A world without tips
I am still incredibly grateful for my recent guest post on tipping. It inspired my response that discussed the economics of tipping. It also raised a few other interesting points that I am now learning are common misconceptions about restaurants. For people who have never worked in a restaurant, these misconceptions can easily be mistaken as facts. Upon further consideration they may not be wise to pursue. One interesting idea that she raised in the post was raising the wages paid to server by restaurants to replace tipping. While on the surface it seems quite logical, it would have a disastrous impact on the industry.
Restaurants are operated on incredibly thin profit margins. As discussed in a previous post, large corporate restaurant chains are extremely susceptible to anything that affects their stock prices. With a huge spike in the cost of labor, restaurant stock prices would crumble. Independent restaurant owners struggling to stay afloat would shutter. Consumers would lose choices. A vast majority of restaurants would survive this initial wave, but be forced into the next step.
The remaining restaurants would set a wage for servers considerably lower than what the servers make now. Professional servers with years of experience would have to settle for the new rate or venture into a new career field. Between servers quitting and terminations, restaurants would reduce the size of their server staff by about a third. Servers who worked four table sections before would now be required to work six tables for less money. This would reduce the damage to the restaurant’s bottom line, but also drastically reduce the quality of service that was provided to guests.
Read the full post at Tips For Improving Your Tips
Tips on improving your Tips 
Nov 12, 2010 @ 15:08:17
There is no way I would wait tables for a set wage. If I could make $10 an hour waiting tables or sitting on my butt in an office, guess which one I’m going to pick. Ten dollars an hour (which would be a very generous wage) is not enough for all the crap you have to put up with as a server.
Nov 15, 2010 @ 06:33:17
Such a chang would certainly shake up the industry and i am sure that some restaurants would fail to adapt. But systems where waiting staff a paid wages and tipping is non-existance, or a bonus for exceptional service work pretty well in most of western Europe, Australia and New Zealand – what makes you think it couldn’t work in the US? I’m not trying to be nasty, I am genuiniely interested in why you are dismissing the possibility.
Of course, it would need to be mandatory, as establishments which paid their staff proper wages couldn’t compete with those which didn’t.
I think you would find that as in most other fields, good, experienced staff would command better wages.
Nov 15, 2010 @ 12:32:57
This is a very reasonable question and one that I considered addressing in the orginal post, but did not for space purposes. The problem with implementing a system that by all accounts has served most of the world well is the initial “sticker shock.” Most people in countries without tipping are not aware of what portion of their meal’s price is spent on the servers wage. If this were to be implemented here, there would be a significant ammount of resistance to the new higher prices. It would make very clear the cost of dining out even if not all of that increase went directly to the server. This price spike would be over 20%. I can speak of a particular instance of a co-worker who took a job in Australia. The menu prices were over 30% higher even though in most cases the price of food was nearly identical. The only notable difference was the cost of servers.
I would point out another common scene that I feel furthers my point. When people from these countries visit my restaurant, they will rave about the quality of the service and how inexpensive the menu is. They will most times follow that up with a tip well below the American standard. Even recognizing the lowered cost, they still are unable to convert that savings into a tip. I believe this is due to the inaccurate perception of the portion of menu price that goes towards the server in their country and the corresponding savings they realize on the menu here.
I sensed no nastiness in you comment at all. It is a great question and one I was glad to answer. Feel free to reply to this or any other topic any time.