n an Op-Ed Piece in today’s NY Times author Steven Shaw argues that restaurants should abolish tipping and adopt a European style “service charge” much like Thomas Keller, the celebrity chef, is doing at his deservedly world famous establishment Per Se.

“…Mr. Keller is right to move away from tipping – and it’s worth exploring why just about everyone else in the restaurant world is wrong to stick with the practice,” Shaw writes.


Shaw argues that tipping makes no economic sense. He cites a Cornell Study that indicates gratuities are often based on a customer’s perceived emotional connection to their server -irrespective of the quality of service provided. “Indeed, there appears to be little connection between tipping and good service. The best service in the Western world is at the Michelin three-star restaurants of Europe, where a service charge replaces tipping” Shaw states.

The author goes on to explore the weakness of the current tipping system such as the “upsell” where waiters, eager to inflate their tips, constantly push higher priced items like expensive bottled water and “quiet understated service often goes unrecognized.” He decries “pooling”, a system where all gratuities are lumped together and distributed to servers at the end of the shift which, in his words, “has gutted whatever effect voting with your tip might have had on an individual waiter.”

Shaw goes on to write that servers are being shortchanged by the current tipping system. He opines that servers (who feel this job is a transient one anyway) are trading in the long term benefits of a less compensated salaried status (retirement benefits, health insurance, vacation pay) for the possibility of pocketing extra cash under the current system. Shaw concludes that restaurants would do well to stop treating servers as “pseudo contractors” and provide a living wage, thus ensuring a waiter’s loyalty. In his words “waiters loyal to the restaurant will perform better and make customers happier than waiters loyal only to themselves.”

While Mr. Shaw’s article is well written and offers some good insights into the restaurant world, his pronouncements belie the fact he has probably spent little time in the trenches as a waiter. Here are the holes in his argument. …

Shaw cites the lofty example of uber restaurants like Per Se and expensive Michelin rated establishments. While these restaurants are excellent at what they do, they do not represent the majority of places that the average American diner can afford. Do you have any idea of the effort involved in obtaining three or four stars? These places operate on a much higher plane than your neighborhood trattoria. With their financial backing, public relations machines, (think Food Network) and fame, establishments of this caliber can afford to pay their servers a living wage and benefits.

Please don’t be fooled by the words “service charge” either. It’s still a tip. The only difference is that you are legally obligated to give it. And what’s more – do you think that the server will ever see that money? Gimme a break.

Now places like Per Se, which tack on 20%, probably give that money to the wait staff. But they’re PER SE. While it might be true the patron’s tip is based on how much they personally like their server, Shaw’s position would remove the customer’s monetary feedback entirely. Plus, water always seeks its own level and greed is rampant among restaurant owners. Sensing profit, restaurateurs will establish a service charge but start paying servers a flat hourly rate, thereby pocketing the difference. This obviates the consumer’s ability to reward the server. You’ll understand what I mean if you’ve ever shelled it out for a wedding reception. The establishment charges an 18% service charge on top of the bill but only pays it’s waiter between $10-$15 dollars an hour. Where does the rest of that money go? Right into the owners pocket! Now you might say that’s the way it works but hold on! There’s a restaurant in NYC that adds a “service charge” of 18% for parties of six or more. The waiters pocket that money. However, when the Christmas season arrives and the restaurant starts booking multi-thousand dollar office parties – they switch the servers to a flat hourly rate and keep the difference. That’s cynical and greedy. And that’s exactly what will happen if every restaurant in America adopts a service charge.

Far from improving a customer’s dining experience the service charge will ruin it. Why? Because if waiters are making an hourly wage they won’t care what kind of service they give. And, since waiters will definitely be under compensated they won’t be happy and what will that do to the “emotional connection” patrons have with their server? It will destroy it – making customers miserable and causing experienced servers to leave the business in droves. The best way for a restaurant to make a waiter loyal and happy is to pay him or her well through tipping. In this age of corporate layoffs and CEO overcompensation do you think any young person (the usual age cohort for waiters) buys that nonsense about long term compensation after they saw their parent’s loyalty to companies like Enron and Tyco so richly rewarded? They don’t and they want their money now. Why? Because a lot of us can take care of ourselves.

I pay for my own health insurance. I can do so because I’m adequately compensated under the current system. But if I start making $10 an hour I can’t. Eventually restaurants will be forced to offer it in order to attract lower paid workers. They will either pass that cost along to you the customer or lower the quality of their food. Besides, a lot of restaurants are independently owned and operated businesses surviving by the skin of their teeth. They need servers to operate as “pseudo contractors” because to do otherwise might incur labor costs they cannot afford to assume. If that happens they might go out of business. Then the only places left standing will be the preserves of the wealthy while the rest of us will be forced to dine in cookie cutter corporate places like the Olive Garden which has the fat bankroll needed to support their servers. Gone will be the corner Bistro with its red and white checkered table cloths. Gone will be the unique menus and quirky waiters – replaced by super expensive or dull soulless corporate affairs. The culinary landscape of America will be greatly diminished.

While I agree with some of Mr. Shaw’s points (I hate pooling tips, eschew the upsell, and appreciate quiet low key service) I have to conclude his approach is simplistic. Tipping is a valuable tool for consumers to reward or punish wait staff. It enables many small restaurants to exist. The service charge will wreak havoc on the restaurant business and turn waiters into low paid customer service wage drones. Just like the workers at another restaurant Mr. Shaw seems to admire so much…..Mc Donald’s.

Not that there’s anything wrong with Mickey D’s. I just don’t think that should become your only dining option!

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