· Food Services

This CEO is Eliminating Tipping at His Restaurants - Here is Why it's Overdue and What It Shows Us About Change

We all know the value of change, but it can be difficult to make in reality. The longer we’ve done something a certain way, the more challenging it is to take a clear-eyed look and see there might be a better way.

Tipping is an example of this. In the United States, a tip of 20% for restaurant service is pretty much expected today. However, this is not the standard in most parts of the world. For example, I once visited a local bar in Europe and learned the bartender would be offended to receive a tip for doing his job.

Under the current tipping norm in the US, working as a server or bartender is a good way to make a living, especially for young people with limited work experience. But upon reflection, some aspects of tipping as we do it in America don’t make sense. For example:

- Why does this high-upside income go to those who serve the food and not the cooks, bussers and other staff who also work to provide the dining experience?
- Why should a customer pay a much larger tip for opening a $100 bottle of wine than for a $50 bottle, when no additional time or effort is required to serve it?
- Why are customers expected to tip a bartender for opening or pouring a beer, but are barely even encouraged to tip a barista for preparing coffee?

Tipping also doesn’t have a great history. Back when most tips were paid in cash, tipping was a known tax dodge. Tipping in the US actually has roots in slavery, many of the earliest tipped jobs in America were designed so employers could avoid giving wages to former slaves. Recent studies also show that US system of tipping fosters racism and sexual harassment. Here's a pretty good summary from Jay Porter, a former restaurant owner who abolished tipping at his restaurant.

"Studies have shown that tipping is not an effective incentive for performance in servers. It also creates an environment in which people of color, young people, old people, women, and foreigners tend to get worse service than white males. In a tip-based system, nonwhite servers make less than their white peers for equal work. Consider also the power imbalance between tippers, who are typically male, and servers, 70 percent of whom are female, and consider that the restaurant industry generates five times the average number of sexual harassment claims per worker. And that in many instances employers have allegedly misused tip credits, which let owners pay servers less than minimum wage if tipping makes up the difference"

Last year I learned that Danny Meyer, an innovative, thoughtful leader and the CEO of Union Square Hospitality Group (USHG) and Shake Shack, started an initiative called Hospitality Included. The program eliminated tipping at all of USHG’s restaurants, including the famed Gramercy Tavern. USHG is known for its excellent culture and training programs, and Meyer felt that, in addition to the reasons above, tipping was not the right choice for his highly team-oriented business.

For the full article : LinkedIn