Whatever happened to the no-tipping experiment? It failed

OPINION: The practice is bad for pretty much everyone, writes Corey Mintz. Here’s why we’re still doing it — and why it needs to stop
By Corey Mintz - Published on January 16, 2019
On the practice of tipping, industry leaders are split between those happy with the status quo and those dissatisfied with a model that puts 20 per cent of revenue beyond their control. (iStock.com/tanjatiziana)

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A couple of years ago, I became very excited when the age-old dispute over what to do about the practice of tipping bubbled up from the restaurant world into the realm of public discussion.

Here’s a short recap of the problems with the current system:

Everyone agrees that serving is hard work. But there’s no justification for servers to earn twice what their kitchen co-workers do.

Industry leaders are split between those happy with the status quo and those dissatisfied with a model that puts 20 per cent of revenue beyond their control. If a restaurant were to do away with tipping and raise prices 20 per cent, putting some of that money toward increased pay for cooks, it would have to pay tax on that increased revenue. Many restaurateurs say they would like to eliminate tipping in order to distribute wages more evenly, but they’re afraid of losing servers to other restaurants and would only consider such action if it were part of an industry-wide push.

In 2015, influential New York restaurateur Danny Meyer began transitioning his entire operation to a no-tipping model. Those of us who cared about such things watched with great interest and began to notice similar efforts in other cities: some restaurants started banning tips, instituting service fees, raising prices, or implementing some combination of the three.

Earls, a Canadian dining chain, experimented with a no-tipping model at one of its Calgary locations. Edmonton’s Café Linnea launched in 2016 with a no-tipping policy. In Toronto, Sidecar and Indian Street Food Co. joined the movement as well.

Back then, there was a flurry of media attention on the subject — but we haven’t heard much about it since. So what happened?

A 2017 study published by the International Journal of Hospitality Management concluded that elimination of tipping results in lower online customer ratings.

Meyer’s Union Square Hospitality Group lost a lot of servers — upwards of 40 per cent, according to a 2018 report in Eater. And many of the restaurants that followed its lead have abandoned the no-tipping movement, citing lower revenue caused partly by higher prices.

Café Linnea has given up on the no-tipping model.  After six months, Earls abandoned the experiment, too.

“The feedback we gathered through the test, from both guests and employees, was mixed — people either loved it or didn’t,” reads an explanation on the Earls website. “Ultimately, we learned that we couldn’t do it alone without other restaurants following an alike model; it was simply too much of a change for many people.”

Sidecar has also gone back to tipping: “It’s kind of like competing in sports without performance-enhancing drugs,” says owner William Sweete. “It’s the right thing to do but it doesn’t work if you are the only one.”

Bruce McAdams has been an academic leader on this subject. An associate professor at the University of Guelph with 20 years of hospitality experience, he co-authored the 2016 paper “Tipped out: How do gratuities affect restaurant operations?”

Asked for a follow-up on the subject, McAdams says, “The evidence-based research exists and has been made public to the industry over the last several years. Industry’s hesitation in moving to a no-tipping model is understandable, but operators should at least understand they have chosen to run their businesses with an anchor tied to their legs. Tipping has a negative impact on all restaurant stakeholders — except servers.”

It’s not easy to admit defeat — but even an unhappy ending is, at least, an ending. And this one sets the stage for what McAdams believes must come next for the restaurant industry.

“If we look at the facts — decades of high turnover, continued staffing shortages, stories of harassment and questionable employment practices — our industry has shown that we cannot manage ourselves to a standard that makes us an attractive employer,” he says. “I believe it is time we need to consider what benefits increased regulation may bring us, including the role that organized labour could play in increasing our standing as an industry.”

I’ve had many independent restaurateurs tell me they’d support an end to tipping, so long as they didn’t have to go it alone. But I’d bet money that the industry’s lobbying arm would oppose any such regulations, just as they’ve opposed minimum-wage increases and smoking bans.

The restaurant world has demonstrated that it’s not interested in policing itself. But tipping is not an underground dice game that the province can pretend it doesn’t know about. The tipping model exists thanks to direct government support: the Employment Standards Act specifies a lower minimum wage for servers. So we have legislation that lowers the legal wage for a group of employees under the expectation that consumers will make up the difference. And we know that most of that consumer subsidy will disappear before it can be taxed. The province has the tools to change this system. It’s only a matter of will.

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