No Tipping Can Improve Service


Tipping helps ensure a better dining experience by rewarding wait staff for attentiveness and quick service, right?

Actually, not so much. The Linkery restaurant founder Jay Porter explains that his company disproved the industry’s assumptions about tipping after he banned the practice in his second year of business.

“We instead applied a straight 18% service charge to all dining-in checks and refused to accept any further payment,” Porter writes at Quartz.

That made the Linkery the first restaurant “where you couldn’t pay more money than the amount we charged you.” But he says instead of his waitstaff’s performance lagging, “our service improved, our revenue went up, and both our business and employees made more money.”

Research backs up Porter’s assertion that tipping actually promotes bad service and doesn’t always reward hard workers. For starters, servers who get the most tips are thin white women in their 30s with large breasts, according to research from Cornell University professor Michael Lynn.

But discrimination also swings in the other direction, Porter notes. Servers often profile guests, providing better service to those they believe will offer big tips. That creates “negative experiences for the many restaurant customers who are women, ethnic minorities, elderly or from foreign countries,” he notes.

Tipping also encourages servers to maximize the number of guests they serve, which can lower the quality of their work.

Some top New York City restaurateurs recently discussed the issue of banning tipping via Twitter but were shot down by their own servers, notes. That might be due to the potential for servers to haul in big tips on busy nights, but the truth is that many workers who rely on tips aren’t exactly rolling in the dough.

The median annual wage for servers is about $18,540, according to the Bureau of Labor Statistics. (While tips are taxable income, some people working in tip-based industries underreport their income, contributing to the $2 trillion shadow economy.)

To be sure, it’s not as if flat service rates are unknown in restaurants. Automatic gratuities are the norm at many eateries for big parties, often charged 18% for tables of six or more.

But a June lawsuit over the practice indicates flat-rate tips may have a tough time gaining traction. Ted Dimond, 47, is suing Darden Restaurants‘ (DRI) Olive Garden and Red Lobster in Time Square, among other restaurants, for adding automatic gratuities to bills.

“They’ll have an automatic gratuity in the price and then they’ll have a line for an optional tip, but a tip and a gratuity are exactly the same thing,” his attorney, Evan Spencer, told CBS Local. “They want to squeeze that extra little dollar out of everybody.”

Follow Aimee Picchi on Twitter at @aimeepicchi.