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Is Denver's Dining Scene Ready to Change the Tipping System to a Service Charge or Salary?

Several days ago, New York Times restaurant critic Pete Wells penned a column entitled "Leaving a Tip: A Custom in Need of Changing?" The article, which advocated doing away with tips as we know them in restaurants, ignited a series of replies in the media.

TipFinal.pngWells's argument is based on a few key points: (1) tipping does not ensure quality service (apparently studies support this assertion); (2) the current system leads to customer profiling based on national origin, age, race, gender and other traits to spot a stingy tipper (this goes the other way, leading to less generous tips based on similar profiling of a server); and (3) a good number of trend-setting restaurants have moved away from the system. These restaurant have replaced tips with either a surcharge (Atera, Chef's Table at Brooklyn Fare, Next, Alinea, Coi, and Chez Panisse) or prices that include the cost of service (Per Se and the French Laundry).

Where does Denver stand on the sweeping changes advocated by Wells? Are we - restaurant owners, waitstaff, and diners- up for such a switch? The Mile High City's dining industry does not always jump on the trend bandwagon; could it take a strong stance on a major change like this one? Eater asked some of the Denver's most prominent restaurateurs to share their thoughts. Opinions from servers and some customers have also been requested. What we got was a little bit of everything - a broad range going from no way to let's do it!

There are many tangents to go off on- tipping when you sit at the bar, when a barista brews your cup of Joe, when you order take-out, and so on. While worthy of a talk, those are not part of this conversation. For purposes of this discussion, the focus is on tipping as a diner who sits at a table and has a meal serviced by a wait staff person in a restaurant that is more than a hole-in-the-wall or college bar. Then there are the other tangents- what about taxes and regulations and possible law suits? Let's pretend like someone can work those out and just take the pulse of the local dining scene: would or should Denver change its tipping ways?

Some restaurants are already doing things a little differently. The tip pooling system found, for example, at Frasca Food and Wine, collects all tips and distributes them to servers every two weeks like a salary.

Bobby Stuckey, master sommelier and co-owner of Frasca Food and Wine explains:

The Frasca system is different than many other restaurants. Our servers don't take home cash tips. All gratuity goes in their paycheck, every two weeks, like a salary. Some weeks the checks might be bigger and some weeks they might be smaller. Everyone that's part of the tip pool has tips added to their paycheck. I don't think we have considered going to the system that we had at the French Laundry. There, all service charges go to house and everyone is paid a salary from that.

While we have not considered switching, we have acknowledged that it's crazy that a server can make more than a manager since the tip pool is so high. The real question is: How do you take care of upper management when the tip pool is so high? That's a problem across the board in the service industry – waiters making more than a general manager. There's an interesting piece to that – the golden handcuffs. It takes a forward-thinking front-of-house person to take a pay cut to become an assistant manager or assistant sommelier and learn that skill set. Later on down their career, they might make more money and have the skill set that enables them to move forward.

If we were to change it, it would go to a salaried position (like the Laundry): the tip pool goes to the house, and people are paid from that- it's the only other option. It's a sticky situation. The service industry is a really tough industry in our country; most service staff are already not treated with enough respect. If you don't tip or compensate the service worker, we won't have staff to work these positions. The restaurant industry is easy to pick on unless you're living in it daily, nightly, weekly. Whatever happens, I hope it doesn't hurt the craft of hospitality.

The Kitchen - and its family of restaurants- also uses the tip pooling system. Kate Kaufman, general manager at the Kitchen, explains why that works for them.

We have never considered drastically changing our tipping system at the Kitchen. We feel strongly that pooled houses like ours create a team atmosphere were all servers help each other, and have a vested interest in all guests having a great experience. If it would change to an hourly or salaried situation, it becomes very individualistic. A possible change here would be to roll tips into the prices on the menu, so the value of the experience is an all-in -feeling.

Chef Jennifer Jasinski, who co-owns three successful Denver restaurants - Rioja, Bistro Vendôme, and Euclid Hall with her business partner Beth Gruitch, sees a change happening on the horizon, but does not believe Denver is ready for it.

I don't think we are ready for this change yet in Denver. The list of places that do this are super exclusive and expensive. I do think change is on the horizon with tipped employees. With the Affordable Healthcare Act, businesses are going to insure people and we need to know accurately what their income was, not just what they report. But I am not willing to say we need to do away with tipping. I do agree that tipping has become more just flat-out expected versus a percentage based on quality of service. I also do not tip less than 20% and, as Pete Wells mentioned, I don't think that is always a representation of a better meal or better service.

For her part, Beth Gruitch, Jasinski's partner, feels more strongly about keeping the status quo as is.

