If you live in the U.S., you’re well acquainted with the tip jar. Whether you’re running through the line at your favorite coffee shop and dropping in a dollar as you rush off to work, or leaving a couple of bucks on the bar with every round of PBR tallboys at your local dive, tipping is a part of everyday life here in the states.
That’s why, over the past couple of years, the general public has been so taken with news of bar and restaurant owners around the country eliminating tipping in favor of a more European approach to paying service staff: raising hourly wages well above minimum wage, perhaps incorporating benefits like paid time off and sick days and, of course, raising prices to do so.
The move to cut the industry’s reliance on tips took off in 2015 when Danny Meyer, head of NYC’s Union Square Hospitality Group, announced that he planned to eliminate tips throughout his restaurant empire, including at the acclaimed Gramercy Tavern, by the end of 2016. Others followed suit. In 2016, Colorado’s William Oliver’s, San Francisco’s Bar Agricole and Trou Normand, as well as Le Pigeon, Little Bird Bistro and Park Kitchen in Portland, Oregon, all did away with tipping. A number of new bars and restaurants have also opened with a no-tip policy in place, including Westbound in Los Angeles, Atelier Crenn in San Francisco, and TKO in Nashville.
“I still think it’s the right way to go and it’s something I hope that in the long run will become the norm,” says Ryan Wallace, owner of William Oliver’s, which has two locations in Colorado. But it’s slow going—not that you would know it by the attention no-tip policies have garnered from the media. Few establishments have actually attempted the switch, and those that have experienced significant pains doing so.
In addition to the public’s apprehension about eliminating tipping, legislation regarding tipping and pay for service industry workers—particularly tax credits like the IRC 45B federal tax credit that incentivizes tipping—doesn’t necessarily work in favor of those who want to change the industry standard. For that reason, as well as the passage of Amendment 70 in Colorado, which raised the minimum wage to $12 an hour, Wallace decided to reinstitute tipping at William Oliver’s after just 15 months (you can read more about the decision in this press release). And he’s not the only one to go back to a tipping model. Thad Vogler, owner of Bar Agricole and Trou Normand, reinstated tipping after nine months, as did Portland’s Le Pigeon and Little Bird Bistro. Joe’s Crab Shack, one of the largest companies to attempt the switch, moved 18 locations of the nationwide chain to no-tipping in 2015, but then scaled the effort back to only four restaurants less than a year later because of increased labor expenses.
But, even as bars and restaurants return to the norm, there are some benefits to a no-tipping model. Experienced bartenders typically know how much they can make in a night behind the stick, but when tips are the primary source of income, nothing is certain. One of the biggest benefits of throwing tipping to the wind is knowing exactly how much a paycheck will be.
Rhachel Shaw started as the bar manager at Los Angeles bar and restaurant Westbound in November 2017. Though she’s worked in the service industry for years, it’s her first gig that isn’t gratuity based.
“I like it for several factors,” says Shaw. “You always know how long you worked and what money you’ll have. There are weeks when it’s slow and you’re not making any money [with tips], so to have that peace of mind to know that you worked and you will get paid what amount of money is reassuring.”
Eliminating the anxiety that comes with tipping was also an advantage in Ella Grace Downs’ eyes. “The stress of checking every credit card slip for the amount someone left or worrying if it’s a really slow day or if it’s rainy out or if it’s January,” says Downs, a former server and bartender at Union Square Cafe, Meyer’s first restaurant venture. “The stress of the feast or famine is gone, and I also just believe that tips are super arbitrary.”
Even so, Downs left Union Square Cafe in December after realizing how much less she was really making at the restaurant compared to what bartenders made at the former bar, which closed for renovations prior to the no-tip relaunch with revenue share-based income in 2016.
“I worked throughout the year and I think that each week, looking at my paycheck, I’d be like, ‘It’s not that much less than I used to make,’ but when I looked at my W2 this was way less than I made as a server,” says Downs. “If a bartender from the old restaurant looked at it, they’d be like ‘woah.’ They were making around $70,000 a year and a full time bartender [now] would probably make $50,000 a year.”
That nearly 30-percent difference in pay was not uncommon among staff at the revamped restaurant and bar. And when employees spoke to management, Downs says their concerns fell on deaf ears.
“No one had real active answers if we brought it up during staff meetings,” says Downs. “Danny [Meyer] never once addressed us about it. He had other people come and talk to us from the home office and say things like, ‘Sorry, we don’t really know what we’re doing.’ This is our livelihood—none of them were taking a loss. We were the ones taking the loss.”
She claims that management salaries went up across the board, which also prompted her to leave after sticking it out through the closure and subsequent reopening and restructuring of Union Square Cafe. “It made us as a staff bond with each other, but feel really disconnected from the home office knowing how hard we worked to put money in their pockets and not in our own,” she says. Union Square Hospitality confirmed that management salaries did go up during that time, but added that the increase was “not related to our revenue share program as managers do not participate in revenue share since they are salaried.”
