Restaurant Eliminates Tipping to Improve System Performance

Why Tip? by Paul Wachter

When he opened the Linkery [the broken link was removed], Porter said, he hoped his employees would become as emotionally invested in the venture as he was, sharing a sense of purpose and joy in their work.

Porter instead proposed a service fee of 18 percent, to be pooled and split roughly 3 to 1 between the restaurant’s front of the house and its kitchen.

Porter, like the anti-tippers of yore, was persuaded tipping itself was pernicious. “If you have a fixed gratuity, but people are still tipping, then you’re back to Square 1 in terms of the money dynamic,” he says.

The restaurant was already paying 65 percent of its employees’ health-insurance premiums, and Porter was working on a scheme to give long-term employees ownership stakes in the business.

But Chelsea Boyd told me that eliminating tipping had made her work as a waiter at the Linkery more meaningful than any other restaurant job she has had in the previous 10 years. “For the first time, I get to concentrate on the job, and I’m looking at the guests without seeing dollar signs or worried about what anyone else is making,” she says. Under the old system, waiters earned between $25 and $35 an hour, much of which was untaxed. “Now, waiters make about $25 an hour, which is fully taxed,” Boyd says.

Renee Lorion, a former waitress at the Linkery who now works in publishing in New York, liked the new anti-tipping policy too. “As servers, we all took a pay cut, but we knew it was for the general health of the restaurant,” she told me. “What made it work is that Jay was very transparent about the restaurant’s finances.”

Obviously, the kitchen appreciates the new policy. “Earning three or four extra bucks an hour makes a difference,” Matthew Somerville, a cook, says. “In most restaurants, there’s not a close relationship between the front and the kitchen. But here you don’t have that tension, where waiters are trying to accommodate customers’ special requests, while the cooks doing the extra work don’t see any of the tips.” Today, Porter’s employees appear almost as fervent in their opposition to tipping as their boss.

The single most important factor in determining the amount of a tip is the size of the bill. Diners generally tip the same percentage no matter the quality of the service and no matter the setting.

In his one concession to big tippers, Porter offers them the option of donating money to charity. The Linkery’s charity of the month is printed on the menu, and in two years more than $10,000 has been raised for various causes.

This is an interesting article discussing some of the psychological and systems thinking aspects of managing a system made up of people.

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