When I promised my kids authentic New York pizza, they didn’t expect to eat at a sit-down restaurant, and they certainly didn’t expect to wait 45 minutes for their meal to arrive.  After a visit to the Museum of Natural History (which, sadly, is a bit underwhelming for kids after their expectations have been set by Night at the Museum) we made our way to Midtown for some elevated pizza.  The service was abysmal.  We waited for about 10 minutes for a server to even greet us, then another 20 minutes to place our order.  I was about to instruct my kids to start misbehaving so that maybe we’d get some attention.  Then I realized we were at a “hospitality-included” restaurant, and the lazy service suddenly made sense. 

I am staunchly Team Tips.  I’ve heard all the arguments and explanations for eliminating tipping, and I disagree with nearly all of them, but one main reason why a no-tip model is bad for business is that tips make busy shifts more desirable.  Servers are incentivized to work weekends because the extra money is worth the stress of a hectic shift.  If a Saturday night server and a Tuesday afternoon server earn the same amount of money, that’s a huge turn-off for your staff, and I don’t think any sort of salary adjustment could bridge that labor gap. 

I was very motivated by tips as a server.  Not only did I give friendly, knowledgeable service to all my customers, but I also hustled and strove for maximum efficiency so that I could turn my tables quickly, therefore maximizing tips.  When I lived in Europe, dining at a restaurant was sometimes painful because of slow service.  Maybe I don’t appreciate the laid-back European life-style, but I prefer having my plates cleared and my check on the table when I’m finished eating.  When you make the same amount of money for serving 1 table or 10, why bother doing your best?

But the proof is in the pudding.  Danny Meyer’s restaurant empire, USHG, suffered dramatic staff turnover after his restaurants began including gratuity in the menu pricing.  As much as 40% of his veteran servers left, claiming they were making a lot less money.  Gabriel Stuhlman, who experimented with a no-tipping policy for four months, has since rolled it back.  He claims that he didn’t lose staff over the policy, but, instead, was losing profit, because customers were ordering less due to higher menu prices. 

I actually also like tipping as a customer.  I felt powerless at the Midtown pizzeria.  I like rewarding good service with a generous tip, and I like being able to leave less than 20% for service that diminished my dining experience.  Tipping is satisfying for everyone involved.


  • Subscribe to our latest insights

Are you capital raise ready?