Why no tipping isn’t working now

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As no-tipping models gain traction in restaurants across the country, it’s a movement that’s borne out to be part trial and error and part trial by fire, as evidenced by some pioneers dropping their no-tipping tests in a matter of months.

The reason why no tipping failed at concepts like Joe’s Crab Shack and Fedora is likely more of a marketing and PR problem than one stemming from operational challenges, panelists said during a tipping discussion at the National Restaurant Association Show, noting that customers who bristled when menu prices rose may not have grasped why there was an increase.

It’s “absolutely huge” that restaurateurs understand that customers don’t fully get where their tips go and probably assume the money is being shared between the back and front of the house, said Dan Rosenthal, president of The Rosenthal Group, which operates a number of Chicago eateries.

It’s really a “zero-sum game” when customers are unwilling to pay more, added Brett Traussi, COO of Daniel Boulud’s Dinex Group, noting that it can be scary for restaurateurs to “play Robin Hood” at their own concepts.

The death of no tipping at Fedora was likely due, in part, to how the policy shakes out with wine, as many customers stick to a certain price point when ordering from a wine list and do not adjust that point even when hospitality is rolled into prices, Traussi said.

One audience member echoed the panelists’ sentiments, noting that her Morgantown, W.Va., operation has received some fairly negative guest feedback since switching from a traditional tipping model. Her concept adds a 10 percent service charge to checks and gives any additional tips directly to waitstaff.

The hurdle has been primarily with guests, she said, as servers appreciated taking home “decent money” during the restaurant’s slower months.

Rosenthal said he plans to conduct a customer survey, asking guests both where they think their tips are going—100 percent to the server, shared by hourly staff, shared between server and busser, etc.—and where they would like their tips to go. Using those results, he said his restaurant group will work to craft a program that addresses wage inequality between the front and back of the house.

The fight for higher wages is not going to go away, Rosenthal said. “We’re going to have to deal with it.”


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