Wednesday, November 21, 2007

What is Your Tipping Policy?

This one is in reply to a post on Million Dollar Journey:

Ask the Readers: What is Your Tipping Policy? Million Dollar Journey

Wow man, didn't you read the MyMoneyBlog post on this thing? It was a S***storm, you've just opened a giant can of worms :)

Cabs
As a guy who's never owned a car, I've taken a few cab rides in my life. I talk to all of them, most of them don't own their cab (in Winnipeg or Edmonton). It's typically closer to one guy who owns 5-10 cabs and all of the cab drivers are on for 12 hours b/c they can't make a living wage on 8 hours shifts. This may be different in TO or Montreal, but I always give a good 10-15% (sometimes more for short rides). You're trusting your life to these guys and they don't get paid very much.

Fast-food
The standard McPolicy is that tips go in the charity bin. The only exception is when the patron insists, then you can take the tip just to get rid of them.

Me I don't tip my Starbucks baristas, but when I go to the Gourmet Cup across the street, the one that charges me a buck less for my latte and always has top-notch fresh-baked goodies and is clearly run by the guy who serves me... well he and his staff will get a tip. Often I'll just give them the buck they saved me :)

Delivery Drivers
Are intentionally underpaid, so I throw them a couple of bucks. Around here, the pizza place tacks on like $2 for delivery which is clearly not paying the driver very well, so I throw him a few extra. If the delivery charge were $5, then he'd get nothing.

Waitresses
Waitresses are like the annoying black hole of tipping. My sister's a waitress and she makes great money (her best gigs made more per hour than I did as a computer consultant!), of course, I've watched her work and she's amazing... most waitresses don't meet that quality bar. But I'm still iffy on the tipping thing.

What annoys me at a deep level, is that I don't really go to a restaurant just to be waited on, I go there to talk and to eat great food. For my night to be good, I don't really need a good waitress, I just need one that isn't inept. Heck, if I could replace the waitress with a computer ordering system and just have someone drop off drinks, that would be just fine.

Personally, what makes my night is great food, and if anyone deserves the tip for great food, it's the cooks. At least around here, the people I know working the kitchens don't make great money. Unless they're independent or "high end", they're pushing just above 30k and they're working weekends and holidays and all kinds of crappy shifts. If anything, these are the people that make my night, why don't they get the tip?

And (400 words in) this is where things get really complicated. Different restaurants and chains have different procedures for tips and tip distribution. Now to start, if it were up to me, everyone involved in the services industry would make a fair working wage and the managers would simply be responsible for paying more money to good waitresses (just like everyone else does in every other industry). But barring legislation, that's pretty much just a pipe dream, so here are the details.

Waitresses at most places are required to "tip-out" based on their total receipts. Cooks will get 2% and the bar will get 2% and hostesses will get 1% at like a typical Earl's, Montana's, Boston Pizza, etc. This may or may not be after total receipts after taxes based on who's calling the shots (of course including the taxes just dilutes the tip even more and it's pretty shady). So the passive-aggressive 1-cent tip is not just insulting, it's financially damaging (yet somehow legal).

And that's where things get funny: financially damaging. Where I live in Edmonton, there is no minimum wage (or at least nobody works for it) as we have a massive boom and a big people shortage. So even with a 10% tip, the waitress can still take home $2.50 on my $50 order and she makes $11/hr (base) + $2.50 * number of tables which can easily push her into $25 range for handling like 6 tables (of which $14 is marginally taxed). Now that's just an average joint, even in Winnipeg, renowned for its cheapness (not frugality, just outright cheapness), a quality waitress can make $23+ / hour even with a base wage of $7.

Of course, once you factor in that $16+ of those hourly dollars are cash tips and are mostly untaxed, then your waitresses end up making the equivalent salary in the $30+ range. That's $30+ dollars / hour for an entry-level job with a small amount of responsibility. A lot of waitresses are making more than the guys who prep and cook the food.

