How Restaurants Are Managing Tipping Amidst a No-Tip Trend

Smoke ‘N Water in British Columbia, Canada will join the growing list of restaurants making its way onto the no-tipping list. As one of the largest minimum-wage-driven industries, the topic has garnered much attention in conjunction with talk regarding living wages, and the potential for a federal increase in the minimum wage. Let’s take a look at how different establishments are approaching the concept and what diners and members of the industry can expect.

A brief history of tipping:

The act of tipping originated in Europe as a means to encourage exceptional service. It wasn’t until after the Civil War that the practice made it to the United States. In the 1800’s, it was likely the practice was more a form of expressing one’s wealth or worldly knowledge than to guarantee great service, explains Michael Lynn, professor of consumer behavior and marketing at the Cornell University School of Hotel Administration.

Interestingly enough, the practice itself likely stemmed from less fashionable intentions. Tipping first appeared in bars and taverns as a way to hasten service or encourage bartenders to over pour. In fact, the word “tip” is actually an acronym meaning, “to insure promptness.”

Over the years, tipping has evolved tremendously. Very few establishments in Europe abide by the 10-20% tipping rule and may even consider anything over 10% excessive. While it may have originated there, the United States is taking the spotlight in today’s tipping controversy.

The “traditional” tip:

Let’s begin with what many consider the traditional form of tipping. In the majority of restaurants, this is managed through the discretion of the consumer and provided to the employee in the form of a percentage of the total bill. It’s customary to offer 10-20 percent.

Today, this form of tipping is viewed as almost involuntary or at least expected from the waiter’s perspective. Some patrons look at it as a means to offer a reward or reprimand while others just view it as another line on the final bill.

When tipping remember that employees with the potential to earn tips are in most cases only receiving a $2.13 minimum wage and are therefore reliant on the tips they receive. To view your state’s tipping and wage laws, visit the Department of Labor site.

The non-existent tip:

Recently, restaurant owners and members of the foodservice industry have been rethinking the roles of their employees and the fairness of federal and state wage laws. Instead of relying on uncertain tips, these employers are opting to pay higher wages to their employees and remove both the uncertainty of tipping amounts and the expectation on the patron to provide for the employee’s livelihood.

Though the new practice has been met with mixed reviews, the common theme amongst critics is that of passion.

One such display was in a March 2014 piece in the Guardian by food and drink critic Elizabeth Gunnison Dunn. “I hate tipping because I believe that I would be in a much better place – as a diner, and as a human being – if pay decisions regarding employees were simply left to their employers, as is the custom in virtually every other industry, in pretty much every civilized corner of the earth.”

These employers are combatting just that. Taking the wage decisions out of the patron’s hands and making the decisions on their own, they’re removing the responsibility entirely from the patron’s radar.

Fan or not, the trend appears to be taking hold, and even big names like David Chang and Danny Meyer are considering the switch.

The service charge “tip”:

Some restaurants have created a hybrid of the two tipping systems in the form of a service charge. For restaurants with this kind of “tipping” expect a pre-established fee attached to your bill in the form of a restaurant-established percentage. For example, at Atera in New York City, each bill includes a 20% service charge as a mandatory portion of the bill.

For establishments with this kind of fee, don’t expect the option for additional “tipping.” This charge is referred to as a fee because of an IRS rule regarding tipping that states, “(1) The payment must be made free from compulsion; (2) the customer must have the unrestricted right to determine the amount; (3) the payment should not be the subject of negotiation or dictated by employer policy; and (4) generally, the customer has the right to determine who receives the payment.”

In other words, restaurant owners can’t make a tip mandatory but they can certainly implement a policy that requires patrons to pay a service fee. While new to the United States, this is quite common in Mediterranean countries.

Interested in reading more about recent restaurant trends?

To learn more about popular industry trends, browse our News & Trends section or check out this recent article: Chefs Trade Formal Environment for Fast Casual Fare.

Chelsea B. Sanz
Chelsea B. Sanz

Chelsea Sanz has lived in East Tennessee since her family moved here from South Florida just before she started high school. While she initially begrudged her new home state, she eventually realized she had come to not only love it, but to “bleed orange” as University of Tennessee Volunteers fans here like to say. She and her boyfriend Hunter, a trail worker for Great Smoky Mountains National Park, enjoy exploring the nation’s most visited national park and coming up with their own farm-to-table recipes.