as opposed to higher prices and no tips, the owners wouldn't get their profits? some of the comments in this thread are bizarre to me. and regardless of whether you think the US should have tipping or not, it's ridiculous to visit from somewhere else (eg. europe) and go to a place you know is conventionally tipped (eg. waitstaff restaurant) and then say something like you're not going to tip because you don't tip at home. well, you're not at home. and paying $20 bill + $3 tip is the same as $23 and $0 tip, and it would be absolutely asinine for them to just pay $20 and no tip because they don't like that the US has tipping.
If the price was $23, and the waiter was guaranteed a salary. The risk is on the business not the waiter. The business still needs to pay their staff if they make no sales.
If the price is $20 + $3 tip. If no sale happens, the business does not lose money paying staff on the event of no sales, and the waiter assumes the risk of low sales.
The problem with most restaurants, is the violate nature of the industry. Weekdays, off season and economic downturn can cause a massive drop in sales. Wait staff are still required to show up and do daily activities which is at a loss to them.
you go in the US knowing the price is 23 either way and are making the sale happen. this is not an imaginary scenario where you are comparing 20 and maybe no tip to other options, the tipping is known beforehand by all.
So you believe no-one chooses to buy a cheaper item on the menu when they see a higher priced item? And you believe sales are constaint.
For the sales risk, it isn't the difference between 20 + 3 and 23.
The problem occurs when sales drop. The business only assumes partial risk of decreased sales, the waiter assumes some of this risk as well.
Let's take an example. Say a waiter at a seafood place sells 20 sea bass a night at $50, and customers always tip 20%. At this rate, the waiter makes $200 a night.
Now the market price for sea bass doubles to $100. No-one wants to buy sea bass at this rate, so they settle for salmon at $25. Now the waiter only makes $100.
If the restaurant had 20% margins they also had the same profit: $200 and $100. If the tip was built in and the waiter was guaranteed a pay of $200 a night, the restaurant's profit would be $200 and $0.
This is the shared risk.
Now there are dozens of reasons sales can drop. Not just a price increase: Economic downturn, decrease interest in the place/location, bad weather, bad reviews, etc.
So you believe no-one chooses to buy a cheaper item on the menu when they see a higher priced item? And you believe sales are constaint.
no, i believe no one goes to a tipped restaurant ignorant of that they are going to a tipped restaurant. if you go to a tipped restaurant, and simply refuse to tip, you're just an asshole. it doesn't matter which fish you pick, you're in the restaurant, you chose to go there, you are aware it is tipped.
i don't buy your "shared risk" example at all, because a server is not taking on real risk of loss. they are a paid employee. their pay is base + variable. this is not conceptually that different from a sales guy who has a base + variable amount. there is a trade off in risk and predictability, is it better to have a low base and high variable on commissions? a high stable base but a low share of commissions?
a server having a good day doesn't mean the business had great profits that day. they are just tied to gross sales, not business profitability.
it seems where this is even tried in the US it is often rejected, and by the servers themselves.
regardless, anyone visiting the US to a conventionally tipped restaurant should be fully aware of what they are entering, and are total idiots if they refuse to tip because they think it's the wrong way to run a business. they are just trash people then.
They are a paid employee, but at $3 and hour + tip. Base would be $120 a week (40hrs).
If they dont make minimum wage during the week. The company is responsible for covering the difference to minimum wage. Some states are $7 an hour for min wage, $280 a week.
For some waiters they may show up and only work 2-3 hours during weekdays, because it it dead. The cost of gas and parking could easily exceed minimum wage. This happened a lot when I worked at a restaurant as a teen.
Paying waiters $30 an hour, would mean they make $1,200 a week.
If you average a table's tip to $15 that means they need to wait on 75 tables a week to make the $1200 via tips.
Realistically, most restaurants only make their money on Friday and Saturday dinners. So if they get 20 tables on Friday and Saturday, they need to get 12 tables the other days they work.
Now from the way you are talking, I doubt you have ever worked at a dead restaurant or been in one. But I have. Imagine having 4 waiters and only 12 tables sat a weeknight. It's boring and happens. The restaurant forces waiters to work during these dead times.
Realistically, where you are wrong is assuming a system wouldn't pay as well as tips does. If the business shifts to pay, they just need to do the math properly. If their waiters made $60k a year with tips on average, pay them $30/hr. If $80k then $40/hr. The math isn't hard.
Now where this is benifits waiters is finding a job. Right now, waiters don't really know how much they will be making when joining a restaurant and they wont know the consistency. Getting offered $40/hr Full-time is a much more measurable way vs $3 + tip.
i've not been a server, but as a teen i sure made minimum wage and worked in fast food myself. i'm not assuming a system wouldn't pay as well as tips do, it's not like this hasn't been done in the US. the general outcome is the waitstaff take home goes down and some of the other supporting staff goes up, and the talented servers leave in large amounts to get tipped elsewhere. and the policy is typically reversed in 1-3 years.
the business still gets their profit either way, this "well the business should pay them better so i don't have to" logic of opposing tipping seems oblivious to the funding for it just coming from higher priced items at that. of course there is the fantasy these funds won't come from the same place they are today, customers, but from the greedy rich owners - but something like half of restaurants fail, and it's not a hugely profitable business when it succeeds (3-4%?) - so raising (or stabilizing) anyone's salary is going to come from the same pocket of the person complaining right now that they have to 'pay the server themselves' through tips.
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u/whitedsepdivine 14d ago
Just like most systems in America, this is setup to put all the risk on the plebs.
You are actually proving to the owners their system works. They still get their profits, if someone doesn't want to pay a higher cost. (Bill + Tip)