Thoughts on Tips vs No Tips

The media has exploded recently (at least in the hospitality and service industry world) about a sushi restaurant that tells their guests to not tip, their counterbalance is that they pay a higher wage which includes some benefits to their staff.

There seems to have been a long-time battle with trying to find a “solution” or “balance” to the customs of tipping and what service industry workers should be paid. I’ve been fortunate enough to have worked in both scenarios and each has their pro’s and con’s, and based on my experience these are my thoughts from working in both tipping and non-tipping cultures.

The non-tipping culture

For those of you who don’t know, I was born and grew up in Australia, which is a non-tipping culture for the service industry. This isn’t to say people don’t tip, or that it’s frowned upon, it’s just not common (there are hotels, resorts, some restaurants where tipping is more common), but tipping isn’t necessary because the minimum wage is decent.

The minimum wage at the time of this blog post in Australia is:

Full-time minimum wage is $15.96 per hour or $606.40 per week. This means that most employees in the national system shouldn’t get less than this.

Casuals (part-time) covered by the national minimum wage get an extra 23% ($19.63 per hour).

Statistics from the Australian Government Fair Work Ombudsman website

Then there is a whole range of different “award” rates that some employers choose to use. Some examples of these “award” rates are paying employees more per hour if they work after midnight or double time on weekends, or double time and a half on holidays, etc.

So if you want to make good money you have to work the hours for it (unless you’re on a salary, but for us servers that’s pretty rare).

An issue I have with the non-tipping system is that no matter how hard or how little a service industry worker works, they get paid their hourly rate regardless. This allows some people to take advantage of others by just doing the bare minimum, while the other staff busts their butts to keep the restaurant running smoothly.

Another issue that comes along with the higher wage is the owners trying to maintain their labor costs. So if you compare these countries minimum wages side by side it looks like this:

  • Australia – $15.96 per hour
  • U.S. – $2.13 per hour
  • Canada – $8.90 per hour

Basically, for every one server being paid in Australia, it’s the same to pay 7 U.S. servers and almost 2 Canadian servers per hour. So what does this mean? well to keep labor down it’s not uncommon for servers to have 10 table sections or more. This then lowers the level of service being given to the guests, because the server has a lot to cover (especially during a rush). It makes it hard to motivate and find servers who want to get better and work harder (because to them where’s the incentive if they are getting paid the same to just do the job adequately?)

I’m not saying that everyone has that mentality, or that everywhere you go in Australia runs their restaurants like that, but I will say that you can see a difference in the levels of service as a whole between a non-tipping culture and a tipping culture.

On the plus side, people feel secure when they know what they are making by working out their hours scheduled/worked to their pay rate. Although benefits aren’t a common thing for servers to receive (though some hotels, event halls, resorts and other types of service industry establishments do offer them) budgeting is a lot easier because there is certainty in the math.

The tipping culture

When I first came to Canada not knowing much about the customs of tipping, I made it a point to ask a number of people who not only work in restaurants but random people I met too. After I found out a little more I was excited to get into a serving job so I could experience the world of tipping.

I never even knew what I was going to be paid an hour (and I never really asked because I was more interested in seeing how this tipping thing went) and when I got my first job I made $170 on my first day with a section. My mind was blown, is this how things are in tipping cultures? I made an average of  $37 an hour for that 6-hour shift (this is calculated with my hourly pay too).

Sounds like all glory doesn’t it? Well, it’s not like that every day, it’s sometimes like a roller coaster ride, there are the up days and there are the down days. There have been shifts I have worked where it almost felt like I had lost money.

Every day is different and the uncertainty of that makes some servers uneasy, and some servers live pay-check to pay-check (which for us is every shift we work). If a server gets sick then there is no pay, people will still go into work sick because they can’t afford to miss that shift.

On the plus side, I worked in a restaurant where I was making over $1,000 a week in tips, and even though the government took some of it away from me, that’s a pretty good pay week. You can have days where you make great money for just a few hours work, that is the bright side to the tipping culture.

There are so many variants when it comes to making good tips, or bad tips. Some of them are:

  • Menu pricing
  • Average check total per guest
  • Style of restaurant
  • Some people tip well, others don’t tip well
  • Location of restaurant
  • Tip-out policies
  • There are busy restaurants and there are quiet restaurants
  • Section size
  • Types of shifts you work (opens vs closes, busy Friday or Saturday nights, etc.)
  • Weather (bad weather can both increase or decrease business)

I’m sure there are a bunch more I could cover, but I’m sure you get the idea. All of these can contribute to how much money a restaurant and its staff make.

Another plus is that with the tipping system there are enthusiastic servers out there who take serving seriously (guilty here), they will work hard to better themselves, and as a result, will give excellent service and make more money for themselves. The standards of service in a tipping culture is higher than that of a non-tipping culture, because people have to be good at their job to make good money, plus there are more servers with fewer tables (because labor costs are low).

To wrap things up, my preference is to work in a tipping culture. There’s something extremely satisfying about serving a table to the best of your ability, providing your guests an amazing experience, and receiving their thanks and a tip-in appreciation for your service.

Thanks for reading.