A World Without Tips

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

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The Economics of Tipping

A reminder for all of us.

I still occasionally get the guest who will say, “I can buy this wine for half this price at the store.”  Which is true, but it doesn’t come with a staff to serve it and a crew of chefs ready to cook you an incredible meal from a fully stocked kitchen.  I wonder if the same people have ever priced grapes at the grocery store.  If they want to get really serious about cutting out the mark up, that would be an even cheaper place to start.  Better yet, if they buy seeded grapes they could plant the seeds and never have to pay for a bottle of wine again.

Most of you understand the absurdity of this logic.  Those who do not understand have already stopped reading to go buy grapes.  At each step along the process of making the bottle of wine the cost of goods and service, along with a healthy profit margin, are passed along to the next stage.  From grape to cellar, farmers, vintners, bottlers, distributors, and restaurants all add to the price of the bottle in advance.  There is one exception to this rule.  The person who opens the bottle and pours it actually makes that wine less expensive.  At the most basic level, the person who serves the wine pays for part of the bottle for you.

Read the full post at Tips For Improving Your Tips

The Rules of Serving: Rule Six

Rule Six: Never spend money you haven’t made.

I am glad July of 2010 is behind me.  I cannot recall a month that was less lucrative in my serving career.  My income dropped by well over 50% last month.  Unbearable heat combined with a disproportionate number of patio shifts took a chunk out of my savings.  I had planned for a slow month, but not one this slow.

I was fortunate enough to follow my own advice on saving and budgeting.  I keep my living expenses low and save during good months.  This allowed me to avoid the month being devastating financially. I stay out of debt and carry no credit cards.  My car is paid for and my rent is minimal.  My savings was depleted, but not drained.

Read the full story at Tips For Improving Your Tips

Refuting Emmer’s Myths

(For my previous posts on Tom Emmer, click here)

For those of you who haven’t been following the Tom Emmer story in the last week, let me bring you up to speed.  Last Saturday in one of the most patronizing publicity stunts I have ever witnessed, Tom Emmer “waited tables.”  I put this in quotation marks because all he really did was shadow a server around a restaurant for a couple hours.  He did no sidework and probably did not even spend the evening living on the $60 his trainer made.  He followed this up with a townhall meeting on Wednesday where he faced a room of angry servers and sycophantic supporters who clearly were not servers.  He faced some pointed jabs, a bag of pennies, and expertly dodged some question.

Here are some of the points Emmer attempted to make at this meeting:

Read the full post at Tips For Improving Your Tips

A Few More Thoughts On Emmer

I covered this issue in yesterday’s post, but have since ran across several interesting pieces of information I wanted to pass along.  MN Gov Nominee Tom Emmer said in a recent stop at the Eagle Street Grille that the owners had told him three of their employees were making over $100,000 a year as a result of being paid minimum wage.  Emmer’s solution was to implement a tip credit so employers could be relieved of the burden of having to pay such high wages.  Reading around through news accounts, talking to a couple politically knowledgeable friends, and doing some math led me to some insights I thought I would share.

Emmer has scheduled a stop on his listening tour at Ol’ Mexico Restaurante and Cantina in Roseville, MN on Wednesday.  His staff says they will not be screening the attendees.  He will inevitably cite the University of Nebraska study that he has already used on his website.  If anyone attending happens to be reading this, yesterday’s post dissects this study pretty well.  I would love to see him respond to the fact it uses data from 1999 or that the basic premise of the study is “if you don’t make enough as a server, you can change states.”  If you or anyone you know is near Roseville, this would be a great opportunity to stand up for the rest of us.

Read the full post at Tips For Improving Your Tips

Fighting For The Server Wage

A brief disclaimer: This is not a political blog.  I am not looking to get into politics with it.  I will only enter the political realm when it is specifically relevant to servers.   This is one of those cases.

Tom Emmer is a State Representative in Minnesota and the presumable Republican Nominee for Governor.  In an effort to showcase his pro-business credentials, he recently highlighted a need for restaurant owners to pay their servers less than minimum wage.  This alone probably would not have merited a post on this blog.  He followed it up by stating that he had talked to a restaurant owner who complained because of this wage he had some employees making over $100,000 a year.  He said this was more than the owner earned.  Therefore, the owners should make a tip credit for the tips their employees earn.  He said that as he traveled around the state that people on “Main Street” knew what he was talking about.

I grew up on Main Street in Gladstone, MO.  I have also been both a waiter and a manager in states with and without tips credits.  I can assure you I have no idea what he is talking about.  So I decided to do a little research.  All of the data I will cite comes from the Bureau of Labor Statistics May 2009 report on waiters and waitresses.  A few quick searches revealed that the annual median wage for a server in Minnesota is $19,220.  The 90^th percentile earns $36,240 per year.  So either Emmer went to the most lucrative bar and grill in the state of MN to speak to the owner or he is lying.  We don’t have to guess the answer because the owner has made it clear that he said no such thing.

Read the full post at Tips For Improving Your Tips