Capital

How Non-Elite Restaurants Can Include Gratuity

In the first two parts of our “hospitality included” series, we discussed how American culture is uniquely attached to tipping, and how it has become a corrupted vehicle for great inequalities within the restaurant industry. And as many have predicted, going tip-less is an inevitable revolution.

But, adding “hospitality included” is no easy task. The likes of Danny Meyer, Tom Colicchio, and David Chang can make the change because they are established, world-renown chefs, who have the financial backing and platform to make such a dramatic shift in their popular restaurants. Not to mention they also have the resources to handle bizarre lawsuits from a disgruntled customers.

Most restaurateurs and bar-owners are not in this same situation. While litigation is exceedingly rare, even an extremely successful business runs a risk with their price-margin when implementing “hospitality included.”

Below are a few steps you can take when considering — and perhaps starting — a “tipless” program.

 

FIRST THING’S FIRST

Make sure it’s legal where you have your business.

 

ASSESS YOUR CLIENTELE

Before including “hospitality included,” first assess your customers. You will want to consider how many “regulars” you have attending, how many new customers are returning or not returning, and how these customers find out about your restaurant. It will also be useful to know more demographic information, such as average income and residency.

While the latter may be difficult to determine, tipping is so psychologically ingrained in patrons, taking it away suddenly may be disruptive. It would not be out of the question to ask customers what they think — perhaps provide a commenting sheet with the bill or put a poll up on social media platforms like Facebook — before moving forward. Later, adding menu items that are more affordable, or having fixed-price items for things like beer or snacks, may also soothe a transition for regular customers.

 

ASSESS YOUR FINANCES

Your customer’s proclivity to pay is not the only issue; make sure you can pay. Menu prices are usually raised between 20 and 35 percent to compensate for a lack of tips; this money of course goes to increased wages for not only servers but all staff. Remember: wages should not be equal, but equitable. Salaries should reflect the value of a staff member; factors to consider include position, skill-level, experience, and/or seniority.

It’s also not as simple as simply raising prices for the same dish and then paying staff more. Owner of Huertas, Nick Adler, told the New York Times how he had to add an “extra tentacle” to an octopus dish because the newly-increased $21 seemed too steep for what the customer was getting:

“Ultimately it’s not about the numbers on the check, but about whether the balance and the value feels right to people as they leave the restaurant … It’s not an entirely rational system.”

Many tip-less restaurants also transition into cutting costs in various areas, like buying essentials in bulk, or in some cases, cutting staff. These adjustments will help cushion the blow for the inevitable downturn in profits as customers adjust to the higher prices; if done successfully, the profit margin should, eventually, correct itself.

 

TALK TO YOUR STAFF

Strong communication with existing staff is extremely important. Explain your reasonings for wanting to go tip-less long before implementing any changes (maybe send them these articles!) and foster an open discussion regarding their qualms or praises. Take their recommendations and experiences seriously; they are why you’re doing this, after all.

It is likely that some staff will not be satisfied with the transition, namely those who benefit the most from tips, like servers and bartenders. Many of Danny Meyer’s restaurants experienced turnover with staff after implementing “hospitality included,” the allure of stable wages and other benefits in the “macro” sense not good enough for the “now.”

In order to prevent an exodus of talented staff, communicate to them about extra incentives for staying – such as a stable income. Educational and awards-based systems can also help fill in the “competition gap” that tips previously provided. Systems like Tipzyy that have a “beat the house” option can help foster the team comraderie that is necessary when going tipless.

Ultimately, going tip-less is a challenging route for any restaurant, but that doesn’t mean one shouldn’t try. Amanda Cohen, owner of Dirty Candy, told Gothamist earlier this year going tip-less was a massive undertaking but nonetheless worth it:

“It’s hard to do the right thing and treat your servers as valued staff members and not as servants who work for tips, but just because it’s hard, it doesn’t mean it’s not worth doing.”

 

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