Working for tips has long been an American tradition. For those willing to put up with the long hours, tired feet and crazy cast of characters only found in restaurants, the shift-ending wad of cash was sometimes the only way to pay tuition or rent. But like many good things — early rock n’ roll and pre-cable college football come to mind — the practice of tipping seems to be on precarious ground.
Mostly due to the Internal Revenue Service’s pending change to how it views automatic gratuities, there’s been lots of discussion in the media and blogosphere lately regarding restaurant tipping. Come January, the IRS will view the 18 percent gratuity added to a party of six or more as income rather than a tip. This means more tax exposure for restaurant owners. Many are eliminating the practice of adding an automatic gratuity or service charge to a bill.
The resulting clamor has opened a broader debate around the practice of tipping: Should it be eliminated altogether? The argument against tipping is that it poses legal and tax issues, especially where management pools tips and distributes them via an employee’s paycheck. Most tips generally stay in a server’s pocket, leaving kitchen staff out of luck.
A few high-profile and independent restaurants have eliminated tipping in lieu of higher wages for staff. That practice has not won widespread industry acceptance, because higher payrolls are tough to swallow for any segment other than maybe upper-end restaurants with higher check averages. Still, other restaurant owners have increased menu prices or added a service fee to offset increased wages. That too has fizzled, confusing customers.
Tipping is subjective and sometimes unfair. It involves money. There will always be someone or some movement looking to upend or change the behavior. In my opinion, tipping is here to say. The brouhaha will blow over. Most restaurants cannot afford the higher wages that would result. And why mess with a good thing? Right now, consumers cover the difference in a waiter’s pay between the $2.13 per hour that most make and the $7.25 minimum wage restaurants would have to pay in a tip-less environment.
What is more likely to happen is that consumers, fed up with having to tip for the hit-or-miss service at their popular neighborhood eatery, will continue their migration to the fast-casual restaurant where tipping is not part of the equation. More and more, diners who see little or no difference in food quality are opting for the limited-service offerings found at these places. As our lives become busier, the occasions for a sit-down, full-service dining experience are becoming less numerous.
Is it possible that it is not the tip going away in Georgia, but rather our local chain steakhouse?
Todd Semrau is owner of Atlanta-based Urban Eats Consulting Group.