I do believe that tipping should be at the discretion of the customer. If someone puts it out there to be attentive, listen to the guest, and go above and beyond with service, then yes, they deserve to be paid more. If service staff becomes salaried, I believe this could enable staff to become complacent in certain situations. Fine dining and high caliber restaurants could include service fees since there are typically many people needed that make the whole experience work, but, in general, tipping should be left as it is. T.I.P.S. = To Insure Proper Service. That is probably not the real definition for it but it works.

Frank Bonanno, who owns eight Denver restaurants (Mizuna, Luca d'Italia, and Osteria Marco among them) sees the system as positive for both the customer, who gets to be generous, and the waitstaff, who is incentivized to work harder.

Of course tipping is a flawed system. Every wage system, no matter the industry, has its flaws, though. I'm going to quote Steve Martin from My Blue Heaven: 'It's not tipping I believe in, it's over tipping.' It's such a uniquely American habit – a reflection of a culture of generosity. Yes, it's problematic, at times inequitable, but it empowers some to increase their earning through sheer professionalism and speed. It gives the rest of us a moment, over a cup of coffee or a sip of grappa, to be That Guy, the generous American who gets to spread the love. Don't tip. Over tip.

John Broening, executive chef at Le Grand Bistro and co-owner of Spuntino, is open to the idea of a service charge.

I have nothing against a service charge: my only problem is if it's 20%. Even though I usually tip 20% , I feel like you have to earn it and find it a little presumptuous if it's automatically added to my check. I think an 18% service charge is more equable. There are two arguments against a service charge, one made by customers and one by servers.
The argument made by customers is that we should be free to penalize bad service. The argument made by servers, especially the superstars, is that they would prefer to take their chance on the open market, where they believe they can earn higher tips than a built-in 18 or 20 percent.

While Tom Coohill of Coohills is open to the idea of having gratuity added to the check, he sees several issues with moving servers to a salaried position.

I could go either way. I don't have a problem with having gratuity added to the check Euro-style. We already add gratuity for larger parties. As far as paying the servers a salary and keeping the service charge for the house, I don't think that would work in most cases. If you are doing the same amount of sales every night and the servers are working the same schedule every week, you could do a pooling of the gratuity-type system. But if your sales are up in the fall and down in the summer and you are using less servers during the slower times it makes it harder to make that system work. Also if your paying a salary it would effect your tax structure greatly. As far as tipping out the kitchen in some way, I'm not opposed to that but it would need to be a universal system nationally to make it work.

Chef Paul Reilly of Beast + Bottle sees the glass half full on this and believes that a change to a salaried structure for servers would actually increase efficiency in payroll for restaurant managers and help retain staff.

We want to make a change but its not staring us in the face quite yet. The major draw has two elements. First: efficiency. Front-of-the-house managers spend hours every week counting tips and distributing them when they could be do other office work to make the restaurant better. Second: servers do depend on their salaries so why not ensure they're getting the money the need to live on? A slow night is one thing, but when a restaurant has a slow run, especially in summer months, it affects servers greatly. It might lead them to seek a second job or worse, leave for another restaurant. Getting them salaried would be locking them up. Like all "trends" in American restaurants, I believe this will catch on and become more common, especially in higher-end restaurants, but I still can't see it taking over the entire industry.

While tipping high may not ensure quality service per se, the fear that you may tip low, could entice your server to behave. Because the customer is the master of that tip, the server needs to perform and please the customer to earn it. Some of Denver's service industry professionals have chimed in.

Brian Melton, a well-known Denver bartender most recently at Old Major, believes that a salary and even the tip-pooling system means no incentive to do better as a server. But, as a seasoned veteran, he would welcome a change that would acknowledge the service industry as a career and offer those committed to it the benefits of any other job from sick days to a 401K.

In a pool house, which is essentially what you're discussing, if you do away with typical tipping practices to a fixed amount on the check, employees receive 100% of their money through checks every week or two. Your entire income is taxed and everyone makes essentially the same. So there really is no incentive for someone to go an extra mile or two, unless you change the game- unless you give a professional a reason to stick around and cultivate the clientele - unless you incentivise them somehow.

When I was in my 20s, I didn't care about my credit score or showing a certain level of income. I just wanted to bartend, make a ton of money and hit on girls. But at 34, I want to buy a house and start a family, so reporting an accurate income is important to me. But that means I'm taxed on everything I make, which lowers my monthly income. Meanwhile, I'm getting old. My body doesn't operate like it used to and my back and wrists constantly throb after a night's worth of work. I have no health care. I have no 401k. I have no paid sick days. I make $4.75+tips. Everything I need as a grown adult I pay for on my own with a reduced income.

