Some restaurateurs are trying to change how employees are compensated by taking a closer look at today's tipping economy. - Odua Images / <a href=''>Shutterstock</a> Some restaurateurs are trying to change how employees are compensated by taking a closer look at today's tipping economy. - Odua Images / <a href=''>Shutterstock</a>
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Insights on Today’s Tipping Economy from an Employee Perspective

Over the past few years, select restaurant operators have been experimenting with no tipping policies. In theory, eliminating tips can result in employee compensation that’s fairer, as well as make payment simpler for the diner. In practice? It’s a different story. Skift spoke with Brian J. Warrener, full-time faculty at Johnson & Wales University College of Hospitality Management and instructor for the College of Online Education, about this growing industry trend. Warrener has conducted revealing research about tipping from the viewpoints of management and wait staff. Warrener’s areas of scholarly interest include food and beverage operations and service management theory and practice.

Skift: You conducted a survey in 2016 to glean attitudes about tipping. What was the motivation behind this study?

Brian J. Warrener: We realized that restaurant operators and customers had opinions that were well publicized, but nobody had really asked servers working for tips, “What do you think about this?” There was a gap in the research. Everybody wants to make sure that they’re not going to lose any customers when they make a change, yet people are less interested in whether they are going to lose staff.

Skift: Were there any surprises in the results?

Warrener: We talked to our students about no tipping policies, and they said they would hate it. The strong negative reactions to eliminating tips were definitely unexpected: 89 percent of tipped employees and 72 percent of managers hated the idea of eliminating tips. The interviews we conducted within the survey also helped us create a profile of a “typical tipped employee” and understand who they are. These people are entrepreneurial, risk-taking, and generally young. They care much more about making tips than they care about perks like 401ks or promotions within the organization. They just want to be able to pay rent at this point in their lives.

Skift: Danny Meyer of the Union Square Hospitality Group has been the poster child for the “hospitality included” movement, and as reported in a recent Grub Street article, the transition has not been smooth.

Warrener: Staff quitting at Meyer’s restaurants was exactly what we thought would happen. The pay in the back of the house has lagged for many many decades, whereas the pay in the front of the house has gone up as tipping has gone from 10 to 15 to 20 percent over the last 30 years. It’s tough to attract people in the kitchen, so there’s a labor shortage in the back. Danny Meyer jumped the gun by trying to solve his back of the house problem by evening out compensation with the front of the house. It’s robbing Peter to pay Paul.

Skift: There is such a tipping mentality ingrained in America. Could we ever change it?

Warrener: No, I don’t think we can. Research indicates that customers are uncomfortable calculating a tip, but no one wants to give that up because it’s what ensures excellent service. Giving somebody money at the end of service doesn’t necessarily encourage them to provide excellent service, though. Objectively, tipping is a lousy system but the dining public disagrees.

Skift: Adding 20% to menu items instead of soliciting tips seems more suited to higher-end restaurants where a jump in price might look significant but isn’t prohibitive for those customers.

Warrener: Frankly, it works in more progressive areas where the argument has been that working for a tip is humiliating. It works in cities where servers are making a lot of money to begin with. If an employee is making $80,000 to $100,000 and a loss of tips costs them $10,000, it’s still a lucrative career. Beyond that, we don’t think the model really works.

This content was created collaboratively by JWU Online and Skift’s branded content studio, SkiftX.

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