Tipping & Service Charges - not on HAL

[dakrewser]

Good article in today's Washington Post how the US restaurant industry is going to service charges rather than tipping for server compensation. It goes it to the reasoning behind, which is remarkably like what HAL says about the HSC.

[jtl513]

Thanks Dave ... but CC bleeps that url-shortening site. Click THIS LINK instead.

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Edited October 15, 2015 by jtl513

[hrhdhd]

Prices will increase by 20-35%? Good grief. I rarely tip 20% and never 35%.

 

Well, that's another place off my list. ;)

[Topsham]

For the last 20, 30 years... tipping in Bermuda restaurants.... about 17.5%.

 

It is added to you bill... "For Your Convenience". Everyone hated it but it stayed and it is the norm and I don't think anyone even thinks about it any more. Yes, it is easy on the 'wine cells'. If you have a problem with the service you can have a word with the Maitr'd and have it removed. I've never heard of anyone doing it. Better to tell them you a problem... and never go again. Easier for everyone.

 

Of course... on the bill you can always add to the tip/service. Leave some extra cash on the table or even add onto the Credit Card ticket. I think a lot diners add a few dollars more... $5... $10 or whatever.

 

But 35%? That is a rip off! That is doubling even a more of the standard 15%.

[dakrewser]

I thought it interesting that the article mentions one reason for the switch is to increase compensation for the "back end" help - exactly what AOL says.

[CaveDiving]

I thought it interesting that the article mentions one reason for the switch is to increase compensation for the "back end" help - exactly what AOL says.

 

I think the reason given for the change is absolute rubbish.

 

It would be relatively easy to require all waiters to chip in say, half of their tips, to the workers in the “back end.” Most of the tips are on credit cards so it would be easy to handle by computer.

 

It seems, IMHO, they simply want to raise their prices and get the customers to believe it is for the workers.

 

Scott & Karen

[dakrewser]

I think the reason given for the change is absolute rubbish.

 

It would be relatively easy to require all waiters to chip in say, half of their tips, to the workers in the “back end.” Most of the tips are on credit cards so it would be easy to handle by computer.

 

It seems, IMHO, they simply want to raise their prices and get the customers to believe it is for the workers.

 

 

Yeah, that's probably why ALL OF EUROPE does it that way, too.

[POA1]

I thought it interesting that the article mentions one reason for the switch is to increase compensation for the "back end" help - exactly what AOL says.

Restaurant minimum wage doesn't apply to non-tipped positions, at least in the US. The line cooks, pot washers, etc. are subject to normal compensation. I hate to be skeptical, but this looks a lot like "raising prices without looking like raising prices."

 

 

https://en.wikipedia.org/wiki/Tipped_wage_in_the_United_States

[sail7seas]

Restaurant minimum wage doesn't apply to non-tipped positions, at least in the US. The line cooks, pot washers, etc. are subject to normal compensation. I hate to be skeptical, but this looks a lot like "raising prices without looking like raising prices."

 

 

https://en.wikipedia.org/wiki/Tipped_wage_in_the_United_States

 

I agree.

 

[LMaxwell]

I agree.

 

 

Service staff is factored into the cost of the food now, so don't see how it is just a sneaky price raise if it all equals out in the end. Provided service is on par.

 

Interesting article here about restaurant owners that went to no tipping policy, raised prices, but gave employees ownership which put some skin in the game and they worked harder to drive down overhead costs and waste. Profits are up, waitstaff are happy and have a steady and reliable check, retirement savings plan, and stock ownership.

 

No cruise line would be that good.

 

http://www.entrepreneur.com/article/246972

[POA1]

Service staff is factored into the cost of the food now, so don't see how it is just a sneaky price raise if it all equals out in the end. Provided service is on par.

 

Interesting article here about restaurant owners that went to no tipping policy, raised prices, but gave employees ownership which put some skin in the game and they worked harder to drive down overhead costs and waste. Profits are up, waitstaff are happy and have a steady and reliable check, retirement savings plan, and stock ownership.

 

No cruise line would be that good.

 

http://www.entrepreneur.com/article/246972

 

Interesting article, but the restaurant has 26 staffers who are expected to make between $48,000 and $51,000 annually. Using the low number of $48K, that's $1,248,000 in salary costs. The US Department of Labor figures benefit costs to be 30% of salary for the private sector (It's higher for the public sector, so we'll use the private sector number - and we'll whack it back to 25%, assuming that this business is super innovative.) That means that the loaded labor cost is $1,522,560.

 

The article says that the restaurant does $33,000/week in sales, or $1,716,000 per year.

 

Employee costs are 88.7% of revenue. The overall US restaurant average is 32%.

 

After employee costs, You're down to $193,440. That has to be used to pay taxes, rent, utilities, and FOOD COSTS. The average full service restaurant has food costs of about 32% Facilities costs typically run at 6%.

 

This business only has 11.27% left to pay EVERYTHING. Since facilities costs and taxes can't go away - especially in Pennsylvania, with the nation's 2nd highest corporate tax, there's practically nothing left to spend on food.

 

I have a sneaking suspicion that customers will notice that the restaurant is only spending about one-sixth the national average on food. (The 5 or so percent left for this restaurant versus the 32% national average.)

 

Because it's important to show your work....

 

The revenue and salary figures are based on information in the Entrepreneur article.

 

The benefits coat data came from the Department of Labor via the Congressional Budget Office:

 

https://www.cbo.gov/publication/42921

 

The restaurant costs came from the San Francisco Chronicle.

 

http://smallbusiness.chron.com/average-profit-margin-restaurant-13477.html