Why Leave a Tip?
I've had many conversations with friends about the complexities behind tipping. Some people think it's a very simple concept - but to many it can be somewhat of a psychological burden. It's an awkward feeling - especially if only one person at the table is paying the bill. As I mentioned above, individual checks can cause some discomfort, especially in a large group.
In the United States, the average tip is 15-20% of the total bill. About five percent of people tip 25% or more, while one in eight people tip 10% or less. Studies also show that people who work in the service industry generally leave a higher gratuity (about 20%). Some places even add gratuity automatically, usually when there are large groups (sometimes it's very discreet that you end up tipping more without realizing). For convenience, many people double the sales tax as the tip (New York City - 8.375% tax rate equates to almost 17% tip).
Some countries are similar, while others differ. In most Asian countries and Australia, there is generally no tipping in restaurants. In Mexico, the tipping standard is very similar to that of the United States. In many countries, such as Colombia, a 10% tip is included in the bills. For many countries across the planet, I have seen that tipping is rare.
I never fully understood the concept of tipping. I believe that the menu price of the food should already reflect the price of service. The prices are already jacked up so much, why do we have to pay even more? And adding another 15 to 20% is a lot. Rather than paying waiters a fixed amount, restaurant owners pay them a very small wage (around $2) and they depend on tips to earn their money. The reason why I tip is because it has evolved into a social norm and waiters get paid so little. Even though people say leaving gratuity is an option, it's implied that you have to. Usually when you leave anything less than 15%, you get dirty looks. That's what I hate the most about eating out - paying almost 20% more of on top of a meal that's probably marked up 75%.
What bothers me even more are when restaurants include gratuity already (usually 18 or 20%), and then add a line for additional tip. I thought the whole idea of leaving a tip was at one's own discretion, based on their opinion of the service. It seems pretty hypocritical to already add a tip (sometimes restaurants called it service fees) to my bill. I understand the reasoning behind this is to protect the waiter from large groups being cheap, but it still defies the purpose.
And if a significant majority of people leave at least 15% of tip, then what is the restaurant worried about? It's being greedy and unfair to hardworking customers if you ask me. Paying an 8% sales tax, and a 20% tip on an inflated bill can be a financial strain. After taking into account tax and gratuity, you are paying close to an extra 30% on top of the subtotal. Some restaurants will include the "service fee" but make it very discreet on your bill. I know many people that have fallen into the trap of tipping double.
There is one benefit that people agree on; tips force waiters to work hard. Since their wages are pretty much determined by their performance, they are forced to practice excellent customer service. In theory, most people should perform better in situations that have a positive reward as an incentive. However, in many restaurants I have seen the contrary - many waiters still slack and act rude. But according to the unwritten social code, we still have to leave at least 15% tip. Anything less, is considered cheap, despite the quality of service. If you aren't going to provide me with good service, then don't give me dirty looks when I leave you a small tip.
Ideally, waiters shouldn't have to have an incentive to perform well at their job. They should be hired because they either enjoy customer service, or they have excellent customer service skills. The job responsibility should already imply that as a waiter, you provide topnotch service to your customers; that is what you get paid to do. Waiters should be paid a fixed rate, with the opportunity to receive a bonus from the employer (that could be an incentive - similar to corporate America). This belief should apply to all types of similar jobs (hotel workers, cable guy, movers).
Most jobs in corporate America don't offer stock options unless you have a very prestigious position. For most people, the incentive to work hard is to further their career and reach financial success. This concept should be applied to restaurant wages. I still don't understand why waiters should be given an incentive to perform well on their job. Shouldn't this already be implied? This pricing model probably saves the restaurant some labor costs, but isn't it a bit unethical to place the burden on customers? If you must, include a smaller service fee, or don't expect customers to leave nearly a fifth of their total bill as a tip.
Of course, we don't live in an ideal society. At the end of the day, it probably is better for the business to use this type of earnings model - restaurant owners are obviously going to use the most profit mechanisms. I just don't agree with the reasoning behind it and hate being forced to pay 15% more, even though "it's optional".
It would be interesting to compare customer service ratings in the United States (or other countries that use a similar model) to countries that don't collect tips. Although there may be variables that affect the data (international differences), we still may be able to see if customer service quality differs. We would also be able to take this further by analyzing overall wage, profit, and other key differences across countries.