Tipping v. fixed service charge
 

http://www.sfgate.com/bayarea/articl...le-5843781.php

5 SF Bay Area restaurants will be replacing the tipping system with a fixed 20% service charge. Berkeley's famous Chez Panisse has had a fixed charge in lieu for years. I can't say I'm opposed to it (leaving the particular % out of the discussion). Furthermore being very familiar with one on the list, and somewhat familiar with another, these are places where management won't stand for slackers that now don't have tip incentive (but will have higher wages).

This is the first that I've seen this among mid-range dining establishments, and wonder if it is the start of a trend, or already taken hold in other parts of the USA. I'm leaving the "you're not important enough to eat here and you need a ticket which costs what your mortgage payment costs" dining establishments out of the conversation.

Thoughts?

From the article:

"As opposed to tips, a service charge becomes part of the restaurant’s overall revenue. The restaurateurs say the service charge component will be used exclusively for employee wages, benefits and payroll expenses."

Right ....

This is good for diners, but terrible for employees. In California I believe servers are paid the full minimum wage anyway, so they are essentially taking a rather large pay cut, and hoping the restaurant passes along some of that "service" charge.

Tipping v. fixed service charge
 

Fixed service charge is terrible for diners. My club has this, and it rewards incompetence.it is used as a recruiting tool for employees.

The caliber of the restaurants in question would not be able to maintain quality servers if the pay didn't increase to a similar sum of an average night with tips. If these places didn't maintain a high level of service, patronage would drop off the cliff.

I think in the case of any big chain, it would be nothing more than a moneygrab.

In the case of Chez Panisse, which I'd say is about 20% to 30% more expensive overall than the restaurants in question, the servers are "career" servers, stay there for years, are good at what they do, and are paid well.

I'm optimistic that this will work well. And if I have crappy service, they'll know.

This works well at high-end places with a steady repeat clientele. The wait staff have the same incentive as the owners to keep standards up as places which charge a lot and do not deliver the goods, go under very quickly. And, as a practical matter, if you are a regular, you wind up tipping over the service charge and at holidays as well.

This does not work at the chains and mid-tier places. But, many will move in that direction.

In the end, people consider how much a meal costs. If it's $150 pp. by the time you leave, it doesn't matter whether and how things are divided up. But, if the service is not up to par, people vote with their feet. The place where you can't get a table for 9 months today, may be empty after a couple of rude waiters gum it up.

That's the logic of rational economics, which breaks down in the face of consumer psychology.

When 2 + 2 Is Not the Same as 1 + 3: Variations in Price Sensitivity across Components of Partitioned Prices

Exactly how a discretionary vs. mandatory service charge affects anything (service quality, consumer sentiment, economic demand) is not well established in the literature, so all foregoing posts are speculation.

I would be all for a set service charge. I never understand why people like tipping. Restaurants should be just like every other business. Charge a set price and it is up to the customer to decide if the price is worth it.

If you eat at a restaurant with a mandatory service charge and service was lousy? Just do what you would do in any other business situation. Complain to a manager/higher up and/or take your business elsewhere. I never understood the idea of how much you pay being based on how satisfied you are with the service. Naturally in the US when eating at restaurants I am a flat tipper, I am also looking forward to my trip to Ireland and the UK in a few weeks. Taxes and service included. Price you see on the menu is the price you pay.

http://jayporter.com/dispatches/obse...rt-1-overview/

From a restaurant owner that had a traditional tipping and a fixed service charge restaurant.

^ great article.

Couple of big chefs were playing around with doing service charge instead of tip in NYC last year also but getting serious push back from waitstaff.

http://www.grubstreet.com/2013/07/to...chio-tips.html

Some interesting posts in the blog, but the owner seems to be ideologically tied to the fixed service charge to the point of rationalizing it any way he can. He presents a pretty utopian view of how the fixed service charge is a better system and seems to think of tipping as some sort of a sexist power trip(!?).

In reality his restaurant was not known for having good service and went out of business.

Not necessarily. At least in London this is what you are more likely to see:

"An optional 12.5% gratuity will be added to your bill"

Most European countries are on a "service included" basis, as is stated typically at the bottom of the menu. Still, people do tip regardless. Not as much as in the US: It's optional (so nobody will run after you if you leave without tipping), but zero tip would still be unusual.

I would believe in the case mentioned, it would quickly escalate to something similar: 20% fixed service charge + tips on top.

Well, welcome to the rest of the world!
Beside from some more (or less?) posh London and other European Capital restaurants, service charge is not added separately or discretionary in Europe, Asia or Australia/New Zeeland. It's included in the price, beneficial for the guest, for tax reasons, for the waitstaff, with having the former "tips" included in their wage, hence also a ground for sick-leave salary and pensions. Rounding up an odd number when paying cash, can be seen, but most of us use a credit card for restaurant bills, hence no need to round up, as there will be no change.

In another thread, the Wiki shows the state of tipping or not in the world:

http://www.flyertalk.com/forum/trave...ry-region.html