Pros & Cons of a Restaurant Going Tipless

Restaurant-Stock-ControlThe practice of tipping in South Africa is well established and until the introduction of minimum wages, was often the only income waitrons earned.

Although tipping recognizes good service, it doesn’t benefit all staff.

By comparison, several European countries and some U.S. restaurants have a policy of paying staff a salary with benefits including medical aid and annual leave; tips are not included as part of the package.

Although food prices are increased to cover costs, owners believe this is more equitable and improves customer service.

Traditional Tipping

Before considering a tipless system, it’s worth looking at some good and bad points of traditional tipping.

Firstly, tips are not considered part of employees’ wages so restaurants must in any case pay the minimum wage. Secondly, waitrons earn the most tips and other staffs don’t share in these tips unless tip sharing practices are adopted; if not, tipping creates a disparity that could cause friction.

On the other hand, a skillful and motivated waitron that enhances the dining experience and draws clientele to the restaurant is rewarded for good service through tips.

Pros of Not Tipping

The most obvious benefit is that all employees can be equally and fairly rewarded for their contribution towards running a successful restaurant, and not only those who directly deal with customers.

Employees have the security of knowing how much they will earn as their income is not dependent upon the need to work the “good” shifts. Better working conditions invariably lead to lower staff turnover and in turn to improved service through the employment of experienced staff.

Patrons know they don’t have to pay more than what is shown on the bill and are saved the embarrassment of calculating a tip in front of their guests and the waitron.

Cons of Not Tipping

On the negative side, it may be more difficult to manage staff performance and morale as the direct incentive for good customer service has disappeared. This in turn places additional pressure on management, who may be faced with having to discipline staff and find new ways of motivating them.

It’s also likely to lead to higher prices for food, which could drive customers away who don’t immediately comprehend that the price includes a service charge in place of a tip.

It’s worth noting that some patrons enjoy tipping waitrons for good service and will not welcome the change.

Going Tipless Needs Careful Consideration

As with any major decision, it’s necessary to carefully evaluate the pros and cons of going tipless.

Changing to a tipless system means paying staff a higher wage and this increases the risk for management, especially as the higher prices could lead to fewer customers.

On the other hand, it gives management more power to manage the restaurant effectively and removes a potential source of conflict. The acid test is the extent to which it succeeds in increasing employee motivation while simultaneously enhancing patrons’ satisfaction.

What strategy does your restaurant employ? Leave a comment below.

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