The North American restaurant service gratuity system is a curious phenomenon.
Food service is one of the only industries the wages of which remain competitive on the basis of a predictable, but still discretionary, supplement provided by customers.
It had been the convention for many years that the minimum suitable gratuity for a restaurant server who had provided adequate service was 15 per cent on the total, post-tax bill. Less than 15 per cent was construed as a plaintive statement, more was an acknowledgement of expertise above and beyond what was expected.
I would suggest that the days of 15 per cent have been behind us for a while now. The scale of evaluation for service staff has shifted a few percentage points and 18 per cent is the new 15 per cent. Leave less and your server will likely wonder what she or he did to earn your ire. If you book a reservation for a larger group, you will frequently encounter the so-called “auto-grat,” an automatic 18 per cent tip, agreed upon before a single glass of water has been filled at your table, to be applied to whatever total bill your party manages to rack up.
I think we are on the brink of a paradigmatic shift in the way servers are compensated. Being close to the restaurant world both professionally and personally, I have heard some extreme tales related to gratuities.
In Manhattan, arguably the continent’s heart of dining, 20 per cent gratuity has been the norm for a long time and 25 per cent is not uncommon. On a bottle of wine, which is already listed on the menu at a 200 per cent markup on cost, that can be a tough addition to swallow.
However, one of that city’s most accomplished restaurant leaders, Danny Meyer’s Union Square Hospitality Group, responsible for iconic eateries including the Union Square Café and The Gramercy Tavern, has been making headlines recently following the announcement that the group’s restaurants are banning gratuities as of November of this year, ushering in a new model of compensation for their staff that does not depend on discretionary funding by patrons.
The precise details of how this will be accomplished have not yet been shared.
The tip ban is a bold move by Meyer’s group and one that will surely require a lot of logistical considerations. I worked front-of-house in restaurants and can appreciate why the gratuity system has evolved into what it is today. Guest service is a tough gig, involving long and erratic hours, last-minute shift cancellations, work on weekends and holidays, and coping with diners who feel that their dollars permit them to treat you like a servant rather than like a skilled professional.
More than this, however, and this is a fact that I find a lot of people still don’t realize, a server’s gratuities do not all go to that server alone. In most restaurants, there is a required established “tip-out” policy.
Under this policy, a server must contribute a defined percentage of her or his gross sales for the evening to the other members of the restaurant team.
For instance, if a server had 10 tables over the course of the evening, each with a total pre-gratuity bill of $100, that server will have sold $1,000. The server’s tip-out will require that the bartender receives half of one per cent of that $1,000, or $5. The kitchen will typically receive 1.5 per cent of those sales, or $15. The host team may receive another one per cent ($10) and, depending on the specific set-up of the restaurant, the floor manager and possibly the food runner will each receive another half percentage point, possibly even a full percentage point. That’s five per cent of the server’s sales, or $50, irrespective of how well that server’s customers tipped. Remember, this tip-out policy is based on sales, not tips. Assuming the server did well that evening, he or she will have earned an average of 15 per cent on sales, or $150. Subtract the tip-out, and you have $100, amortized across the eight-hour shift, translating into a $12.50 hourly supplement to what is typically a minimum wage base.
Under this scheme, if you stiff a server, leaving nothing, you actually cost them money.
On your $100 bill, they will now have to pay $5 of their own money for the pleasure of serving you. Similarly, in a restaurant that does not typically do take-out orders but can accommodate them as needed, the server that rings in your order and processes your payment must account for your take-out as part of their evening’s sales. If you don’t leave any gratuity, even a nominal 10 per cent, that server will still have to tip-out on your order, paying for the favour of ringing in your meal.
Of course, there are also occasions upon which a server can win big in this model, opening several expensive bottles in the course of an evening and earning very good money, even once tip-outs have been distributed.
Some might argue that it is not up to the diner to compensate for wage schemes in a restaurant. While that may be true in principle, it nevertheless remains a well-established cultural norm that accepted minimum gratuities are simply part of the cost of dining and are not, in the end, all that discretionary.
I am curious to see how Danny Meyer’s group fares with their new approach; perhaps it is the start of a movement.
Chris Dagenais served as a manager for several restaurants downtown and on the North Shore. A self-described wine fanatic, he earned his sommelier diploma in 2001. He can be reached via email at [email protected].
