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Tag Archives: tips vs. service charges

The story about Lehigh students arrested for refusal to pay service charge

My fellow WordPress blogger, Jonathan Turley has posted the story, a story that places like Waiter’s Rant have already covered:

There are some interesting comments on both sites. I’ve added my own at the bottom on the Turley blog which are still awaiting moderation which has to do with the difference between gratuities, tips, service charges and autograts (which is a bit arcane).

My thoughts on this? From my admittedly biased view of this, I think that the students were acting like spoiled rich students with a sense of entitlement (not to say that they didn’t have cause for complaint). IF, and this is a big IF, they turned down getting part or all of their meal comped by the manager, and then turned around an refused to pay the autograt, their passive-aggressive behavior merited some sort of consequence (“No I don’t WANT you to take $30 off off for the bad service. WHAT??!! You expect me to pay $16 for service I didn’t receive??!!!) Hopefully they’ll learn that it’s not always a zero sum game in life.

Now we turn to the idiot management and restaurant employees. Starting with the poor service, continuing with allegedly poor food quality, proceeding to a management that couldn’t communicate their remorse in not providing decent service and ending with the arrest of the participants, the restaurant violated just about every tenent of customer service possible. Having been on the other side of arrogant, entitled and unreasonable guests, I can understand how this could have spiralled downward. Yes, I’m calling out these students as “unreasonable” even though they might have gotten the worst service imaginable (if it’s true tha tthey were offered comps on their bill). And yet, if the management sent hostile, non-apologetic, defensive and passive-aggressive signals themselves when offering said discounts, they deserve the huge hit in business and the national scorn that they’re facing now.

Hopefully both parties have learned something from this. Perhaps the students will get the message that sometimes you accept an accomodation, not necessarly “stand on principles” when it’s counter-productive to their own interests and the owners of the pub will have a better shot at success in their next restaurant after they are forced out of business with this one.  

From Photo credited to Daniel H.

BTW, for those confused as to how a $16 tip on a $74 bill goes from 18% to 22%, Max, who responded to this story in a different blog seems to have nailed it down:

“Please note that other sources state the owner said “some” of the food was comped. I suspect that their bill was $105 ($89 + $16 gratuity), then when the customers complained, the idiot bartender comped them $16 dollars worth of food instead of removing the gratuity. This would reduce the bill to $89 ($73 + $16 gratuity), which would still look like they were being forced to give a tip. So they paid the $73 as was stated in the news story, and fought the rest”.

The thing is, most POS systems don’t let the service charge ‘track” purchases. In other words, when you add the service charge, it takes a snapshot of the bill and computes the service charge at that point. It doesn’t change, even if the server has forgotten to ring something in and has to add it after the service charge has been added (which means that the percentage would actually fall in relation to the bill). The only thing a manager can do is remove the service charge and start again. If the bartender comped the amount of the service charge from the food portion of the bill, the service charge would remain the same. This is where the students should have said, “It’s a wash” and just paid the darn bill. Instead, they “stood on principle” even though legally, they were still on the hook for the service charge. Not reasonable in my opinion. If they really wanted to stand on principle, they should have called the manager over, said that they wanted to pay the whole bill but have the service charge itself removed.

Just my 2¢.

Phoebe Damrosch on service charges vs. tipping in the US

In a little bit of synchronicity, as I was debating the advantages and disadvantages of tipping vs. wages/mandatory service charges, Phoebe Damrosch, noted author of Service Included: Four-Star Secrets of an Eavesdropping Waiter, has weighed in on the subject.

Here is the pertinent part of her post that discusses service charges, a post which otherwise discusses the fact that waiters tend to be underappreciated and yet somehow lacking in solid commitment by falling into some stereotypical categories:

Tipping provides American waiters with an incentive to increase their check average by pushing bottled water, extra courses, expensive entrees and pricey wines and by showing guests the door as soon as they stop chewing. The service charge shifts the focus from the money to the experience. Instead of worrying about how much money she will take home that night — and upselling and groveling her way to that goal — a waiter can worry about doing her job well: making people happy at whatever price and pace they prefer.

Lower turnover resulting from a more professional employment package would encourage restaurants to invest time and resources in training. They might offer menu tastings (important with the ever-changing “seasonal” menus fashionable now), wine and spirits education, guest speakers (winemakers, foragers, game hunters), employer-sponsored travel and dining, mentoring programs that connect newcomers to leaders in their field, externships for service staff, and — most important — cross training between the kitchen and the dining room.

I would take issue with some things here. First of all, let’s not forget that Ms. Damrosch spent her time since 2004 waiting tables at Per Se in Manhattan (her bio is a little thin regarding her previous time waiting tables, and I must admit that I haven’t read her book yet – I’m certainly planning to).