I have elevated myself to becoming one of the best in the industry, learned a craft, and so my priorities have changed. I want to help cultivate a culture around me, not sling beers and shots until 2 in the morning. I want to go home to my wife at a decent hour. But the trade off is that the a 22-year-old waitress at Lodo Tavern is pulling 10-15k more a year than I am and not reporting 80% of it. The trade-off would be fine if we were treated like professionals, given sick days, insurance and help preparing for the day we can't stand for 10 hours behind a bar anymore. But we aren't given that option because our money comes from tips. I make the same per hour as the 22-year-old. And no offense to her, but I've worked harder than she has. I deserve to make more money. But those of us who are relegated to accepting a 15% tip because the guy on the other end of the table thought his steak was over-cooked are forced into a corner. We are targeted by vicious Yelpers who demand their every need be met by someone they read about on a blog. We participate endlessly in charity events, fight for our city in cocktail competitions and help our restaurants win local and national awards. But why? To simply make less pay? To wonder how we're ever going to retire or see a dentist?.

Long-time service professional and Eater contributor Laura Saffioti see the serious challenges posed by changing to a salaried system.

I think it would be incredibly challenging for many restaurants to pay their servers/bussers/etc. a substantial wage or salary when they already struggle with this when it comes to paying cooks and often times managers. I have worked for tips for over 15 years and sometimes I'd really like to not have to work for tips. It would be great to earn a good salary, come into work, leave feeling like I did my best and knowing exactly what I would make. I wish it wasn't so soul-crushing when I receive a bad tip, but it often is. That said, I think many service professionals wouldn't hang around for very long if their take-home pay was significantly less.

Tip-pooling can create a good sense of teamwork, but only when everyone is working at the same level. If not, it can create animosity. I think it makes sense for some restaurants, but not for all. Some larger restaurants have trouble with tip-pooling, because it's easier for slackers to hide in a big space, and there's just more people that need a piece of the pie.

Sarah Gore, a customer service and marketing consultant for the service industry shares her thoughts from two perspectives - that of a former server and that of a customer.

Do I believe a "service fee" is the answer to the issues we have with tipping? No. TIPS – To Insure Proper Service. At the age of 20, I made almost 35K a year as a waitress. There is no way I would have made that with an hourly pay or salary. I took my job seriously and worked as a team member with other employees and always felt good about tipping them out at the end of the shift. The system we had promoted team work and gave us a goal to strive for. By providing quality service, engaging the customer and upselling, we made money and the customer left happy.

Servers need to think of their job as their own little company within a company. Every new table is an opportunity to create more profit for them (and the restaurant) and the others they tip out. Upselling can play an important part in the bottom line of a restaurant. What is the incentive to upsell, learn the customers' needs and provide excellent service if they cannot control the outcome?

The above-par server will want to control that situation and they are willing to go over and above all the time. The average to below-average server generally does only enough to get the customer seated, served, and billed with no memory points in between. A quality team can provide better service and repeat business with less overhead and less employees and the customers have a sense of ownership in what they tip for a great experience.

Eric Elkins, a frequent diner in Denver's restaurants, speaks as a guest who enjoys the generosity that the current system allows him. Elkins, however, acknowledges the inequities of the system and unfairness of servers being at the mercy of tips to make a living wage.
My father taught me when I was 8 years old how important it was to tip correctly. If we stayed at a hotel, I would bring my sisters down to the restaurant for breakfast in the morning, so it was important to my dad that we behaved properly. We might get treated with a bit of disdain that first morning (until I signed for breakfast and added 15%), but, the next day, the server would be especially kind to us.

I love tipping, and it's always a minimum of 20%, even if the service is shitty. I know how hard it is to work in food service, how low the pay can be, how crappy the hours, how stressful the clientele. And I dine out often, so I want to reward the people who take good care of me the best way I can. With cash. My 13-year-old daughter understands how to work out the tip, too.

But, that said, I haven't given much thought to the inequities of the system and I do agree that back-of-the-house folks deserve to be on equal footing. It is a big responsibility to think that the service industry is at the mercy of tips to pay their rent and I would gladly pay an 18% surcharge, with the option to add a few extra bucks for exemplary service. It would take some serious adjustment for me to stop tipping altogether - even when I travel to countries where you aren't supposed to tip, it always feels weird to leave without leaving some cash on the table. But if there were a win-win solution and it worked with the dining culture, I'd be willing to give it a try.

