Tipped out: Gratuities may be changing in the hospitality industry

Restaurant owners are grappling with the thorny and complex issue of balancing the huge discrepancy in income between servers and kitchen staff created by the current practice of tipping.

Front-of-house staff generally receive a gratuity of between 15 per cent and 22 per cent while cooks who make the food may labour for minimum wage.

“The truth is labour costs are going up, minimum wages are going up, restaurant margins are going down, and so in order to close that gap and keep people working in the kitchen, restaurants are going to start taking control of that tipping revenue as a way of just making sure they can continue to meet labour costs,” says Mike von Massow, a professor in the department of food, agriculture and resource economics at the University of Guelph.

The issue of tipping differs depending on the industry sector — fine dining, casual or quick service.

“And even within the certain sectors — we’ve done some surveys and whether to move to a non-tipping model or not — our industry is split almost evenly on the issue,” says Mark von Schellwitz, vice-president for Western Canada for Restaurants Canada, who is based in Vancouver.

“There’s certainly no consensus on which way to go.“

Proposed models include a hospitality charge, profit sharing or a hybrid plan in which there’s a moderate increase in pricing along with a small service charge.

“I’m very much in favour of cooks and waiters and all restaurant employees making a living wage, which many of them don’t at this time,” says Anthony Bourdain, host of “Parts Unknown” which airs on CNN.

“Is the no-tipping, service-included plan the way to get there? I don’t know. I’m open-minded about it. I tip 30 per cent. Everyone should, in my view, but absent that, I suspect it’s the future.”

Dining chain Earls launched a 16 per cent hospitality charge in July at its 67th location, in downtown Calgary, to test the waters.

Craig Blize, vice-president of operations says the experiment, which the company will begin to evaluate in January, has been “polarizing.”

“A lot of our staff love it. Our kitchen staff definitely loves it and our support staff loves it and the majority of the servers do as well,” says Blize, who is based in Vancouver. “There have been some staff that have been disgruntled or haven’t liked that option so we have moved them to other Earls where we do have tipping.” There are no plans to roll the policy out to other locations.

Meanwhile, some guests love the all-inclusive charge while others “despise” it because they feel they’ve lost control over recognizing the service they’ve received. Earls67 will waive the hospitality charge if a client is displeased with the food or service.

But evidence suggests people don’t vary their tipping much whether they’ve received good or bad service, says von Massow. “It’s a social norm. We just do it anyway.”

In the history of gratuities, “tips” was an acronym for To Insure Prompt Service.

“When it began originally, I believe it was in the U.K., the tip was paid before the meal, so you gave the server a little bit of money just to make sure you got good service, then it evolved to coming after the meal,” says von Massow.

“In fact, most of Europe has moved away from tipping even though that’s where it began. It’s deeply rooted here.”

Some say tipping is an incentive to ensure people do a good job, though there are plenty of examples where great service is automatically provided.

“I’m a university instructor. I don’t get tipped, but I still work pretty hard and I care about the quality of my lectures,”says von Massow. “Can you imagine if I put a jar at the front of my lecture hall and students were to come and drop some coins and bills in at the end of a lecture and I say, ‘Of course I need to be tipped. How else am I going to deliver a good lecture?’”

Von Massow says he thinks many consumers will be happy if tipping is banished. At the end of a meal there can be an uncomfortable few moments as diners try to calculate how much to tip.

And it can affect restaurant dynamics and server behaviour.

There’s evidence of a strong correlation between the “expected” tip and quality of service, even though it may be unconscious. “Servers look at a guest or a group of guests who come in and the quality of service they provide is based on what they perceive the tip will be,”” says von Massow. This can relate to clothing, age, gender or ethnicity.

If a customer doesn’t order alcohol, the cheque is smaller so the tip will be less. Von Massow says he’s had restaurant people tell him they order beer or wine with lunch just to make sure they get better service.

There are also “quota” servers. Once they’ve achieved a target, such as $100 in tips for the evening, they’ll shut down and their service quality will go down.

Ned Bell, Vancouver Aquarium’s Ocean Wise executive chef, says the restaurant business is tough and service should be rewarded.

“Unless we’re willing to pay more for food, which I think we should be doing anyway, I think tipping needs to be something we should still see as a valuable thing of celebrating getting good service,” says Bell.

“If you don’t get good service you shouldn’t tip. But if you get good service and you enjoy a great meal I think you should reward the server and the restaurant’s staff … to help pay their bills. They’re making minimum wage.”