Tipping Point: Is it Time to Change the Gratuity System?

By contrast, in the US, the stereotypical image of a reluctant server—perhaps an aspiring actor or a single parent working a second job—persists, regardless of its inaccuracy, even as chefs have elevated in the popular consciousness from grunts to geniuses. In the psychic dynamic that results, the tip is leverage to entice a worker who presumably doesn’t want to be there to do their job well: ‘Provide me with excellent service … or else.’

It’s a demeaning system, and restaurants are among the very few service-based industries where it isn’t assumed that doing a good job is a simple matter of fulfilling one’s responsibility.

It also has troubling roots associated with slavery and racism in the United States; post Civil War, many who had been enslaved had difficulty landing a job. One available option was to work in restaurants for tips, without any hourly compensation. Though things have changed, in more than eighty-percent of US states, employers aren’t required to pay tipped workers the full minimum wage, leaving them at the mercy of their customers.

The result is two distinct, sometimes competing, economies under the shared roof of a restaurant. The kitchen workers rely on a set hourly wage, while the dining-room team’s income fluctuates based on tips. Just what that means depends on the venue, the clientele, and the day. In upscale destination dining palaces, servers and captains might charm and upsell their way to astronomical tips, though the possibility of a petty or stingy customer is omnipresent. Meanwhile, in more casual restaurants that aren’t populated by the fancy and the foodies, extraordinary tips are more rare and lower tips more common.

The truth about tipping is that it’s a psychological construct. Most customers will tip in the neighbourhood of fifteen-percent, even if the service is mediocre. It’s part of the social contract of dining in a restaurant. Meanwhile, no matter how you look at it, the price of a restaurant meal is at once artificially inflated and deflated. You will pay more than the price on the menu, while at the same time the restaurant is likely operating on slim margins, and the food and service, even after the tip, is being sold for less than it should be to sustain the restaurant and humanely compensate its workers.

During the pandemic, many guests with the means to do so have lavished upwards of fifty-percent tips on servers waiting on a reduced number of tables in uncomfortable circumstances. This was the stated reason why Union Square Hospitality Group’s Danny Meyer discontinued his restaurants’ ‘Hospitality Included’ policy this summer. But there’s a grim flip side. “When a crisis hits, and tips disappear, all of these workers [who aren’t paid the minimum wage] have nothing to fall back on,” explains a Covid-specific section on the website of One Fair Wage, which among other goals, is working toward ending tipping as a practice. The organisation further points out that servers represent the largest workforce of women of colour. Just as Covid takes a greater toll on this community, so too does the economic result.

Where Meyer saw a reason to reinstate tipping, Jesse Cool—who owns and operates Flea Street Café in Menlo Park, California, about thirty miles south of San Francisco—saw a different opportunity in Covid.

Cool has initiated a program she calls Heart of House. Essentially it’s a service charge that’s distributed evenly among the entire staff, everyone from porters and dishwashers, to cooks and servers. (The restaurant is currently not serving guests on premise due to the continuing pandemic.) By classifying it as a service charge, the restaurant pays taxes on it, and can distribute the monies as Cool sees fit.

Cool opened Flea Street Café in 1980, and has periodically considered breaking with the tip system, even though legal guidelines have prevented it.

“In the past, there were moments when I was borderline considering breaking the law because it prohibited us from distributing fairly,” says Cool. “Everything changed with Covid. All of a sudden, everything was possible. Justice was possible.”

The one hitch was the possibility that good servers, not believing they’d earn as much under a new system, wouldn’t return to work at the restaurant. Cool admits to being scared by that prospect. “But I didn’t care,” she says.

Heart of House is a sly reference to the elimination of the barrier between front of house and back of house. “I am both front of house and back of house, but my core values are of a cook, so I have deep compassion for what goes on back there,” she says.

In addition to cutting everyone in on the service charge, Cool has her team cross-training, with individuals performing tasks on different sides of the kitchen doors. Bartenders water plants and scrub the outdoor deck. Everybody washes dishes and mops the bathroom floors.

“The employees who have stayed are all rising up and using new skills,” says Cool. “They feel more equal in production and service.” And with the Heart of House income factored in, most of them are earning between $27US and $34US per hour, more than they were before.

If in 2020, one were to be tasked with creating a model of restaurant pricing and compensation, the tipping system would likely never occur to them. Like the Electoral College, this structure, with its roots in repudiated mores and politics, simply makes no sense today. But it gives customers a feeling of power, makes menu prices palatable, and is deeply ingrained in American dining society. It will take a concerted effort to end it. But winds of change are blowing through the industry and nothing right now is off the table.