Bicoastal bartender Erick Castro, co-owner of Polite Provisions in San Diego and the mix master at the newer Boilermaker in New York, believes bars and restaurants need tips.  Below, he explains why. 

Many readers may have noticed that the anti-tipping movement in bars and restaurants has gained significant steam as of late.  What you may not have noticed is the true motivator for this sudden change.  In short, it’s not as admirable a movement as you might have been led to believe. 

... what these restaurateurs do not want you to know, is that ... these automatic gratuities are a scam designed to line their pockets. 

From reading a lot of the rhetoric coming out of the anti-tipper camp, you might assume that restaurants are making the change to eliminate the need for basic math at the end of each meal.  What these articles never seem to mention, and what these restaurateurs do not want you to know, is that, all too often, these automatic gratuities are a scam designed to line their pockets.  It’s a simple ruse that allows the owners of the business to help themselves to the tips and earnings that have traditionally belonged to the servers. 

According to the laws in most states, tips and gratuity constitute money that belongs to the people that earn them, which means that employers are forbidden from taking these funds and utilizing them for their own means.  However, with a little bit of Orwellian creativity, an unscrupulous operator can legally — albeit unethically — commandeer this money by renaming it something as innocuous as an "administrative fee." 

Since it is no longer referred to as a gratuity or tip, sums which are protected by state law, owners are now able to take this money and use it for whatever they wish.  This money can now go towards paying for manager bonuses, supervisor salaries, kitchen payroll, and apparently anything that falls under the vague, aforementioned umbrella of "administrative."  In one infamous incident at an unnamed restaurant in San Diego, the owners of the establishment allegedly took a lavish trip overseas with money that was earned by their very own staff under the guise of these mysterious "fees." 



The frightening thing is that when labeled appropriately on the check, these tactics can be completely and totally legal.  These fees begin to get shady when they are presented to guests as a "gratuity" or "tip," when they are clearly anything but.  And naturally, there are always a handful of rationales used by owners to justify why they are instituting these "administrative fees" and doing away with tipping. 



The first rationale is typically the subtle insinuation by operators that their servers make too much money.  If you pay close attention, most references by these operators regarding server take home pay tend to be vague at best and anecdotal at worst. 



From the way this rationale is misrepresented in many articles, you would think that the average service employee was living in the lap of luxury.  Which is why most readers might be surprised to learn that, according to the US Bureau of Labor and Statistics, the median hourly compensation for servers in 2012 was $8.92.  Keep in mind that this includes both hourly wage plus tips, and that the vast majority of serving jobs do not include necessities such as healthcare or dental. 



Another rationale often used is that the managers, supervisors and kitchen staff do not make enough money.  I agree that many people in the restaurant industry are not being paid what they are worth, but that responsibility belongs to management and ownership, and not their already-struggling employees.  If ownership cannot afford to pay their staff what the market demands, then they need to take another look at their scheduling and labor costs, or whether they can sustain a restaurant that pays its employees a reasonable wage at all. 

If you cannot afford to pay your staff, then maybe you should take a minute to reanalyze your business model, because expecting your employees working the floor to pay for the overhead of running your restaurant is positively shameful. 

Except it rarely stops there, because now they can use the money accrued from this "administrative fee" to pay for bonuses, human resources, and miscellaneous expenses.  It doesn’t take a genius to realize that this ploy simply equates to more profits for the management’s bottom line.  From an economic standpoint, this is troublesome because it allows a faulty business model to achieve the illusion of sustainability, when this is not the case.  If you cannot afford to pay your staff, then maybe you should take a minute to reanalyze your business model, because expecting your employees working the floor to pay for the overhead of running your restaurant is positively shameful. 

An alternative to this system, and one that is more mindful of the integrity of the staff, is a restaurant model that utilizes all-inclusive prices on the menu.  This is the standard that is most popular around the world, particularly in Europe.  Under this system, there are no gratuities or fees at all for guests, and staff is simply paid in the form of a higher hourly wage.  Although not very common in the United States, it is transparent for both the staff and customer and precludes the necessity to tip. 



The most obvious downside, however, is that the venue’s prices will be understandably higher to accommodate the increase in hourly wages.  Many business owners feel that larger prices will scare off customers by making competitors look like a better value, which means it could be a tough sell to patrons unless other restaurants follow suit. 



Regardless of the options explored, no one seems to be asking whether eliminating tipping is even beneficial to the guest experience.  The customer is the most important person in any dining transaction, a point overlooked much too often, and policies created without that in mind will undoubtedly have unintended consequences. 



Unlike the clientele in other western countries, Americans are accustomed to a greater level of efficiency and promptness when dining.  Small requests such as another glass of wine or a side of butter will typically only take a few minutes, as would closing out your tab.  The pace at which we live our lives is highly active, and most of us do not have the luxury to remain immobile over meals for extended periods of time. 



We like our service to be attentive and professional, and those who choose to provide such service are compensated for it with a better tip.  Which is why, all things being equal, a server who is capable and efficient will fare better at the end of the day then an unmotivated and disagreeable one.  In fact, the latter will usually opt out of the profession for this very reason.  This is magnified by the fact that a lot of people choose to not leave more than 18 percent, and if the service is not good, it is not only understandable, but it is also their right as a consumer. 



Basic economics tells us that behavior changes when monetary incentives are present, which is exactly what tips are, and to expect the same level of performance when those incentives are removed is naive.  And that is the problem with these "administrative fees."  They were never designed with the welfare of the guest in mind, nor even that of the employee.  It was and has always been, just another way for the unscrupulous to get their hands on money that does not belong to them.