Jeremy Kossler, founder and organizer of the Denver Burger Battle, feels strongly about the necessity of changing the current system and providing stronger safeguards to compensate service industry professionals. Here's his rant:

I've been reading quite a few articles on this subject and some of the most interesting part to me were the comments. It's really eye opening the vast array of opinions on this and the mis-information that's out there. People often think of the tip as a reward for going above and beyond with good service. Very misguided. When you go out to a restaurant, you're purchasing two things: food and service. The food portion, which also includes cook salaries, rent, electricity, water, insurance, etc is all rolled up into the prices on the menu and then in the check. The other - service - is not. Let me repeat that: the bill that you get at the end of the night does NOT include the charge you rang up to be professionally served. For all realistic purposes, the servers are not paid by the restaurant. The $4.75 tipped-hourly-wage that restaurants (even high-end) pay for wait staff just about covers taxes on tips and results in a $0 paycheck or below. It is up to us, fellow diners, to pay for service, provide the paycheck for those working to wait on us. The current "tip" - a seemingly optional, wide-open, discretionary system allows people to decide how much and IF they will pay. It is a license for diners to arbitrarily determine a server's wage after the service has been rendered. It's like eating a full meal and deciding how much or IF you want to pay for it. That is what the "tip" has become. This is no way to treat an entire class of workers.

There are a few more reasons I find the current tipping to be in need of a change:

(1) It leads to discriminatory outcomes. Statistically, blacks get tipped less than whites, people in their 20's get tipped less than people in their 30's, and women with certain features get tipped more than other women lacking these... ahem... features regardless of performance. A service fee would completely eliminate diner bias and stop the discrimination.

(2) The tipping system does not bring better service outcomes. This is the big concern. Most opponents of a service charge argue that tipping will ensure that diners get better service since they're in control of the tipped amount. There is almost no statistical relationship between tip amounts and service performance. The scholarly work on this is extensive. The foremost expert, Dr. Michael Lynn of Cornell University, found a 4% correlation between the two - almost non existent. You don't get better service because you tip 20%. The good news is that the service level doesn't drop off once you stop dangling the "no tip" threat. UBER is a taxi company that moved to the mandatory service fee model instead of tips. Their drivers are universally praised for their friendliness and good service, even though they don't stand to gain extra money from it. Good service is all around us, and the reasons for it are varied and rarely attached entirely to additional money. It's the way they were trained, or their work ethic or the culture of their leadership, or the friendliness of their customers, or their pride and professionalism. As long as they're paid well (which a service fee would allow) they will do their job, and if they won't they'll be replaced with someone who will.

(3) The tipping system allows for tax cheats, and the service fee model reduces them. This is self-evident since we lose millions each year in unreported cash tips. A service fee would require the restaurant to report this income since it's on the check and ultimately would benefit the server as well with a higher credit score, etc.

(4) The tipping system doesn't get complaints conveyed to management. Got bad service and want to make a statement? Leaving a bad tip is just about the worst ways to communicate that. But, that's exactly the way it is today. When a waiter sees a bad tip, they're more likely to think the diner was a cheap tipper than unhappy with a certain element of service. And even when the waiter connects it to a lapse in service - do you think he's really going to tell his manager about your bad tip? Mandatory service fees may not enable diners to punish bad service, but at least there is an understanding that complaints need to be voiced to management (where they have a chance to learn from it), as opposed to a silent and misunderstood stiff of the check.

(5) The current tipping system doesn't reach all the right people. The truth is that when you leave a tip for a waiter, that tip is generally split between at least 2-3 other people such as bartenders, runners, hosts, sommelier, etc. Your tip, however, is not split with the cook that prepared the meal. He makes minimum wage or just above. If you stiff the waiter for not refilling your water, you're also stiffing 2-3 other people who are counting on this income to pay their rent and may have done an excellent job at your table. In a "service included" model, that money is certain to go to these service professionals.

I advocate a "service-included" model with a good hourly wage for servers. I'd actually like to see the prices on the menu to include the service fee, but I understand how that could be a sticker shock to the diners.

In a recent article, Denver Post restaurant critic Bill Porter is categorical in his belief that the system won't change any time soon. Says Porter:

Tipping may be an outmoded and unfair way of paying someone -- and there is a small amount of industry buzz about whether restaurant workers should be salaried, or tips built into the check -- but the bottom line is that this system won't change any time soon, not in this country.

What do you think? Can we or should we move away from the current tipping system?

· Leaving a Tip: A Custom in Need of Changing? [NYT]
· Waiter Advocate Offers Perspective on Tipping [Restaurant News]
· IRS Rule Leads Restaurants to Rethink Automatic Tips [WSJ]
· Ask the Critic: Here's How Tipping Actually Works [Serious Eats]
· Tips For Tipping: Just How Much Is Fair? [DP]


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