Consumer Trends

Tipping 360 Part 2: Pay gap could push tipping change

tip dish

Sure, the cool kids are doing it—Danny Meyer, David Chang and Tom Colicchio are a few of the big names ditching tipping in some of their restaurants. But still, they’re among only 9 percent of operators who have adopted new policies of late.

That’s not to say all of the others are ruling it out. The majority of restaurateurs feel it’s important to close the gap between front- and back-of-house pay, and nearly a quarter say that discrepancy could prompt them to make a change.

That’s according to a new survey conducted for Restaurant Business by Technomic. The operator results are part of our “Tipping 360” series, examining the issue from three perspectives.

Who's offering tipping?

restaurant accept tips

Operators' sentiments about tipping

76 percent of restaurant operators favor tipping

76% of operators consider tipping an effective means of compensating servers and front-of-house staff (15% consider it to be at least somewhat ineffective).

But it's not a perfect system ...

56 percent of restaurant operators close pay gap

56% of operators say it is important to close the gap in pay between servers and back-of-house staffers, and 23% say that discrepancy would make them consider a new tipping model. Only 18% say closing the gap is not important.

A no-tipping model may not be the end-all, be-all …

49 percent of restaurant operators don't like no-tipping model

Half of operators (49%) say a no-tipping model is not a good fit at all for their operation; 10% of operators are right in the middle and 10% give a no-tipping model high marks as being a good fit.

Changes ahead?

You first …

  • So far, few restaurants have changed their tipping policies, and only 9% say they’re very or somewhat likely to change in the next 12 months.
  • More than half (54%) say they are very unlikely to change.
  • Still, 68% expect to see some change to tipping policies over the next five years, with 50% predicting incremental change and 18% expecting significant change.

Why the hesitation?

Asked to share their biggest concerns about tipping changes, operators worried most about how servers would respond:

  • 55% Servers will object
  • 32% Servers will seek employment elsewhere
  • 21% Customers will object
  • 20% Unsure which model is more advantageous

What would push operators to consider a new tipping model?

  • 35% An increase in the minimum wage
  • 23% FOH/BOH pay discrepancies
  • 19% Changes in tax policies related to tipping
  • 17% Restaurants in my area adopting no-tip policies
  • 15% Pressure from new labor mandates
  • 13% Tip credit change

Read more about the issue from consumers’ and servers’ points of view

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