Pooling Tips & The 18% Service Charge - Don't Believe the Hype

After eating pastured-pork sausages and drinking a few pints of San Diego-brewed beer, it barely registered that I wasn’t able to add a tip to my bill at The Linkery. In lieu of gratuities, the San Diego restaurant, which recently closed, added an 18 percent surcharge to every bill. That’s less than the 20 percent I make a habit of leaving as a tip, so I didn’t think too much of it when I ate there last year.

The policy, which The Linkery adopted in 2006, was apparently so wrapped up in the identity of the restaurant for some customers that discussing the reasoning of not accepting tips became a distraction from its farm-to-table ethos, according to former owner Jay Porter. Now, in the wake of the restaurant’s closing, Porter is writing a series of blog posts that show just how involved his thinking about tips and wages and the restaurant business was. “I felt like I was sitting on this years and years of knowledge and experience and observations that basically nobody but us have, because we’re the only place that has done this and we’re the only place that has done this for many years,” Porter said, somewhat grandiosely, in a recent telephone interview. “So, it seemed like something interesting to write about.”

Indeed, it is. Porter’s posts offers compelling, pro-business yet community-minded reasons for doing away with tips—something that he argues raises overall wages, results in better service, helps curb the sexualized emotional labor of female employees and the discrimination of minority workers, and reduces turnover.

“Unlike all other working Americans, restaurant servers are a class of simpletons who require a drip of money every few minutes to keep them on task,” Porter writes of the general attitude customers have about service workers and the culture of tipping. “By perpetuating the idea that servers, and servers alone, won’t perform without the threat of pay withheld, we dehumanize our neighbors and peers who work taking care of us.”

So is not tipping—or, more accurately, doing away with tips—the key to a more equitable industry? It’s not quite that simple, as labor laws, restaurant culture and, alas, the market, are all somewhat in the way.

“There are things that owners can do, things that operators can do to help relieve the inequalities in the system, but in the end, McDonald’s is really busy,” Porter said. “It’s a pretty niche market when you want to make the argument to your community that you should make everything by hand and pay people livable wages. That’s also the argument that I would like to make.”

Here’s what Porter’s version of that argument looks like: An 18 percent line-item charge is added to every check, and no additional gratuities are accepted. There’s no pooling tips, no tipping out, no change made to the service charge in relation to the diner’s opinion of the service. The set model, according to Porter, accomplishes a number of things. For one, it removes the incentive for servers to play the system for tips—which, if one person is vying for too many tables, reduces the quality of service, to the detriment of the business. It also puts front of house and back of house on more equal footing. “By implementing the system, we improved the service so revenue in general went up, which meant that the pie got bigger,” he says.

At the restaurant’s peak—Porter says that overall revenue dropped after the recession, bringing employees total pay down along with it—the approach amounted to servers earning $22 per hour, cooks pulling in $12 to $14, and dishwashers making about $10. That’s not going to buy anyone a house, but it’s not the “poverty wage” (a term I’ve never heard a restaurant owner use to describe his own industry’s pay standards) that he outlines as the status quo in one blog post:

We can extrapolate from standard industry models that, of the $1000 in sales, there will be $300 available to cover the 36 hours of labor. It just so happens that this math means that everyone in the house will make $8/hour, which is of course both minimum wage and a poverty wage. But that’s just how the pie divides.

ROC United, an advocacy group for restaurant workers, agrees with Porter about where minimum wage leaves employees: “The current full minimum wage of $7.25 still produces a poverty-workforce,” says founder Saru Jayaraman. And, in states like New York, that wage is $2.13 per hour for tipper workers. “Although tipping is most likely not going anywhere anytime soon,” she says “there are several restaurants across the country that institute alternative approaches to wages—either by doing away with tipping altogether or starting their tipped employees at higher rates than the subminimum—all of which help combat the industry narrative that low wages are fundamental to running a successful restaurant.” 

There is another product of that industry narrative minimum wage—tipped or un-tipped—doesn’t account for, and that’s emotional labor: the sexualized exchanges that occur, for the most part, between male clientele and female servers. For women in the industry and those who go out, the tip-less model upends the power structure.

“A certain small number of very vocal men (and it was always men) resented that we were not letting them try to exercise additional control over our team members,” Porter writes. “The idea that the restaurant was not offering our servers up as objects of control was heresy. For these people, the primary service they wanted from the restaurant was the opportunity to pay for favors from the server.” Considering that women make up 73 percent of the tipped workforce, this is by no means a small issue in the conversation about wages and tips.

Rather than having to put up with unwanted advances from customers—or having to engage in tip-increasing emotional labor tricks, like touching diners or other ways of intimating intimacy—female servers at The Linkery had more autonomy. “In the non-tipped environment, it was really easy for us to tell our team, ‘Hey, if a guy gets out of line, get ride of him. Get out of here. We don’t want him,’ he says. “But in a tipped restaurant where that guy who’s out of line represents a significant portion of a server’s income, that was a much harder thing to communicate.”

Research, however, shows that the psychology of tipping is more complicated than a simple power play or a cash-for-flirting exchange. In a post about Porter’s writing, Popular Science’s Shaunacy Ferro points to studies that suggest very different driving forces:

A 2010 paper Azar published in Applied Economics found that rather than being a strategic move to ensure quality service, tipping is largely the result of psychological motivations—like feeling social pressure, or wanting to preserve a self-image of generosity. Another study found that tipping is a risk sharing method between a waiter and a customer, ensuring people don't lose too much money on food that could be terrible: "when the meal is unusually bad the diner can choose to withhold a tip and reduce the loss of utility that would otherwise occur," the researcher theorized.

There’s no true consensus, though, and Porter’s observations are supported by another paper Ferro cites from the International Journal of Hospitality Management: “As a result of management’s limited ability to directly control the behaviors of servers at the point of service delivery they attempt to do so indirectly by delegating control responsibilities to consumers who leave tips in accordance with the quality of service they received,” writes the author, sociologist Zachary Brewester. 

In our interview, Porter gave his less academic, more expansive take on what that delegation (or, perhaps, abdication) of control can lead to. “So tipping is a way in which it allows all these nasty things to happen that we’ve outlawed in every other industry but restaurants. So, we’re just sweeping that all under the rug because we don’t want to give up our racism or we don’t want to give up our sexual power games. But we just have this tipping thing that kind of hides it all.”