Tipping the scales: Restaurants could veer from tip system, survey says

Lauren Richardson, left, serves Ann Brennan and Ethan Flaming a late lunch Wednesday at The Buck Burgers and Brew in downtown St. Joseph. The restaurant goes with the traditional U.S. tipping system. (Don Campbell | HP Staff)

Lauren Richardson, left, serves Ann Brennan and Ethan Flaming a late lunch Wednesday at The Buck Burgers and Brew in downtown St. Joseph. The restaurant goes with the traditional U.S. tipping system. (Don Campbell | HP Staff)

By Tony Wittkowski | Business Reporter | The Herald-Palladium

ST. JOSEPH — Restaurants across the country are taking a closer look at no tipping for servers.

However, eliminating gratuities and raising prices might not be an option Southwest Michigan eateries want to consider.

Ken Kozminski, owner of The Buck Burgers and Brew, is familiar with the no-tip model and doesn’t think it’s a good fit for today’s industry.

“People are going to tip on their experience. It’s about providing a hospitality experience for the costumers,” Kozminski said. “People don’t go out to eat for the food, they go out for the experience.”

About 18 percent of surveyed restaurant professionals said they’ve already adopted a no-tip model, according to an American Express Restaurant Trade Survey released in mid-May.

The survey was conducted among a random sample of more than 500 U.S. restaurateurs. Some 29 percent said they plan to adopt a no-tip policy, according to the survey.

Kozminski falls in line with the 27 percent who said they would not jump on the no-tip trend. About 17 percent said they may do so if other competitors follow suit and 10 percent said they were undecided.

Tipping, wages and restaurant trends are closely watched as the service industry has been a major driver of job growth since the Great Recession.

At the Mason Jar Cafe in Benton Harbor, the regular tipping system reigns supreme. Jayme Cousins, owner of the Mason Jar, said they have never considered the no-tip model.

“I think it’s a horrible idea,” she said. “Servers get tipped based upon their service. Once you take that element out, now they assume they are going to make ‘X’ amount of money and don’t put as much effort into it anymore. If the servers notice the food is taking longer, they’ll go back to the kitchen and see what’s going on because that extra time is taken into account on their tips.”

The trend is similar to what European restaurants have been doing for years, where the tip is automatically added to the bill.

Kozminski once spent a year and a half in France where he traveled to various neighboring countries. During his time there, Kozminski noticed the gratuity was included wherever he went to.

“When we have any Europeans come through our restaurant, they believe the tip is already included in the bill,” he said. “It’s engrained over there. In our industry it’s about providing a fun experience. People can cook at home and eat by going through a drive-through. Instead they choose to sit down for a personalized experience.”

No tipping can lead to higher menu prices to cover service costs. And tipping can be a very personal dining choice, where tips tend to range from 15 to 20 percent.

Could it work?

Beyond tipping changes, the survey noted the growth of a cashless restaurant experience. The no-tip model takes the choice out of the customer’s hands and will fall on the diner, regardless of their experience.

Kozminski realizes this and doesn’t favor the option. The model could essentially put servers out of their jobs and cripple an industry that was responsible for so much job growth in the last decade.

“We would have to go to a more electronic model with tablets, versus interacting with a server,” Kozminski said. “In my specific restaurant, it would drive technology to replace the servers. What we would become is order takers, rather than provide a hospitality service.”

Tipping tends to be the major draw for servers looking for employment. Kozminski said his employees walk out of his downtown St. Joseph restaurant with cash in hand as a sort of “automatic bonus.”

“Each evening they receive cash and that cash becomes a reward for how they perform on their shift,” he said. “It’s immediate gratification.”

Cousins said succeeding by not instituting tips would depend on the type of restaurant that implements it. Cousins said corporate establishments could benefit from a set gratuity from each bill because their main mission is to serve people at a higher volume.

The model wouldn’t be an easy transition for smaller businesses because they rely on the personal touch, Cousins said.

“If I was to tell our servers that we would go by an hourly rate and took away their tips, they would not be happy,” she said. “They would make more than the normal minimum wage an hour. If you make that change, both the servers and the customers suffer.”

Whether the no-tip model grows in popularity stateside, Kozminski said it will be up to the customer.

“I think everything changes, that’s the way our industry works,” he said. “It really becomes consumer driven. If it does change, it will be because of the consumers, not the owners.”

Contact Tony Wittkowski at twittkowski@TheHP.com or (269) 932-0358. Follow him on Twitter: @tonywittkowski.

(Author’s Note: This article was originally published on June 24, 2016)

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