Eliminate Tips? Only if You’re A Bad Server

People in the customer service industry, such as food servers, have the ability to affect their pay through the level of service they provide.  A server who serves customers quickly and keeps tabs on the kitchen to make sure the order is made promptly can gain more income if only because he can serve more customers in a shift.  They will also probably increase their tip income because of the fast service.  Looking at a casual chain restaurant, if a server can serve an average of two tables of four each hour for an eight-hour shift, assuming a $60 bill and a 15% tip, that would be $18 per hour, $144 a night, and a little over $3,000 per month.  That’s over $37,000 per year in tip income alone.  Add on another $5.00 an hour in wage income, and a server could bring in almost $50,000 per year in income; well above the poverty line.

If a server could up her average tip to 18% through great service, that would add another $5,000 per year, bringing earnings up to $55,000 per year in income.  People who are great at customer service could also get hired at the upscale restaurants, where the average checks would increase to $200 or more for a table of four, causing tips to increase proportionally.  Tip percentages might also increase in such a place as people tend to tip more at such restaurants because the service standard is higher.  Then again, there is nothing keeping you from giving five star service at a three star restaurant.

There is a movement started, however, to replace tips with a standard, higher labor rate.  This is being pushed by a group advertising themselves as a supporter of food service workers.  (Note that less than 1% of food service workers belong to this group.)  They believe it would be better to just have employees work for a fixed wage, claiming that the tip system is sexist, among other things.

While it may seem like they are trying to make things better for servers and bartenders, the real motivation is probably more nefarious.  You see, their main goal is to unionize servers and bartenders.  The number of private sector union workers have been declining for years.  (This was in part because many of the plants that had unions closed down and shipped jobs overseas.  Witness Detroit.)  Bringing restaurant workers into a union would swell their ranks again, bringing the leaders high paying jobs running the unions and power over employers and those in the union.  (People always like others to be forced to rely on them, because it brings them power.)  They could then collect union dues from all of the restaurant workers.  Having only wages, instead of tips, would make it a lot easier to collect dues since employees might hide some of their tips in the current system.  The unions would rather be able to take the dues out of the employee’s paycheck before they received it.

Unions also tend to like to spread the wages evenly among all and base things like pay and lay off decisions based on seniority, rather than things like productivity.  The employer would keep the more productive employee over one who had been there the longest, given the choice.  He would also pay the higher producer more because he generates more income for the business.  In a union, the employee who had been there for three years and worked hard would be cut long before the twenty-year veteran who is in no hurry because the employer couldn’t blow him out with dynamite.

In the current system, it is easy for a server to improve service and (generally) increase tips.  The odd thing is that there are so many that do the bare minimum, or even less, when a significant amount of their income depends on tips.  If you work for tips and want to improve your income, perhaps suggest drinks when the customers are seated, but also be willing to come back in a few minutes.  Check back a few times after the food arrives instead of just doing the minimum of taking the order, bringing the food, and then bringing the check.  Notice when the customer is ready for the check so they don’t wait.  This can mean a bigger tip and faster turn-over, which means more customers and more tips.

If you are a customer reading this (which is all of us at some point, please be a good tipper.  If the service was adequate (prompt service, drinks refilled), I leave 15%, usually rounded up to the next even dollar.  If the server went out-of-their way and made my dining experience special, or they do things like scrape my bread crumbs up, I will tip 20%.  If they do like one server did for me and buy candy out of the machine out front of the restaurant when my young son wanted candy on his ice cream but the restaurant didn’t offer it, I’ll tip 30%.  If I use a coupon, I will tip on the pre-discount amount (they still needed to bring two dinners, even if one was free.  I always leave at least $1 per person no matter the size of the bill.  (When my sister worked at Denny’s, the customers who were the most demanding were also the ones who sat for hours just drinking coffee and then left the change from their dollar bill as a tip.)

If you don’t want to tip because you don’t want to spend the money or you don’t believe in the principle of tipping, don’t go to a sitdown restaurant.  Their pay structure is based on people tipping, and you really don’t want to go to a system where the quality fo the service has nothing to do with the pay and bonuses the employees receive (see the DMV for the service that would result).

What are your thoughts?  Any servers out there who make a lot in tips?  Any who think straight pay would be better?

To ask a question, email vtsioriginal@yahoo.com or leave the question in a comment.

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Disclaimer: This blog is not meant to give financial planning advice, it gives information on a specific investment strategy and picking stocks. It is not a solicitation to buy or sell stocks or any security. Financial planning advice should be sought from a certified financial planner, which the author is not. All investments involve risk and the reader as urged to consider risks carefully and seek the advice of experts if needed before investing.

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