My Op-Ed ran in today’s Moscow-Pullman Daily News. Enjoy!
I am not a fan of the oxymoronic “mandatory gratuity.” The move in Washington State and by some Moscow restaurants to shift to mandatory gratuity changes the entire dynamic of food service in those restaurants. Incentives matter, and the waitstaff in these restaurants are less incentivized to focus their attention on the experience of the customer. The job of the waiter becomes more mechanized until he is little more than a vehicle to deliver food from point A to point B.
Restaurant managers have three responsibilities: to the guest, to the employees, and to the owners. Managers owe it to the guests to keep prices down while keeping quality and service up; to the employees to provide good paying jobs and a healthy working environment; and to the owners to make a reasonable profit (the average national profit margin is 3-5% in US restaurants). Those three interests are held in tension.
Allowing guests to tip is a great way to resolve some of that tension. It allows managers to be employee focused so that the employees can be customer focused. The guests take financial care of the wait staff.
In the tipping environment, the wait staff are equivalent to a sales team who work for commissions. Salesmen are paid comparatively lower salaries, but they make their money off their commissions. The more they hustle and the better customer service they provide, the more money they make. A great salesman would never choose a higher salary over losing their commissions.
The best servers have the ability to elevate the status of any restaurant. They learn what regulars like and do not like, and they develop a connection with their customers, even developing their own clientele who ask for them by name. Customer retention will be higher from this kind of service, so it’s in the restaurant’s best interest to foster that environment any way that it can.
Tipping does not only drive up the quality of the service, but it also encourages the server to maximize his capability. If one server can provide good service to only 20 guests while another server can provide excellent service to 75 guests because they are efficient, personable, and have a healthy schmooze with the guests, the customer should have the power to reward that server accordingly. When given the opportunity, the average diner welcomes the chance to be generous when they can be. Customers want to be impressed and appreciate the opportunity to show gratitude. A restaurant should capitalize on that, rather than hinder it.
Great waiters average more than 15% tips. Many of our nicer restaurants are filled with millennials working there because of the flexible hours and pay, not because they cannot find better jobs. Talking to many of them, they would take a significant pay cut if they were forced into a mandatory 15% gratuity system, and would immediately look for employment at a restaurant that allows tipping.
In March 2018, Congress passed an amendment to the Fair Labor Standards Act (FLSA) recognizing that a tip was a transaction between a consumer and a server (rather than the consumer and the restaurant), and therefore the server cannot be compelled to give up his tips to the restaurant owners, management, or supervisors. Since then, some restaurants have shifted to the no-gratuity / price-inclusive / service-charge model, effectively avoiding this law.
Moscow-Pullman locals will see this unfold in front of their eyes. Restaurants that allow for tipping will attract the best waiters and waitresses on the Palouse, and you can be sure that the best dining experience will be found at those restaurants as well.