant really does screw up and you want to punish them with no tip. I want the waiter to go work hard and get me the right thing, etc., after a screw up or to know not to ignore my table for an hour. I don't have that option with an enforced service charge.

judk 13y ago
You can tell the manager why you aren't coming back.

mwfunk 13y ago

Mildly tangential, but I'm always surprised when people express so much anger about being expected to tip in restaurants (in America, at least). Not people who come from other places where the conventions are different, but people who have lived here their whole lives. I'm not surprised (and empathize with) people who are reacting to the inefficiency of The System ("why don't restaurants just charge more and pay their employees reasonable wages?"). This is correct, but as others have pointed out, in the US at least we seem to be stuck at a suboptimal local maximum in this area. It would be impractical (and maybe catastrophic) for any one restaurant to suddenly adopt this policy, so that's not going to happen anytime soon. Rather, I'm always amazed at the portion of people who have a visceral reaction to tipping due to what appears to be just plain lack of empathy. These aren't the people who are saying, "why doesn't the restaurant just pay better?". That totally makes sense. These aren't the people who tip less (or not at all) when they've had a really bad experience with the server. That makes sense too. Specifically, I'm talking about the people who deep down inside just always have a reflexively negative reaction to directly giving their money to the person who just served them. These are the people who feel happy about themselves when they say things like, "my tips start at 0% and go up from there", or who seem to put way, way, way too much mental energy into grading the level of service that they've received and coming up with a number that reflects that level of service each and every time they go to a restaurant. If anyone posting is that kind of person, please just shut up and start being a better person already. I encounter these people all the time in SV. These aren't poor people for whom the tip is ever a meaningful amount of cash. These are people making many times the annual income of their servers, getting continually worked up over a few dollars, supposedly because of "the principle of the thing". These are always people who have never worked in a restaurant, and are almost always people who never even had a job until after they got out of college. If anyone posting here is posting for this reason, please just get over it and find more constructive things to get worked up over. Ideally something that doesn't directly impact the income of people making way the hell less money than they do.

mpyne 13y ago
What surprises me of the visceral reaction of those who say "why doesn't the restaurant just pay better?" is that by that logic you'd still be paying essentially the same price. It wouldn't actually be cheaper if you were charged for food + good service separately, so why are you getting so inflamed about it?

ghx 13y ago

> We tip barbers and coat checkers along with waiters, but not doctors, flight attendants You don't tip people who already get paid really well. I guarantee that you would tip your doctor a lot if doctors usually only made $8/hour.

krzyk 13y ago
It doesn't matter how much given person earns, I have no idea I don't see his/hers pay slip. You pay for the service if it is good you can pay more, if it is bad you would like to pay less (if at all).

doesnt_know 13y ago

Tipping isn't a requirement for good service. Plenty of countries don't have a culture of tipping and restaurants still exist. Tipping is just a convenient way to dance around the concept of minimal wage and exploit workers, almost to the point of slave labour.

caycep 13y ago

OT, an aside, but from when I last ate there ~ 2.5 years ago, Sushi Yasuda was probably the best sushi restaurant in NYC. Maybe Masa, the famous place at $300/head minimum was technically "better" in terms of the sushi you got, but Yasuda was up there in terms of the quality of the fish and preparation, at a much more reasonable price. (not cheap, but not outrageous like Masa). Yasuda can probably get away without tipping, I am assuming, because the wait staff is probably higher trained and more professional than your average student or aspiring actor trying to pay the rent at the Denny's down the street... Heck, I now live in LA, and I can't find sushi that good.

MrMeker 13y ago

As a dishwasher who makes $8/hr, tips are very important. Mine are based on a percentage of sales, like the "tipout" mentioned in the article. I don't know where the author gets their information or if they have ever worked in a restaurant. Some of the information is ridiculous. In California, everyone is payed at least $8/hr before tips. Tips only add to take home pay. Without tips, I can't imagine making more than minimum wage. Last night I made $15.50/hr, nearly double what I or someone else would be payed without tips. The market clearing price for a dishwasher is much lower than minimum wage.

SethMurphy 13y ago

A great (for the owner) side effect of tipping is it allows restaurants to remain open even during times they are slow (weekdays, off-season) by passing much of the financial burden to the waitstaff instead of the owner. Otherwise hours would probably be much less convenient for the customer. This may not be the case in a large city but in smaller towns the weekday shifts are also a rite of passage to earn a good night where you can make some money.

stefan_kendall3 13y ago

I feel like there's a business opportunity here. There is a large group of people who don't want to think about tipping, and would always just tip 20%. Could a payment system or card do this automatically? Or perhaps legally signal to the server that they should take 20%? This doesn't seem impossible, and I think the idea has a reasonable market.

abalone 13y ago

Mandatory Reservoir Dogs clip: https://www.youtube.com/watch?v=V4sbYy0WdGQ https://www.youtube.com/watch?v=V4sbYy0WdGQ

rch 13y ago

Tipping extra sometimes encourages behaviors that are materially detrimental to the business itself. This effect is pretty well known in the industry, so I can't imagine many restaurateurs would complain if tipping were universally ended for everyone. But are restaurant owners ready to start employing servers and bartenders on professional terms? The article alludes to the practice of tipping out the bussers and dishwashers, but is a bartender more or less likely to do that with a $60-80K salary? Maybe the back of the house could see a percentage of sales instead... Or just food and wine, but not cocktails. There are really too many corner cases and caveats to work through up front, but if this becomes a trend it could open new opportunities for POS providers who might appreciate the shot at staying relevant.

arjie 13y ago

I always tip a reasonable amount (15 to 50 percent) because it's what Americans expect and I've already factored it in. One thing that bothers me, though, is the view that's prevalent among wait staff (if reddit posts by them are to believed) is that black people and Indians don't tip. Well, the tip comes after the service. No person is going to provide equal service to a perceived good tipper and a perceived bad tipper. If, after providing inferior service, they receive a bad tip, it just reinforces the view. If they get a good tip, it is too late for me to receive good service. Well, they'll still get the tip, but it makes me seethe when people say that.

balladeer 13y ago

You ever tip the chef? The guy who cleans the table after you? The lady who cleans the dishes? Or the guy sits at the cash counter? Or the guy who opens and closes the door after you? Or the guy who walks around taking everyone's orders? So why do we start making a noise when it comes to tipping a waiter? Is it only him/her in a restaurant who deserves to make some extra money? Or others are well paid? Well, then why not pay him well too? I have always found this attitude, that not tipping means you get the service what you pay for, disturbing. This is regressive. The worse are the people who chime in with their moronic "if you can't tip, stay at home". All the good restaurants I've been to, the ones which are famous for both the food and service, offer good food and service and food whether you tip or not. If there's an exception that restaurant needs to have a closer look on its policies and staff.