Hospitality Included: Should your service business move past tipping?

Danny Meyer recently announced that he would begin phasing tipping out of all thirteen of his restaurants in New York City. This has become a hot button issue that is increasingly front and center in the service industry.

The Dilemma.

As an owner or manager, you face the challenge of the constant resentment between the back of the house and front of the house employees, with the BOH employees feeling they do the hardest work for the least pay.

To be fair, your back of the house employees may not realize that having a server who can educate your guests, create an unforgettable experience, and keep their per person average at the highest possible rate is a godsend and well worth the money they make. The difference in job duties creates a distinct difference in the type of employee that you hire to interact with your guests.

As owners begin to realize that creating an unforgettable experience for every customer requires intricate teamwork, they are reassessing their business models in order to create a more fair environment.

In the past, the practice of tipping has faced scrutiny and been frowned upon. In thinking about the actual process of tipping, Danny Meyer points out that:

The American system of tipping is awkward for all parties involved: restaurant patrons are expected to have the expertise to motivate and properly remunerate service professionals; servers are expected to please up to 1,000 different employers (for most of us, one boss is enough!); and restaurateurs surrender their use of compensation as an appropriate tool to reward merit and promote excellence … Imagine, if to prompt better service from your shoe salesman, you had to tip on the cost of your shoes, factoring in your perception of his shoe knowledge and the number of trips he took to the stockroom in search of your size. As a customer, isn’t it less complicated that the service he performs is included in the price of your shoes?

Danny Meyer brings up a good point. As a patron, you expect good service; you should not have to bribe your server or room attendant to provide it. Good service should be a requirement that you look for in a person when interviewing a potential employee.

Should you move past tipping?

It seems that the biggest obstacle that owners will face as they make the decision to move towards a “hospitality included” service model is navigating guest concerns about the increase in prices, and the worry from employees who are used to basing their personal budgets on money they expect to walk home with at the end of the night.

Have you recently been to a restaurant or hotel where tipping is no longer needed? What was your experience like? Did the level of service suffer at all?

Let us at Serviceable know.

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