Even in instances in which management takes specific care to ensure that their employees’ wages don’t drop dramatically, it doesn’t always work out. When Wallace and the other co-owners at William Oliver’s transitioned the staff to no-tip, he says he “averaged everybody’s pay individually—not as a group” for three or four months. “Then, that became their starting wage. The lowest paid employee we had was $21 or $22 an hour and the highest was $27 or $28.”
But it still didn’t result in high enough hourly rates to match what the staff was making with tips.
“When we went to no-tip I lost quite a bit,” says Josh Green, a bartender at the William Oliver’s location in Fort Collins, Colorado, who’s currently training to join the management team. “I have been doing this a really long time. I’ve got regulars and I know how to provide that extra amount of service that people really look at.”
But, he stuck around. “It did make it difficult on some of my bills, but I adapted and compensated for it,” he says. “I prepared myself for that transition.” Ultimately, though, he was happy tipping was reinstated. “I saw a little bit more of a surplus [in pay when we switched back] and it did make up for the 15 months we were no-tip.”
The loss of instant income also means bars and restaurants that adopt a no-tipping policy are unable to be as competitive as other businesses. Holding onto a staff can be hard.
After instituting a no-tip policy at both of his bars (which he later reversed), Vogler says there was significant staff turnover. Though he hired a “crop of really cool young people who were into the model,” the staff had a 30 to 40-percent turnover twice in the nine months the bar didn’t allow tips. That’s because people realized they could be making 10 to 20 percent more elsewhere. That created significant strain on management working to train new staff. Vogler also adds that most of his “key bar staff” did stick around through the transition.
Downs recalls similar issues at Union Square Cafe. “One of the biggest regulars we had said to me when I left, ‘I’m so tired of learning new faces’ because there had been so much turnover that year,” she says. “It really changes the culture of Union Square Cafe in particular. People had been going there for 30 years and they’d been seeing the same servers for a lot of those and they knew their families. They still have great regulars who we chat and catch up with, but I hope they can retain that sort of spirit.”
Aside from a steady (if somewhat less bountiful) paycheck, there is another aspect of the no-tipping model that those in the industry do like: not having to focus all of their attention on tips.
“Working without a tip system, I think you treat people more fairly across the board,” says Shaw. “There’s no competing or paying more attention to someone because you know they’re a better tipper. It equalizes the level of service.”
But there’s also a consensus that customers seem to feel like they have more control when they’re able to tip and, to some extent, enjoy the attention that brings.
“People want to have that great experience, and for them it’s like, ‘I’m going to control how I get my service and if I tip well I’ll get great service,’” he says. Taking away the feeling that they can manipulate bartenders and servers for tips means that some may feel like they’ve lost a handle on their experience.
Even worse, without tipping in place, some customers seem to feel like service is lacking. “As an owner whose been on both sides of it, I really didn’t see a huge cultural shift in terms of how staff treated the customers,” says Wallace. “I did see a perception from some consumers—a very small percentage—who would come in with a chip on their shoulder because there was no tipping [and] they expected poor service.”
Some bar owners also believe that tipping inspires a higher level and quality of service. “I think it kind of did make staff seem a little less motivated with that [tip] incentive removed,” says Vogler. “That’s hard to substantiate, but it’s just an impression I had. Service is good in the U.S. and I think [tipping is] part of the reason why.”
“I don’t really believe that not having tips as an incentive makes people lazy or bad workers,” counters Downs. “The historical roots of tipping are totally racist and sexist and classist and I think that paying people a wage and giving them raises for fair work is going to professionalize the industry.”
But Downs notes that it’s also going to require an open dialogue between management—or, in her case, corporate—and those who are most directly affected by cutting tips.
“I think if [Meyer] really listens to people and what we wanted it to be and expected it to be then it can be good and positive and there won’t be as much turnover and there won’t be lawsuits,” Downs says. “The rest of the industry can be revolutionized.”
At the beginning of his career, Green spent time bartending in Ireland and Australia, where servers are paid significantly higher living wages (he started off at close to 34 euros an hour at 18 years old) rather than relying on tips, so he’s experienced no-tip systems that work well and are a huge benefit to service staff. He admits he was “relieved but sad” to reinstate tipping after the 15-month no-tip run at William Oliver’s, and he notes his admiration for the management team for wanting to be at the forefront of modernizing the industry.
“I know how hard a decision it was, but the overall relief that I saw when we went back to tipping was good,” he says. But he also says that, “If you can get a healthy wage with no tip I would like to see the states move into that ideology. But will it happen in my lifetime? I highly doubt it.”
Shaw agrees, adding, “The closer we get to not using physical money anymore, the closer we’ll get to non-tipping structures—but it’s going to be a hard transition for everybody.”
Tipping is so ingrained in American culture—and legislation—that it will likely take years to get all the kinks worked out well enough to support no-tip policies nationwide.
“I think the way we’re going to see a successful path to the no-tipping model is as a culture when we stop thinking that gratuity should be a part of wages,” says Wallace, who attempted contacting the Colorado governor’s office to open a dialogue about tipping and the then-proposed Amendment 70. He received a formulaic letter in response.
“It’s frustrating when you don’t even have the support of your local government to really be able to change the face of this industry,” says Green. “It has to start somewhere.”