With a starting pay rate of $2.25 per hour, New Yorkers serving in restaurants rely heavily on tips. In June 2013, Sushi Yasuda, an established, popular sushi restaurant in Midtown Manhattan, broke from the standard model and instead started paying servers a salary. To cover the additional salary expense, the restaurant has increased the menu prices 15%.
The change garnered nationwide attention. With the exception of a handful of states, U.S. restaurants are legitimately paying servers below the standard minimum wage based on the assumed earnings from tips. If tipping is eliminated as the standard model in the U.S., what form of compensation would replace it? The most popular proposal is a model in which a set service charge would be added to a customer’s bill and distributed by the employer to staff as the employer decides.
Of course, the servers themselves have a strong opinion on this. There is the concern that the servers would only receive a portion of the service charge, or perhaps none of it. For this option to be accepted, the servers — and diners — must be assured that the server receives a fair portion of the service charge.
Advocates have long argued that restaurant servers are not paid a fair wage and are not offered basic benefits afforded to most workers, such as paid sick days. Restaurant Opportunity Center (ROC) engages in worker-led research projects involving more than 5,000 surveys of restaurant workers and employers, as well government data and academic literature. According to ROC, “There are over 10.1 million workers in the restaurant industry, which is nearly one in every ten private sector employee.” Furthermore, “More than half of restaurant workers earn below the federal poverty line for a family of three.”
There is resistance from restaurant owners, though. Tim Zagat, Chief Executive of Zagat Survey, said, “Few restaurants are confident enough of the quality and consistency of their food and service to get away with it.” Perhaps there is concern that customers would resent losing the power to choose how much they want to tip based on the service received in each experience. “Deciding how much to tip the server remains a strong preference among 80 percent of people surveyed,” reported Zagat.
Until all parties involved stop tip-toeing around the subject and discuss real options with solutions, the tipping standard will remain. Perhaps Sushi Yasuda is on the forefront of a model that provides fair employee compensation, a reliable profit structure and incentives for excellent service. Only time will tell. Write me and share your thoughts.
Debra Wheatman is a certified writer and career coach who has guided the professional development of thousands of clients globally. She is reachable at email@example.com.