Monday, November 26, 2007

Tips are bad, mmkay?

Stealth Wealth wrote an article about why he thinks the practice of tipping has gotten out of hand. I agree and further I think the practice has become counterproductive, at least when it comes to restaurants.

Let's look at some of the effects of the current system.

No special service required -- tipping isn't for special service, it's for standard service. People will pay 15% unless service is truly terrible. Unfortunately, people will only pay 20%-25% for very good service. Since 15% is the norm, that translates to a 5%-10% tip for special service... not very motivating!

Quantity over quality -- Going along with the above, there is an obvious emphasis on quantity over quantity. It's generally more profitable (and definitely more of a sure thing) to give good service to 6 tables than to give excellent service to 3 tables. Waiters always tell the hostess "No I'm not too busy, give me the next table!" They will never say "Gee, give it to X, his last table left quickly and I want to continue providing excellent service to my existing customers."

Service depends on what you order -- Have you ever gone out for lunch, by yourself, and gotten something small like a salad with just water to drink? Your waiter's motivation to provide good service is approximately zero. It takes as much effort to refill your water glass as it does to bring that other guy another $4 beer.

Time is a factor -- Want to sit at the table and reminisce with your friends for 2 hours getting free refills all the while? Most people realize that they should tip more in that situation, but few pay significantly more, meaning a 50% tip instead of 25% or 30%. That's why service trails off.

Waiter takes blame for restaurant mistakes -- Most people recognize when a problem isn't their waiter's fault, but some don't.

Stereotyping leads to self-fulfilling prophecies -- If you look like a bad tipper, you will receive bad service, and you will most likely leave a bad tip. Or if you're a regular customer and you frequently leave bad tips, you will get bad service. I think pretty much every restaurant has some groups like that. When I was a waiter, we would seriously try to avoid getting stuck with a certain group of 6 or 7 old women who came in once a week. Suddenly everybody would be taking a smoke break, going to the bathroom, or whatever. It was funny. The reason was that they would all order fairly small meals, only drink water, and for a tip each one would round their bill up to the next dollar.

All of those issues could be resolved by paying waiters a normal wage. People could still leave tips if they received truly exceptional service. Bad service could be addressed by speaking to the manager (which is almost universally more appropriate and effective than not saying anything and leaving no tip).


stealthy said...

I totally agree with you when you say "All of those issues could be resolved by paying waiters a normal wage. People could still leave tips if they received truly exceptional service."

Paying a lower wage kind of forces the waiter to choose quantity over quality. Then again people are greedy and may choose quantity no matter the wage.

Bottom line tips shouldn't be something expected. The employer should pay the waiters/waitress at least minimum wage and don't expect the customers to pay their staff.

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