Is this a new Gratuities policy?

[Catlover54]

3 hours ago, Retired-N-Happy said:

It ties in to the cost because of the ambiance of the establishment as well.  You could have a place where the bill will be 75.00 for two versus 100.00 for two for the same exact items.  Solid service would be 15.00 versus 20.00 tip wise, based on a 20% gratuity.  It is what it is.  Over the past 20 years or so, the percentage has increased in general from 15-20%.  I usually give 20% based off of pre-tax dollars and if the service wasn't up to par, the tip would be reduced to 15% and if was really bad, would be 10%.

 

Sounds reasonable.

However, if we have ordered a *very* expensive bottle of wine in a restaurant (by the standards of what we consider very expensive), as opposed to a cheap or moderate wine (same), we don't tip proportionately on the cost of the wine when we are in the U.S. (anymore than we accept the "suggested" 20% credit card tip on the cost of the wine when we go to a California winery, have a nice pour person for 20-30 minutes, and then walk out with two or three cases of pricy wine -- even if it was on sale).  The math doesn't add up for that "service."

 

[TRLD]

4 hours ago, SCX22 said:

 

That law has been in effect in California since 2001.  The recent cuts to staffing at full service restaurants is due to inflation and to keep costs down.  Food prices are still high as compared to pre-pandemic and restaurants can't keep raising prices to cover higher food costs without losing customers; if there are fewer and fewer customers profits dwindle, which eventually leads to closure. 

 

What's killing fast food restaurants in California as of recent is the newly mandated minimum wage of $20 for all fast food employees.  Fast food restaurant workers never relied on tips because they were never expected at these establishments.  (I personally never left a tip when eating at McDonald's or In-N-Out Burger and still don't.  Leaving a tip is actually frowned upon at In-N-Out because management believes that they pay they employees well.)  Owners/franchisees can't raise wages and maintain the same profits without raising prices.  Thus, many are fast food restaurants are cutting staff and resorting to self ordering POS systems.  Fast food restaurants rely on the low price, high volume model.  They can no longer keep the low price in the equation because of labor costs.

Yes and no. 

While the law requiring restaurants to pay minimum has been around for years the last increase to $15 was just last year.

 

The recent change in fast food restaurant are basically going across the entire industry. After all raise fast food minimum to 20 that move up the food change impacting all of the fast food jobs. Entey level now 20, and the rest of the pay structure went up accordingly.

 

It also means that other food outlets have to match or lose their workers. The end result is fast food restaurants are cutting staff, they are also filling the slots they are staffing with higher skilled workers some of which are coming across from sit down dining.

 

The funny thing is that as a result of the change high skilled workers are flowing to fast food, requiring their previous employers to raise salaries to back fill the positions, while the cuts mean that the lower skilled fast food workers that the law was intended to help are losing their jobs or getting hours cut.

 

In addition to this change you also have several cities that have passed their own rules piling on top. 

 

Just as food inflation is settling, wage inflation is growing. 

 

While one does not tip in fast food, the the sit down restaurant industry is also impacted.

[ldubs]

6 hours ago, TRLD said:

I do not know of any state where minimum wage is a living wage.

 

Do what California is doing, which is pushing restaurant worker wages up into the living wage range, and you start getting similar prices and reduction in staff similar to Australia. Many restaurants are switching to the model of ordering at the counter, getting a number and having the food brought out. 1 or 2 front house workers where their used to be full table service and 5 or 6 at any given time.

 

California's hourly minimum is not near a "living wage".   

[paddingtonbear]

 

57% of US adults say they would tip 15% or less at a sit down restaurant. 

 

This is from the Pew Research  centre released in No 2023. 

https://www.pewresearch.org/2023/11/09/services-americans-do-and-dont-tip-for-and-how-much/

Edited July 11 by paddingtonbear

[ldubs]

5 hours ago, SCX22 said:

 

What's killing fast food restaurants in California as of recent is the newly mandated minimum wage of $20 for all fast food employees.  Fast food restaurant workers never relied on tips because they were never expected at these establishments.  (I personally never left a tip when eating at McDonald's or In-N-Out Burger and still don't.  Leaving a tip is actually frowned upon at In-N-Out because management believes that they pay they employees well.)  Owners/franchisees can't raise wages and maintain the same profits without raising prices.  Thus, many are fast food restaurants are cutting staff and resorting to self ordering POS systems.  Fast food restaurants rely on the low price, high volume model.  They can no longer keep the low price in the equation because of labor costs.

 

Not all fast food employees.  Only those in larger chain operations with at least 60 locations.  Still I suspect that would cover the majority of fast food jobs in the state.     

[ldubs]

10 minutes ago, paddingtonbear said:

 

57% of US adults say they would tip 15% or less at a sit down restaurant. 

 

This is from the Pew Research  centre released in No 2023. 

https://www.pewresearch.org/2023/11/09/services-americans-do-and-dont-tip-for-and-how-much/

 

So, 80% tip 15% or more.  Not surprising.   

[MacMadame]

1 hour ago, TRLD said:

Just as food inflation is settling, wage inflation is growing. 

Good. Inflation has outpaced wage growth for ages. It's time wages to catch up.

[LittleTinker]

5 hours ago, rideev said:

Why does tipping in American Restaurants based on a percentage of the ticket total?  Is it more difficult for the server to bring out Prime Rib vs. Chicken Strips?

Exactly

 

The server is serving for two hours, for instance, if the bill is 100....he gets 20....but if its 200 he gets 40?

So he doubles his wage just for bringing out a more expensive dish?

 

I thought it was to 'make up wages'?

