No Tipping Means More Great Restaurants
The decision of New York restaurant owner Danny Meyer to eliminate tipping in his establishments goes against the American tradition; but, if it's more universally accepted in the U.S., it might give consumers something to cheer about.
Of all the countries with Michelin-starred restaurants, waiters in the U.S. probably have the highest tip expectations. I've checked dozens of sites describing customary tipping practices throughout the world, and nowhere else is a 20 percent tip the social norm. It's why European waiters smile so broadly when they see an American tourist walk in -- and why American waiters are not so fond of European visitors.
The U.S. has a bizarre government-imposed system that bans servers from sharing tips with cooks, dishwashers and other staff who do not interact with customers and at the same time allows restaurants to pay waiters just $2.13 per hour because they are expected to make up the difference with the federal minimum wage, $7.25, in tips. As a result, the medium hourly pay for American waiters is now $4, or less than $700 per month based on a 40-hour workweek. Not tipping a waiter is therefore more than an insult; it is an assault on his livelihood.
The median pay for a cook is $9, but because a server makes much more than her paycheck in tips, there's a problem: waiters are paid much better than the people who actually make the food. Eliminating that irrational disparity is the reason Meyer -- and some other U.S. restaurateurs -- are eliminating tips.
It's a good one. Causation may be hard to prove, but it's worth noting that countries where tips are small or simply not expected are richer in culinary delights than the U.S.
In Switzerland, the country with the most Michelin-starred restaurants per capita, tips were officially abolished in the 1970s. That means a service charge of 10 percent to 15 percent is added to every restaurant bill, which is for tax purposes. Switzerland is a country with one of the smallest shadow economies in the world, and restaurant owners routinely pay taxes on the service element of their offerings, not just on the food they sell.
Service charges are similarly included in the check in France (15 percent is mandatory), Belgium and Hong Kong. A customer only adds more if the service has been exceptional. Many French waiters expect that as a matter of course -- not because they're as badly paid as their U.S. colleagues (they make about 1,500 euros [$1,700] per month, which is about average for Europe) but because they're French. In Belgium and Denmark, rounding off the check is mainly enough, and in Hong Kong, waiters only accept tips because they've been spoiled by the remnants of the British colonial culture. In mainland China, as well as in Japan, tipping is largely seen as humiliating.
In restaurant cultures where tips are not part of the business model, line cooks normally make considerably more than waiters. That -- along with culinary traditions, of course -- accounts for the greater prevalence of top-class restaurants.
Countries where the inclusion of service charges in the check is not required -- such as Germany, Spain or the U.K. -- have relatively fewer such establishments. Again, that could be a matter of food tradition, but the chaos that comes from a lack of clear tipping rules probably contributes to the overall lower quality of these markets. In the U.K. last summer, a scandal broke out when it transpired that some restaurant service charges weren't going to staff, and the government waded in, demanding that the practice be changed. Working in an industry with unclear rules is unattractive to the kind of people who might make a career of waiting tables in finer establishments -- the perfectionists who are likely to deliver the most perfect dining experiences. It's also a deterrent to anyone with financial planning to do.
Tipping, of course, is very American in nature. It goes with a competitive, achievement-oriented culture. But it doesn't help create great restaurants, where food, service and general ambiance combine for a memorable experience. Even the best establishments draw staff from a pool affected by the prevalent tip-based business model.
The U.S. will never be completely tip-free like Japan. It could, however, move to the Swiss system, under which every check includes a service charge to provide information to the taxman and the customer but waiters and cooks make decent salaries commensurate with their skills. The checks will get bigger, but customers are unlikely to complain if there's less hassle and a better overall experience.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
To contact the author of this story:
Leonid Bershidsky at email@example.com
To contact the editor responsible for this story:
Therese Raphael at firstname.lastname@example.org