A cynic might expect that, in an era when most restaurants cannot provide dine-in service, customers for takeout orders wouldn’t feel the need to tip. However, when I ask restaurateurs about this, I’m surprised by how many of them say that their clientele is still tipping. One owner told me that, after receiving blowback in response to a mandatory service charge, he made it voluntary and found that customers chose to pay it, leaving an average of 18 per cent.
As restaurants are generating a quarter of their typical revenue during COVID-19, however, that 18 per cent doesn’t add up to what it used to. Government subsidies for wages, even when they work well (by keeping people employed and businesses solvent) don’t cover what employees earned in tips, because tips are not wages. And with remote work expected to be a long-term shift in office culture, reducing lunch business, sales will likely remain low for some time.
So how much sense does it make to compensate employees through a tip structure — a subminimum wage ($12.45 in Ontario) subsidized by voluntary contributions from diners? The system enables discrimination of every kind, from race to age to gender, while entrenching a distribution of revenue that suppresses wages for workers in the kitchen, who often earn about half of what servers make. No, tipping is not a method for ensuring or rewarding good service. If that were true, we would have tipping and subminimum wages for plumbers, landlords, teachers, accountants, real-estate agents, and other professionals who, instead, receive a paycheque and/or a set commission. Imagine if police worked for tips.
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Entrenched as the practice is, the anti-tipping movement periodically gains the public’s attention.
In 2015, abolishing tips got a strong push when New York’s Union Square Hospitality Group announced that it would eliminate tipping at their 13 restaurants (which employed 1,800 people). Though regularly cited as a harbinger of industry-wide change, by July 2020, the USHG had reversed position. And, yet, at the same time, restaurants dealing with pandemic conditions, such as Toronto’s Marben, Ten, Burdock Brewery, and Richmond Station, have chosen to take the plunge.
In March 2020, Richmond Station was slightly better positioned than most full-service restaurants for the impact of a shutdown.
There was a side of beef hanging in the butchery fridge. Kitchen staff broke down the half cow, freezing every scrap of meat and bone. They fermented vegetables, turned dairy into yoghurt and cheese, transformed fruit into jams, kale into pesto, and mushrooms into duxelles (minced with shallots and sauteed in butter). Whatever food wasn’t going to survive, they gave to staff. The remainder — thawed Fogo Island shrimp, salad greens, desserts that couldn’t be saved — they ate that night in a feast.
And then they walked away, secure that they had the finances to reopen. After eight years of operation, the owners had resisted the common urge to expand. So they had money saved.
“If this lasts for a year or two years, Richmond Station will be open,” co-owner Carl Heinrich told me at the time. “I don’t know how that’s going to look. But we’ve got a good lease and a great staff. And we’ve got cash.”
A year later, he’s still confident. But he admits he’d been short-sighted.
“Like most businesses, we were a little naive,” says Heinrich now. “We closed the 16th of March for what we thought at that time was going to be about three weeks.”
By June, the restaurant had opened a “curb-lane patio” with 40 seats and was able to operate at various levels of capacity (10 seats, then 50 per cent, then nothing) until the end of October.
These days, the restaurant has dropped from a staff of 68 to about 18. Like other survivors, Richmond Station has changed everything about how it operates — enabling it to make other alterations long in coming.
Over the years, I’d spoken with Heinrich and his partner about tipping. They had wanted to make the shift long ago but, like many restaurateurs, felt certain they’d lose their best servers to restaurants where more money could be made in tips. Sure enough, after they restructured tip distribution in 2016 to share more with the kitchen, they saw a complete turnover in service staff within nine months. Also, it’s expensive. One New York City restaurateur who eliminated tipping in 2015 told me that the higher wages she pays inflate her payroll to 50 per cent of revenue (typical labour cost often falls within the range of 20 to 40 per cent).
But in summer 2020, the situation was different.
“The thing that really tipped the scales for us is that we opened for takeout and delivery only,” says Heinrich. “It would have been immoral to pay our staff a subminimum wage at that time, when there were no tips coming in. So we paid them a fair living wage. Everyone. Front of house and back of house. And we did that for a couple of weeks before we had our patio.”
The restaurant didn’t immediately raise menu prices to account for the increased labour costs. The owners are concerned about sticker shock. But the end goal is to push prices up 20 per cent and incorporate the revenue directly into the payroll.
“It was absolutely the right time to make the change,” says Heinrich. “We always held back. Then [after making the switch] we looked at each other and said, ‘Why do we have to go back to a system where our staff are relying on tips?’”
Culturally, it feels like the right time for restaurants to try this again. So many diners have gotten used to online ordering, wearing masks, and using their phones to pay. This should set the stage for other changes, like a shift to no-tipping.
Unfortunately, there’s little hope of challenging tipping culture if we don’t eliminate the subminimum wage. Good luck getting your child to stop eating boogers if you’re providing tax breaks for booger consumption and handing them a monogrammed booger spoon before each meal.
In the United States, a federal bill, the Raise the Wage Act, was introduced to Congress at the beginning of 2019. Among other features, it would have phased out the subminimum wage for workers with disabilities, workers under 20, and tipped workers. The bill passed a Democrat-controlled Congress. Following the 2020 election, it was tacked on to the $1.9 trillion pandemic stimulus package. But its inclusion was spiked by the parliamentarian (a bipartisan referee of the senate), and it lacked unified Democrat support.
In Canada, there’s no momentum at a federal level. Ontario’s “Open for Business” government, which rolled back scheduled minimum-wage increases and has long opposed paid sick days for the vulnerable front-line workers who have risked their health to keep the province running, likely feels no compulsion to support a significant change to the Employment Standards Act.
Without political will, it won’t happen.
“The removal of tipping cannot happen in most restaurants, on their own, in the current marketplace, where all their competition practises tipping,” says John Sinopoli, restaurateur and co-founder of Save Hospitality, an advocacy group for independent restaurants. “In my mind, the only way to really get rid of tipping is through government policy. So it’s an even playing field for everybody. Only then will the consumer understand why prices have increased. Otherwise, they’re going to go to the restaurant down the block, where prices are cheaper. And servers can go home with 75 per cent of their wage in cash and not record it.”
For a long time, I’ve been arguing against tipping, mostly because I think money should be distributed such that front-of-house and back-of-house employees are more fairly and evenly compensated. The pandemic, and its long-term implications for the dining economy, has flipped that. Now, in a largely cashless environment with drastically reduced gross sales, it’s servers who stand to immediately benefit from being paid a wage rather than relying on tips.