Simply raising prices to cover lack of tips is a non starter from the business perspective. Every restaurateur was against this idea. One of them was openly hostile towards the question. I agree that this would make the most sense but at the expense of shocking consumers and driving business away so I don’t see it happening.
They’re also not going to cut into their margins to fund employee living wages and benefits so it is going to fall on the customer no matter what. Ultimately the correct solution is decoupling “benefits” that are actually necessities from employment, but I digress…
High performing employees are by and large for a traditional tipping model because it means they make more money. Everyone else is just getting by or actively getting screwed by the traditional tipping model. It is not equitable. Those who currently benefit the most need to accept a pay cut to move to one of these mandatory service fee models. Hence pushback and turnover by the highest performers which is hard for businesses to accept.
In a traditional model, I am going to tip 20% on service no matter what so adding it on as a mandatory but transparent fee is fine. My problem is that there is currently no standard so you have to look out wherever you go and adjust your tip accordingly. It’s a consumer nightmare. We need a regulation to standardize how these service fees work for consumers and honestly in a lot of cases we should eliminate the tip line entirely.
Here are my takeaways from the article.
Simply raising prices to cover lack of tips is a non starter from the business perspective. Every restaurateur was against this idea. One of them was openly hostile towards the question. I agree that this would make the most sense but at the expense of shocking consumers and driving business away so I don’t see it happening.
They’re also not going to cut into their margins to fund employee living wages and benefits so it is going to fall on the customer no matter what. Ultimately the correct solution is decoupling “benefits” that are actually necessities from employment, but I digress…
High performing employees are by and large for a traditional tipping model because it means they make more money. Everyone else is just getting by or actively getting screwed by the traditional tipping model. It is not equitable. Those who currently benefit the most need to accept a pay cut to move to one of these mandatory service fee models. Hence pushback and turnover by the highest performers which is hard for businesses to accept.
In a traditional model, I am going to tip 20% on service no matter what so adding it on as a mandatory but transparent fee is fine. My problem is that there is currently no standard so you have to look out wherever you go and adjust your tip accordingly. It’s a consumer nightmare. We need a regulation to standardize how these service fees work for consumers and honestly in a lot of cases we should eliminate the tip line entirely.