Why is this relevant? First of all, Per Se does indeed pay a salary and it’s paid through the 20% service charge that’s folded into the price of the meal, as it’s done in many parts of Europe. But what’s practical for a 12 table restaurant (not counting the newer private dining rooms that have been made available fairly recently) isn’t necessarily practical for most other restaurants, especially restaurants that have to deal with the masses, and especially restaurants outside the very rarified Manhattan dining scene.  Per Se has a highly structured dining flow (two seatings, no dead tables, exact staffing for the business, guests insensitive to price, etc) that can take advantage of a bundled service charge. Charlie Trotter’s does the same thing and can do it for many of the same reasons. Try doing this at a place like Chili’s (yes, the masses also deserve professional, competent waiters as well!) and it just wouldn’t work.  The low wage/tipping scheme allows for the very flexibility in staffing that’s required in most restaurants. And menu prices! I note that the prices at Per Se has risen close to 25% (not counting the added service charge) since they changed from tipping to service charge. This in only 4 years.

I maintain that, in most circumstances, tipping is a win/win/win wage structure. It’s a win for the restaurant because it allows more restaurants to actually get open because of the lower requirement for payroll (it’s hard enough just to get a restaurant open since it’s very hard, if not impossible, to get a conventional business loan). It’s a win for the guest, since it keeps menu prices lower (Per Se is a perfect example of how just adding a 20% service charge doesn’t translate to simply a 20% increase in menu prices), plus, let’s face it, most people actually enjoy the act of tipping for various reasons. And it’s a win for the waiter because, not only does it act as an incentive, it keeps the job flexible in terms of scheduling and obviously allows the waiter to have cash in hand.

Ms. Damrosch talks about upselling. What she fails to acknowledge, probably because she hasn’t really had to work in the sort of restaurants that most waiters work in, is that upselling is a required part of the waiter’s job. It isn’t just a matter of greed, it’s something that waiters must do in the event that they are visited by a secret shopper. Many restaurants employ these services and a waiter can be docked for not mentioning bottled water (my own $75 per head restaurant even requires mentioning the various waters by name). They can be docked for not trying to sell appetizers, deserts, coffees, etc. And, let’s face it, waiting tables is a sales-type job. Most restaurants don’t have prix-fixe menus where there’s actually no “selling” involved.  One of the job of most waiters is to help the guest build their dining experience, and much of this is done through selling certain items that can enhance the dining experience. If it’s done for purely craven, economic reasons, it’s not serving the guest, which is the waiter’s job. That’s why I’ve cautioned in the past that “upselling” be done to enhance the meal, not rob the guest.

Let’s also not forget that Americans often need to be “shown the door as soon as they stop chewing” because of the very impatience that Americans display, especially when it comes to dining. Nobody likes to wait an hour and a half for a table and the only way to do this is by being efficient in service. Most restaurants don’t have the luxury of demanding reservations a month in advance and being able to offer a totally relaxed three hour dining experience. And, let’s face it, most Americans don’t actually like to dine in such a relaxed, long term manner. They have movies to catch, babysitters to get back to, dining companions to ditch, jobs to get back to, etc.

So, we have to move people along. Having said that, the great waiter never moves them along at a pace faster than they should be moved along.  But the waiter is always mindful of the crush of people who also want to dine. Obviously, turning tables is a financial benefit to the waiter. I would agree with Ms. Damrosch that pushing people out the door only for its own sake is undesirable. But she should also remember the dining circumstances of the non-Per Se type restaurant.

I’d also note that I’ve worked in restaurants that do all of the things that she’d like to see restaurants do. Even in the humble P. F. Chang’s, continuing education was done on a daily basis, wines were tasted and discussed, wine reps lectured, every dish was tasted, many “exotic” ingredients were tasted separately as part of the training process, and yes, even the occasional field trip was offered to interested parties. Another American bistro restaurant that I worked in indeed has a seasonal menu with a menu rollout mandatory tasting session for all servers as well as some pretty intensive continuing wine education and constant tastings.

So, the waiting environment isn’t as bleak as she makes it. Could it be better? Sure. Could be get more training? Of course. It can always be more and better. But I’m not sure that a service charge/salary is a magic bullet.

I obviously share some of her concerns. This very blog exists to support and demand professionalism by waiters. I too hate to see lackadasical and mediocre service, which is why I cajole, counsel, needle and talk about the little things that underpin great service. I try to motivate servers to constantly refine their service. But I’m not sure that taking away the motivating aspect of tipping would move us toward the goal of perfect service. While a salary can help give the job a professional air, it can also offer the danger of complacency. If I’m getting my money regardless, am I as motivated to improve, especially in the high volume type service that I have to operate in?  Hard to say. It’s easy to see yourself as a professional when you’re rarely in the weeds from getting double and triple seated.

Don’t let my quibbles blind you to the fact that I agree with the basic tenet that Ms. Damrosch is promoting – that service is the weak link in the dining experience and should be improved. Hopefully my blog is a small part of improving the service level of waiters in every dining experience, from the most humble meat and three to the Per Ses of the world.

Service included