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Doing away with the tip
Fancy Manhattan eatery opts for 20% charge regardless of service. Is this the future?
August 17, 2005: 4:29 PM EDT
By Steve Hargreaves, CNN/Money staff writer
Should tipping in restaurants be replaced by automatic service charges?

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NEW YORK (CNN/Money) - The last thing you want when dropping $450 on dinner is a catfight to break out between the chef and the server.

But at many high-end restaurants, there's economic tension between the front of the house and the back.

Even if a literal fist fight is unlikely, the disparity is huge between what the kitchen staff earns and what waiters make.

Now, one New York eatery is taking steps in an attempt to close that gap, and it will take the discretionary tip out of the hands of the diner.

Effective September first, Per Se, one of the most highly rated Manhattan restaurants, is instituting a 20 percent service charge to all checks in lieu of a tip. The service charge will then be used by the restaurant to help pay all hourly employees -- kitchen staff, waiters, and busboys -- a flat hourly wage.

"Historically in restaurants, the service staff is awarded significantly higher wages than cooks and other staff who prepare the food on which a restaurant's reputation is based," said Per Se chef/owner Thomas Keller in a statement. "The gap in pay is so great that it is becoming increasingly difficult for young cooks to pursue their passion at the rate of pay restaurants are able to afford."

But the move by Per Se -- which those in the business say will be watched closely by other restaurants across the country -- could mean less money for waiters and waitresses.

Certainly, it will mean less control for those doing the eating, at least if you're the sort who uses the tip to reward or punish waiters for their service.

In the weeds

While Per Se would only say the new system is expected to boost the salaries of those not currently working for tips, some say servers are bound to take a hit.

"We were working with stupid amounts of money," said Bill Guilfoyle, an assistant professor at the Culinary Institute of America and a former wine steward at the Quilted Giraffe, a now-closed upscale Manhattan restaurant.

Guilfoyle said servers and other floor people at the Quilted Giraffe would make upward of $100,000 a year, while those in the kitchen might have taken home $30,000.

He said he saw no way around Per Se tinkering with its compensation without that top figure coming down. "The waiters are going to have to take a pay cut," he said.

With a cut in pay, or even the tip incentive removed from the equation, service could suffer.

"It's kind of like working for the government," said Paul Paz, an Oregon-based career waiter of 25 years and author of the book "Serving at Its Best." "If I know it's automatic, then there is no incentive to work harder."

Stiffing the diner?

Customers may also grumble as the power to tip is removed from their hands.

"They will lose the sense of control that they can reward or punish the server based on the service they receive," said James Oliver Cury, a food writer at the the entertainment magazine Time Out.

A poll by the entertainment guide Zagat Survey backed up Cury's claim. It showed that 70 percent of restaurant patrons surveyed in 2004 would rather determine the tip themselves than have the gratuity included in the bill.

Yet Cury cautioned against reading too much into the impact on the diner or the service. He said people tend to leave the same tip, which nationally averages 18.6 percent, no matter what type of service they receive.

Leave the tipping to us

Management at Per Se doesn't seem particularly troubled by these concerns.

Chef Keller has said he instituted a service charge at one of his other restaurants, The French Laundry in Napa Valley, and it has gone well.

A spokesman for Per Se said the stable salary -- which also comes with benefits like vacation and health insurance -- would create a more professional environment and increase motivation. He also said the customers might find it convenient not having to contemplate a tip.

Eric Lilavois, director of Per Se operations, said profit margins in restaurants are slim and the service charge is really what supports the staff.

But others questioned how slim margins really are at high-end places and the need to restructure the wait staff's pay.

"The owners of those restaurants are making huge profits," said Guilfoyle. "If you have these huge checks and these huge tips, why can't Keller afford to pay his staff more?"


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