Could Tipping as Much as 30% Backfire on Restaurants?

Joshua Chong

1. You won't be prompted for tips when you pay for dinner at Marben.
2. The farm-to-table restaurant in downtown Toronto moved to a no-tip model nearly two years ago - raising workers' pay so employees no longer relied on gratuities to make a livable income.
3. "We thought, what would happen if, in an ideal world, we could get rid of tips altogether and compensate people fairly for their time and skills, and essentially take the decision-making out of the guests' hands," said Chris Locke, executive chef at Marben and the Cloak Bar.
4. The restaurant increased menu prices to reflect the "total cost of dining," Locke said, and introduced other benefits, including paid sick days above the provincial minimums and a health spending account.
5. But while a handful of eateries, like Marben, moved to a "hospitality-included" model during the pandemic, they remain outliers, comprising fewer than one per cent of all businesses in the Ontario restaurant industry, according to Mike von Massow, an associate professor of food economics at the University of Guelph.
6. Since the return of in-person dining, the trend is towards increased tipping. In Ontario, 53 per cent of diners are tipping more at table-service restaurants compared to before the pandemic, according to an Angus Reid survey released in April. The average tip in the province is 18.9 per cent.
7. At full-service restaurants across Toronto, it's not uncommon to see payment terminals with tip prompts starting at 18 or 20 per cent, and climbing as high as 30 per cent. But as Torontonians are being asked to tip more, some diners are questioning the city's tipping culture, and asking whether the onus should be on diners to decide how much servers make - or if it's on employers to pay a livable wage.
8. "The industry seems to have gone a step too far here and we're finally at that threshold where people are saying it's getting out of hand," said von Massow.
9. About two decades ago, the average tip was around 10 to 12 per cent, noted James Rilett, Restaurants Canada's vice president for central Canada. Since then, the acceptable range has crept up, he said.
10. With restaurants reopening following the pandemic, "people recognized that restaurant employees had a hard couple years with missing a lot of shifts and being laid off," said Rilett. "So they wanted to recognize that through their tips."
11. The Restaurants Canada survey reported more Ontarians were raising their tips from pre-pandemic levels compared to residents of any other province. Nationally, 44 per cent of Canadians said they were tipping more than before. In Alberta and the Atlantic Provinces, only 34 and 35 per cent, respectively, reported doing the same.
12. Rilett believes Ontarians are tipping more than other Canadians because the province was closed the longest during the pandemic. "I think people recognize that the staff were hurt the greatest and so they're recognizing that," he said.
13. However, von Massow believes societal pressure is driving tips up. With some consumers upping their tips, restaurants are now increasing the tip options on their payment terminals, which puts "pressure on the social norm" and "pushes people at the bottom end of the tip range to give more," he said.
14. But that strategy could backfire for restaurants, van Massow warned.
15. If diners feel the tip options are too high, that may end their meal on a bitter note. "The last experience those people have at the restaurant would be a negative one," he said.
16. Locke agrees and believes the climbing tip rates paired with rising menu prices could soon hurt the industry. Even if diners are tipping the same percentage now compared to before the pandemic, they are still giving more because food prices, the base cost upon which tips are calculated, have already increased.
17. "It's going to dissuade people from dining out," he predicts.
18. But with several restaurants in recent years opting for a no-tip model, and raising wages to a livable income, it will be interesting to see if other restaurant owners make the switch, said Rilett, noting it's a "copycat industry."
19. Lori Fox, a journalist and food service expert who previously worked as a server, believes it's going to take a significant cultural shift for that to happen.
20. Tipping culture is all about control, they said. "The underlying perceived value for the customer in tipping is actually the exchange and temporary control of another human body."
21. The practice has a racist history and is a legacy of slavery, many scholars have highlighted, noting tipping was popular in the U.S. after the Civil War and used to exploit the labour of emancipated Black women and men. Instead of receiving a wage, workers in the restaurant and hospitality industry often relied on customers' gratuities for their pay.
22. Aaron Binder, co-director of the Better Way Alliance, believes the no-tip model is more equitable for workers and gives greater stability, as income is no longer dictated by the number of tips they receive each shift. In this era of staff shortages, that could help restaurant owners decrease staff turnover.
23. "Plus, by reducing or removing tipping completely ... you see a lot of these power imbalances removed in the food service industry," he added.
24. Jaby Dayle feels workers are divided between the two systems.
25. "It was nice to work in a space where my rent won't be dictated because this random person who's never worked on the floor is judging me," said Dayle, a server and wine professional who has worked at establishments that have used both models.
26. However, she said servers who work at restaurants that do accept tips still tend to earn more money, on average, compared to those who earn a higher wage at a no-tip establishment.
27. While the debate continues, Fox encourages diners to continue tipping, but also engage in these discussions with servers and ask how to create a more equitable system.
28. "The debate should not be, 'Am I going to tip or am I not going to tip?'" they said. "The debate should be. 'Why am I tipping and why isn't the restaurant paying servers a living wage?'"

 

Question is

Some restaurants have opted for a no-tip policy and pay their employees their full salary. How do you believe this can affect the food industry?