GO
Loading...

Should American restaurants abolish tipping?

Tracy Saelinger, TODAY contributor
Wednesday, 21 Aug 2013 | 1:46 PM ET
Tom Merton | OJO Images | Getty Images

Imagine that the next time you went out for a nice meal, the tip line had disappeared from the bottom of the receipt. Admit it, after some initial puzzlement, you'd probably feel a sense of relief—and that's exactly what happened to diners at a high-end sushi restaurant in New York City, Sushi Yasuda, which recently eliminated tipping and integrated the cost of the service into the food, in an effort to give diners more of a true Japanese dining experience.

Having dined in Tokyo, I first applauded the idea—eating out in Japan, or paying the bill anyway, is a refreshing experience for an American. The bill is what it is—no math, no guilt about wondering if the waiter has to split his tips, or if he'll lose a cut to the credit card company. And there are no games, like in Europe, where you think there's no tipping, but the guide books tell you that you're supposed to round up and leave your change. Tipping is so unwelcome in Japan, some servers even find it offensive.

Cramer's Mad Dash: Tasty restaurant plays
Jim Cramer explains what to watch ahead of the open, including Chipotle Mexican Grill and Red Robin Gourmet.

So what if more American restaurants followed suit and started to pay waiters and waitresses a salary?

First, the obvious: Menu prices would be higher. Without tipping, restaurants would be forced to raise the price of dishes. And yes, we all know that we'll have to pay that 15 to 20 percent extra at the end of the meal, but when you're ordering, it's out of sight, out of mind.

Funny enough, studies show that all-inclusive restaurants—where 15-percent service costs are built in to the menu pricing—are perceived by diners to be higher-priced, according to Mike Lynn, a professor of consumer behavior and marketing at the Cornell University School of Hotel Administration.

"It's true even with 20-percent tippers, even though the all-inclusive restaurant would have been cheaper for them," he said. "Diners don't like being forced to do anything."

And think about it: With tipping, diners are paying different amounts for the exact same meal, Lynn points out—which means more generous customers are being penalized. A recent survey even found that 63 percent of Americans felt pressure to tip even when the service was bad.

So, score one for restaurants. But customers benefit from tipping, too, through the old rewards-and-motivation system.

"More competent servers want to work for tips," Lynn says, whereas the "slackers" tend to prefer the flat-salary system.

More from TODAY:
Is 25% the new standard for tipping? Depends where you eat
Rolled herring, bull parts? Hangover remedies from around the world
Next wave? LA restaurant offers water menu with $20 bottle

Take away tipping and you run the risk of taking away good service, which is exactly what is happening in some touristy areas, like Miami Beach. For years, restaurants there have been tacking on an automatic 18-percent service charge, mainly to keep foreign visitors who may be unaware of American tipping customs from stiffing waitstaff.

Service in those places always seemed a little lacking to me, and a Miami restaurant manager, who asked not to be identified, confirmed my suspicions.

"The service is really, really not very good on the beach—and a lot of that is due to the tip being included, the manager said. "If you don't have to work really hard and you're getting the money anyway, that's what happens."

Waiters at her restaurant, which is still on the tip system, would be on the fence about abolishing it, she adds—they bring home an average of $180 a night for about six hours of work, but that can easily run $200 to $300 on a Friday or Saturday night. To make comparable money on salary, servers would have to make about $30 an hour, she estimates.

And while there are the customers who have stiffed waiters on a $280 bill—leaving the waiter to tip bartenders and food runners out of pocket, essentially losing money on a table—there are those nights where a super-generous customer will tip $100 on a $200 bill.

"The most appealing thing about this job," she says, "is that you can make a lot of money in a short amount of time."

So in the end, as dreamy as it would be to not have to end a delicious meal on a sour note with multiplication and decimal points, I came around on our tipping system. Overall, it seems financially better for the waiter, provides better service for the customer and gets us to order more liberally, which is better for the owner.

Mostly, I think tipping is just too ingrained into our psyche. After all, this is America, where we expect that our hard work will be rewarded with better pay. What's more capitalistic than that?

By Tracy Saelinger, TODAY.com/money.
See more Money News from The TODAY Show at our Facebook and Twitter.

Featured

Contact U.S. News

  • CNBC NEWSLETTERS

    Get the best of CNBC in your inbox

    › Learn More

Don't Miss

U.S. Video