A numbers game

Whether tips or wages comprise servers’ pay, consumers always will be part of the equation.

After the United Nations solves the world’s problems,  it needs to undertake a special peacekeeping mission in the restaurant business. Alan Greenspan could be roped in, too, because the situation poses an economic challenge where someone is likely to catch considerable pain. It’s just a matter of whom.

server digital money

The irony is that everyone agrees the wallop shouldn’t land on restaurant servers. A portion of the public, no doubt the descendants of those who insisted the world was flat, is stuck on the falsehood that a server is only paid $2.13 an hour, plus the few bucks they might pocket in tips. How can a person make a living on that kind of money? They’re incensed and want restaurants to pay their waitstaffs a real income. The starting point, they contend, is paying servers and bartenders at least the wage that’s mandated by law for everyone else in the restaurant.

With the urging of labor organizers, they’re bellowing their feelings and snagging the sympathetic attention of lawmakers and state regulators. You can read elsewhere in this issue how that very scenario is unfolding in New York, the nation’s fourth-largest restaurant market. 

If there are restaurateurs who wouldn’t prefer to pay their servers more, would you please send along their contact info? At last year’s Aspen Food & Wine Festival, such full-service trendsetters as Danny Meyer and Tom Colicchio dreamt aloud about paying their servers an actual salary, likely far above the federal $7.25 an hour.

Other operators have been to Europe and seen how a conventional employment model would make their lives simpler, braking turnover and elevating the art of service to a profession. If waiting on tables was restructured as a conventional job, with tips no longer part of the equation, there’d be no controversy about tip pooling, tipping out or sharing the credit-card expense of charged gratuities. Nor would restaurants be forced to play IRS agents and lean on the waitstaff to report more accurately.

Restaurants and servers would be happier. Customers would presumably get better service, since a true professional would be waiting on them. So what’s the problem?

Few consumers realize they’re going to pay servers’ compensation one way or another if a restaurant is going to stay in business. The 15 or 20 percent of sales routinely collected by tipped employees is a far bigger portion of sales than most full-service restaurants are left after paying expenses. The National Restaurant Association pegs the average profit margin for mid-priced places at 5 percent. 

The option of server salaries is simply unfeasible, if not mathematically impossible. But tripling servers’ wages to $7.25 an hour is no less of a fantasy. The numbers just don’t make sense for a business. The only way to raise the necessary funds and still preserve restaurants’ profits would be to raise prices significantly. And there’s agreement of consumers and restaurateurs on that point; neither wants to see menu charges increase.

Tipping as a compensation model may strike some as less than ideal, but that’s because it’s not understood. People catch a sound bite about waitstaff earning only $2.13 in wages and think that’s their income, when in fact a server at The Cheesecake Factory is actually in the $35-an-hour range. Bartenders at any number of hot places can make $1,000 in tips on a Friday or Saturday night.

Servers are not usually the ones grousing about the status quo. Restaurants like the setup because it puts service levels and compensation in direct correlation. Even the vast majority of consumers seem content with the model, given how readily they leave 15 percent of their bill as a tip, even if the attentiveness was a little off. 

So what’s the problem?

Miscommunication. And it falls on the industry to clear it up.

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