So we come back to my previous thought, don't the guys cooking the food deserve most of the money? I mean, isn't their job just a little bit harder? So here's the math:
  • Your meal cost: $100
  • Waitress salary: $7
  • Cook salary: $15

If you tip 15%, the waitress keeps 10% and ends up with $17, the cook gets 2% and ends up with the same number. As you add money to the cost of the meal, the waitress makes more and more relative to the cook. In fact, the only salvo here is that the cook should be able to cook more tables than the waitress is waiting and will therefore catch up (a little). But you're still throwing a lot of money at the person who didn't really do much that you couldn't have done yourself...

If you're like one of the crazy MSN writers and you figure that 20% is the new 15%, then the waitress ends up with $22 and the cook is still stuck at $17. (Of course, she's writing from the US where the minimum wage for wait staff is typically 50% of the regular minimum wage)

*sigh*

After this whole bit, I basically don't want to starve anybody, so when I'm tipping for a night out, I tip 12-15% and that's it. If I get really good food (better than expected for the price), then I'll add tip money specifically for the cooking staff (as written on the receipt), but this seems to happen pretty rarely.

It's not a perfect system and I have to vary slightly for specific places (i.e.: family-owned joints), or for when I'm sucking up a table for a long time (i.e.: watching a football game at the Boston Pizza). However, I think that it correctly accounts for the way services staff are paid and the amount that I feel they should be paid.

Of course, YMMV.

27 comments:

Anonymous said...

Great post!

I too was inspired to write a tipping post - I'll probably publish next week sometime.

Mike

Anonymous said...

Gates, I happen to like s***storms. :)

Another note about waitresses is that they only make money during the busy hours (12-2, 5-8). So if they're working the whole day, the hourly wage from tips needs to be spread out. Although you mention that they don't have a lot of responsibility, they are the first to face the "crap" if a customer is not happy.

Great discussion though. Glad to see that some of my blog topics inspire you to write. :)

John Champaign said...

Good write up! I need to move out to your neck of the woods if people there are known as cheap ;-).

John Champaign said...

I've had the same idea that I'd like a restaurant to do away with servers and have an automated ordering (and perhaps delivery) system.

You could have a little console at each table that lets you browse the menu and pick out what you want, and the order would instantly go back to the kitchen (just as if the waiter had put it in).

Gates VP said...

Hey Cheap did you see the link for Microsoft Surface? Check YouTube/Google for videos, they actually demo a restaurant ordering system built right into the table... it's pretty impressive, very WPFey (if that makes any sense). It even incorporates CC payments via the table, (though there's some smartcard tech going on there).

You can also find some of the vids here on one of my previous posts.

Matt Frost said...

On delivery drivers, please note that the 'delivery charge' does not go to compensate drivers for their service. It is a fee that the store collects in order to keep their price points down. Delivery drivers seldom, if at all, see a chunk of that charge. Even if they did- a delivery fee *may* be construed as mileage reimbursement for their vehicles, but it is not intended to be a tip or part of a tip. The tip is between you and the driver and is given in appreciation for them bringing you your food. The reimbursement is part of what the store pays them (often in addition to their sub-minimum wage). The delivery charge is simply a way that stores steal some of the tips that should be going to the drivers. If you tip low because of a high delivery fee, you're only hurting the driver, the store gets the delivery charge money.

Ratsttam said...

Fully Agreed with Matt Frost. As a former driver, I can firsthand say that this Delivery Charge HURTS the driver. Completely withholding a tip from a driver is the equivalent of stealing from the driver. That $2 you pay, goes directly to the store.
A little Information:
(1)
Delivery drivers get paid a base rate (often below minimum wage. See "Tip Credit" http://www.dol.gov/dol/allcfr/ESA/TITLE_29/Part_531/29CFR531.59.htm). In a nutshell, an employer may pay a tipped employee below minimum wage, so long as the tips the employee collects makes up the difference. This is why waiters and waitresses can be paid as low as $2.25/hr (well below minimum wage!)
(2)
They also get a small mileage fee, or a flat rate per delivery. This typically falls well below the IRS and AAA rates for using a personal vehicle for work.
(3)
This fee was paid to drivers LONG before the "delivery charge" came about. The store uses it to recoup what they were paying for all along.
(4)
Drivers are also required to do inside tasks such as dishes, mopping, folding boxes. This is time away from the road, and does not generate a tip.
(5)
The job is also quite dangerous.
Your everyday road hazards and accidents. Delivery drivers are safer drivers than most, based on mile per mile rate of incident. We drive much more than the average driver. Law of averages says an accident will happen eventually.
(6)
Social Stigma.
Commonly referred to as a "delivery boy", the term can't be any more wrong. One cannot deliver until they are 18 (21 in some states). The average age of a delivery driver is in the mid 30's. A large percentage have a family to feed and care for. A very large number of drivers do this as their career, and not as a side job, or something until "something better comes along".

