The Ethics of Tipping in the Restaurant Industry: Pros and Cons of Alternative Models

According to the U.S. Bureau of Labor Statistics (BLS), a waiter or waitress makes $15.87 an hour on average, or $33,020 per year. Similarly, delivery workers often rely on tips to cover their living expenses. 

However, here’s the thing. Tips are available to every eligible restaurant industry worker. However, the experiences employees have trying to get them are vastly different, and this can depend on the employer’s choices. 

Let’s explore the restaurant industry’s ethical issues surrounding tipping in more detail, and also review some alternatives to provide a better experience for your customers and staff alike.

Ethical Issues Around Tipping That Are Affecting Workers

It would be ideal if all restaurant industry workers had to do was provide quality service and the tips poured in equally for each one. But sadly, this is far from most restaurant workers’ realities. Ethical issues around tipping have made the experience tough for many. 

Historically, research has shown evidence of discrimination toward Black workers, with certain races tipping them less than their white coworkers. There have been so many studies that the argument that tipping is a discriminatory pay practice has surfaced. 

Unfortunately, some individuals may mistreat people of a specific race due to racism. This can lead to unfair treatment or inadequate tips for restaurant workers of color, even if they have provided exceptional service.

Finally, tips often go to the servers and delivery workers. But what about the kitchen staff that prepared the food? Or the busser that cleaned and prepared the table? Or the hostess who politely sat at the table? It takes effort from the entire team to ensure the customer has a great experience. 

Many employees are relying on this point to push for a shared tip policy that includes everyone or a way for patrons to choose where tips go. Of course, a lot of workers aren’t too fond of the idea, creating rifts within the team that affect the restaurant’s operation. 

Also, it could be as simple as customers experiencing tipping fatigue or not having the means to tip. Whether or not the employee provides exceptional service, they were going to be tipped very little, if anything at all. Because customers don’t choose the servers they get, this could affect any one of your employees, adversely impacting their tipping experience. 

The tipping experience isn’t the same positive experience for everyone. But maybe these alternatives can turn things around. 

Consider These Alternatives to Traditional Tipping 

It’s fair to say that the traditional tipping method isn’t creating the fair, ethical workplace environment that’s ideal for a successful restaurant like it should be. So, it’s wise to experiment with alternatives that may help you develop an environment like these two. 

Adding a service charge 

A service charge is essentially an extra charge for the service the restaurant is providing patrons. Customers are typically required to pay this fee but also have the option of tipping. 

By adding a service charge to the bill, restaurant owners can guarantee something goes to their employees, regardless of whether a customer tips. But the drawback is that whether or not that amount goes to workers is entirely up to the owner. 

Also, it’s for people to dislike service charges. This is because being forced to pay for something without any say in the matter can be unsettling. Losing customers because of service charges is a very real risk. So, approaching service charges cautiously and strategically is a must. 

Folding tips into menu prices 

You could do like many restaurants and experiment with eliminating tips. The secret is folding an average tip amount into menu prices. That way, tips are still accounted for, and the restaurant is still making money. 

However, taking away tips can deter top talent from working at your restaurant. Many people rely on daily tips to survive and save, making your restaurant less appealing to them. In addition, upping your menu prices could turn off customers. 

In order to implement this alternative, you will need to come up with a strategy for attracting workers to your restaurant without relying on tips. Further details on this will be provided below. Additionally, it is important to be considerate of your customers when increasing menu prices, ensuring that they are still within their means.

Work on Other Ways to Attract and Retain Workers 

Working on other ways to attract and retain workers is critical, especially if you eliminate tipping. Designing a compensation strategy that outlines how each employee benefits and pay can help you do this. 

Begin by offering a competitive base salary to your employees. Afterward, consider providing additional benefits and perks to ensure their well-being, such as wellness benefits like free gym memberships, access to mental health resources, and flexible scheduling.

You’ll want to cover how to create a positive work environment for your employees. For instance, fostering open communication can lead to great working relationships that allow for conversations around wage, tip, and work environment issues. Offering meaningful job responsibilities and opportunities for advancement contribute to a positive work environment too. 

The ethics of tipping in the restaurant industry is an ongoing conversation that we must keep up if things are to get better. Restaurant owners who consider alternatives to traditional tipping and strengthen other parts of their business to attract and retain talented workers are more set up for the future of the restaurant industry than those who don’t.