So why not just tip $5 for every hour you're there?

[SCX22]

Just now, MacMadame said:

Good. Inflation has outpaced wage growth for ages. It's time wages to catch up.

Not good.  It's just printing money, which causes more inflation.

[MacMadame]

If wages don't catch up, homelessness increases. Maybe companies could lower prices instead and stop making obscene profits.

[SCX22]

22 minutes ago, MacMadame said:

If wages don't catch up, homelessness increases. Maybe companies could lower prices instead and stop making obscene profits.

The prime example if why not to print money are South American economies.  This is the reason why one of The Fed's functions is to curb inflation.

 

Circling back to California's new fast food minimum wage laws, the wages are why so many fast food franchises are closing.  (Rubio's has closed many locations as a result and there are 5 McDonald's that have closed in my metro area alone.). The affected fast food restaurants have to get money from somewhere to pay increased wages and they are not going to take it from their profits.  Therefore, they will raise prices to compensate.  More inflation for consumers of fast food and more reason to call for higher wages for everyone else.  Some owners have decided it's not worth it and have closed up shop or have laid off employees, adding to unemployment.  It's a never ending vicious cycle, which is why inflation has to be kept in check so wages can be kept in check.

Edited July 11 by SCX22

[MacMadame]

Public companies need to grow to keep their stock prices up. Closing stores doesn't do that. Things will get to equilibrium. I was working in the 80s when inflation was 18% and we didn't have the issues South America is having. It's more complicated than inflation.

[SCX22]

5 minutes ago, MacMadame said:

Public companies need to grow to keep their stock prices up. Closing stores doesn't do that. Things will get to equilibrium. I was working in the 80s when inflation was 18% and we didn't have the issues South America is having. It's more complicated than inflation.

 

That was then.  The world has changed a lot in 40 years.

[MacMadame]

8 minutes ago, SCX22 said:

 

That was then.  The world has changed a lot in 40 years.

Which is why I'm not worried about runaway inflation.

[SCX22]

4 minutes ago, MacMadame said:

Which is why I'm not worried about runaway inflation.

 

43 minutes ago, MacMadame said:

If wages don't catch up, homelessness increases. Maybe companies could lower prices instead and stop making obscene profits.

 

49 minutes ago, MacMadame said:

Good. Inflation has outpaced wage growth for ages. It's time wages to catch up.

So no reason to worry about wages.

[ldubs]

1 hour ago, SCX22 said:

The prime example if why not to print money are South American economies.  This is the reason why one of The Fed's functions is to curb inflation.

 

Circling back to California's new fast food minimum wage laws, the wages are why so many fast food franchises are closing.  (Rubio's has closed many locations as a result and there are 5 McDonald's that have closed in my metro area alone.). The affected fast food restaurants have to get money from somewhere to pay increased wages and they are not going to take it from their profits.  Therefore, they will raise prices to compensate.  More inflation for consumers of fast food and more reason to call for higher wages for everyone else.  Some owners have decided it's not worth it and have closed up shop or have laid off employees, adding to unemployment.  It's a never ending vicious cycle, which is why inflation has to be kept in check so wages can be kept in check.

 

It is reported 10,000 fast food jobs lost in California since the new law was signed.  

[Retired-N-Happy]

3 hours ago, Catlover54 said:

 

Sounds reasonable.

However, if we have ordered a *very* expensive bottle of wine in a restaurant (by the standards of what we consider very expensive), as opposed to a cheap or moderate wine (same), we don't tip proportionately on the cost of the wine when we are in the U.S. (anymore than we accept the "suggested" 20% credit card tip on the cost of the wine when we go to a California winery, have a nice pour person for 20-30 minutes, and then walk out with two or three cases of pricy wine -- even if it was on sale).  The math doesn't add up for that "service."

 

The math doesn't add up for that service because you don't tip anything if you buy wine in bulk at a winery.  It's a retail transaction, so there is no reason to tip.

Now, if you sit there and split a bottle and have some cheese and crackers, then you would be obligated to tip on that single bottle, but certainly not the extra cases that you would be leaving with.

 

[SCX22]

5 hours ago, TRLD said:

Yes and no. 

While the law requiring restaurants to pay minimum has been around for years the last increase to $15 was just last year.

 

The recent change in fast food restaurant are basically going across the entire industry. After all raise fast food minimum to 20 that move up the food change impacting all of the fast food jobs. Entey level now 20, and the rest of the pay structure went up accordingly.

 

It also means that other food outlets have to match or lose their workers. The end result is fast food restaurants are cutting staff, they are also filling the slots they are staffing with higher skilled workers some of which are coming across from sit down dining.

 

The funny thing is that as a result of the change high skilled workers are flowing to fast food, requiring their previous employers to raise salaries to back fill the positions, while the cuts mean that the lower skilled fast food workers that the law was intended to help are losing their jobs or getting hours cut.

 

In addition to this change you also have several cities that have passed their own rules piling on top. 

 

Just as food inflation is settling, wage inflation is growing. 

 

While one does not tip in fast food, the the sit down restaurant industry is also impacted.

 

I find the article's view point to be of interest.  The writer is an economist who is an emeritus from UC Irvine.  His argument is that because of higher hourly minimum wage at fast food establishments, hours will be cut for employees.  Although other food establishments will keep their hourly minimum wage lower, workers will still accept those jobs because they are given more hours to work, because it still results in higher overall pay.  I find the last two sentences of the last paragraph to be particularly interesting.

 

https://www.econlib.org/library/columns/y2024/mckenziecaliforniafastfood.html