Bitter Tipper said...

Matt Frost and Matthew -

If they don't like it, then they can go work somewhere else. Sorry, but if I'm being charged for delivery then there's no f'ing way I'm giving the driver any more money. Likewise, if a restaurant is charging me for service, the server is getting no more money from me than that. Trying to get me to give them more money for a service I'm already paying for is called EXTORTION and like it or not, that's a CRIME.

Anonymous said...

hey better tipper, at some point you have probably gotten spit in your pizza lol

Pizza Driver said...

The poster above probably never gets a really hot pizza since the drivers at his local Pizza Place know that he doesn't tip and will deliver other orders first.

A delivery charge is just that. A charge for the convenience of having your pizza delivered to your door. It doesn't go to the driver but covers the cost of the hourly wage for the driver, bags to keep your pizza hot, and several other things that are involved with having a pizza delivered.

Please tip your pizza drivers at least what you would tip a server at a restaurant. If your total is $24, a $3 tip would be ok, a $4 tip would be good, a $5 tip would be great. Your Pizza Driver spends thousands on their vehicle each year in gas, insurance, and maintenance costs to be able to bring pizza to you. Delivery drivers usually fill their tanks at least twice a week if they work over 25 hours a week.

If you do not want to pay a delivery charge or tip the driver, please go pick up your pizza. What, you don't want to leave you house and spend your time and gas to get your pizza? Pick up a frozen pizza the next time you go food shopping. They cost less than $10 each and you won't have to spend any extra gas to get a hot pizza.. but you will have to spend a little money on gas or electricity on heating up the oven.

Bitter Tipper said...

The above two posts are perfect examples of how tipping your pizza delivery driver is extortion. Spit on my food because I don't tip? Intentionally give me worse service because I don't tip? And this is when I already PAY a delivery charge for the service.

You guys are nothing but criminal scum, pure and simple. You are no different from drug dealers who extort money out of their customers.

Boma said...

I agree with Matt Frost and Matthew. They are right about the deceptive practice behind the so-called 'delivery' charge. If you lower the tip or don't tip because of the fee, you are only skimping on the tip. The driver receives none of the delivery charge.

I delivered pizza for 13 years. Five of those years were prior to the charge's inception back in the era of free delivery. When the delivery charge began, driver hourly wages and vehicle mileage compensation stayed the same. This means the company kept the extra income for profit. They essentially stole the fee. Today, it's the same story. The fee is a price increase for the store in disguise.

The reason it's called a 'delivery' charge is because you are a delivery customer. They have targeted you with a senseless ATM fee because they believe they can get away with it. Corporate greed is the motive. Independent pizza stores charged the fee for years but they gave it to their drivers in the form of mileage reimbursement or hourly wage. Their drivers still depend on your tips. The major chains saw that and thought they could get away with charging a fee too, despite not giving a cent to their drivers.

It's a misnomer to confuse the delivery charge with the delivery service. Pizza delivery drivers depend on tips today just as much as when delivery was called free. Please tip the same to show your appreciation to the driver.

Ratsttam said...

Quote: Bitter Tipper
Trying to get me to give them more money for a service I'm already paying for is called EXTORTION and like it or not, that's a CRIME.
End Quote.

As a former driver, I have to agree that it is a crime, and maybe even extortion to some degree. However, it is not the DRIVER that is committing this, it is the company the driver works for. You may note that your driver will not ask for anything more than the total listed. The driver relies on tips to make a living wage. The company relies on customers tipping the drivers to keep payroll as low as possible. It is due to how the delivery charge is setup. Some franchises have actually changed this to a "Convenience Fee" (which is still only charged to delivery customers), and some others have even added a disclaimer on the receipt that the "Delivery Charge is not a Gratuity."
Boma's explanation is very concise regarding this. This is true across the many shops that I have driven for.
I would also like to address the above comment about receiving pizza with spit on it. Driving is a PRO-fession. We are PRO-fessional people. Rest assured that you will not have your food tampered with by any driver worth more than the weight of his car keys. Worthless drivers don't last long enough to learn who tips them and who doesn't. However what may well happen is that you, as a non-tipping customer (especially if you order frequently), will receive your pizza last on a multiple drop run. We go out of our way to take care of customers that appreciate what we do.

Matt Frost said...

Bitter Tipper, I would never tamper with your food or anyone else's. It is true that you are not required to tip. I have many regular customers every day who do not tip. I genuinely feel sorry for you, that you would steal someone's service because you are angry that the store charges you more for delivery. Why not call the store and complain? Why take it out on a driver who makes less than minimum wage, who depends on tips to make a living? And besides, isn't it worth an extra few bucks to ensure the best service you can possibly get? I don't understand people like you.

Gates VP said...

@BitterTipper: Sorry, but if I'm being charged for delivery then there's no f'ing way I'm giving the driver any more money. Likewise, if a restaurant is charging me for service, the server is getting no more money from me than that. Trying to get me to give them more money for a service I'm already paying for is called EXTORTION...

Your view falls cleanly in the extremist camp. I can appreciate that the extra charge of tipping seems extortionist, but the reality is far more complex.

Your anti-tipping policy is based on the concept that we are paying the true cost of the services we're receiving. In reality, we're not.

In fact, in many states in the US the minimum wage has actually been halved for wait staff under the assumption that they'll make up the rest with tips. So enough people actually voted for this law (or didn't complain), that tipping is basically a living requirement for a whole cross-section of service people.

You can see from the discussions above that the "delivery charge" is clearly a little fishy, but hey, they're playing the game. I wrote this post two years ago and check out my own comment. If the charge had been raised too high, the drivers would get nothing (likely from me and everyone) and there would be a revolt.

So it's easy to say that we don't want to tip any more. In fact, I can appreciate the sentiment, market wage for market labour. The big problem here that we have actually legislated around the existence of tipping. And we've "voted-in" tipping with our dollars. We go buy the cheaper plate of food and add the 15% later. If we don't add the 15%, much of the service industry simply goes under as no one wants to do this service jobs professionally if they're only making minimum wage (or less)

@BitterTipper: note how I said "we", not "you". If you feel very strongly about tipping, then you're in a position to work on making those changes happen at a societal level.

The current tipping system is the result of decades of societal mores and evolution. If you feel that tipping is truly abominable, you just have to convince enough people it's the case.

Honestly, I'm fine with paying more for my food and less (or nothing) for the tip. The math is the same to me. But without some sort of "tip-free" movement, it's unlikely that this is going to change.

Bitter Tipper said...

Matt Frost and Matthew -

If they don't like it, then they can go work somewhere else. Sorry, but if I'm being charged for delivery then there's no f'ing way I'm giving the driver any more money. Likewise, if a restaurant is charging me for service, the server is getting no more money from me than that. Trying to get me to give them more money for a service I'm already paying for is called EXTORTION and like it or not, that's a CRIME.

Matt Frost said...

On delivery drivers, please note that the 'delivery charge' does not go to compensate drivers for their service. It is a fee that the store collects in order to keep their price points down. Delivery drivers seldom, if at all, see a chunk of that charge. Even if they did- a delivery fee *may* be construed as mileage reimbursement for their vehicles, but it is not intended to be a tip or part of a tip. The tip is between you and the driver and is given in appreciation for them bringing you your food. The reimbursement is part of what the store pays them (often in addition to their sub-minimum wage). The delivery charge is simply a way that stores steal some of the tips that should be going to the drivers. If you tip low because of a high delivery fee, you're only hurting the driver, the store gets the delivery charge money.

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