Restaurants keeping a portion of server's tips

[gismo]

A major group of upscale restaurants in the Minneapolis area announced that they are taking a small portion of the tips given to the wait staff. At first I thought this was some crazy scheme to make more money but after hearing the whole story I'm thinking the concept sounds pretty reasonable.

What they're doing is just passing on the fees charged by credit/debit card companies to the servers. This is only applied to tips added to a charge slip and does not affect cash tips in any way. Until the change, the restaurant has been paying the card fees which in some cases (large tips) can be a substantial fraction of the restaurant's profit on a meal.

So from now on, if I'm trying to indicate appreciation in my tipping I'll pay the tip in cash, at least at those restaurants. I wonder if the restaurants following this practice will post some sort of notice to patrons. Also I wonder if the same thing isn't being done in other cities.

 

[AdamZ]

I know a lot of hair cut places won't allow tips to be put on a CC and will have a small sign posted at the counter.

Its a tough call Waiting tables is hard work but running a restauraunt is very risky and hard work as well. I have a restaurant client that was getting killed with credit card fees and their response was to cut out cards all together. They took Cash ( there were 2 ATMs with in spitting distance) or checks. I was very surprised that their business didn't suffer at all.

I'm sure some restauraunts will use the practice to make a few extra bucks but I'm sure a good amount will do it as one small move to help keep them afloat.

I think the bigger issue is between the restaurant and their employee. Such practice may be violating labor laws in some states.

 

[woodstock]

You know, merely the fact that management changed this means that the waitstaff is getting shafted somehow. They didn't make this change to their own detriment.

Wait staff makes what, 2.01 per hour?

 

[wsuffa]

This really is nothing new (some restaurants have been doing it for a number of years). It's one reason that I normally tip above the suggested 15% (somewhere between 17 and 21%)

 

[Jay Honeck]

The real story here is that credit card fees are enormously burdensome to small business, and growing, as the government tries to restrict what the cc companies can charge their customers.

Additional taxes or expenses are always paid by everyone -- not just the intended target. In this particular case, it's the wait staff that loses. I'll bet the stuffed shirts in Congress didn't see THAT coming!

 

[Anthony]

The real story here is that credit card fees are enormously burdensome to small business, and growing, as the government tries to restrict what the cc companies can charge their customers.

Additional taxes or expenses are always paid by everyone -- not just the intended target. In this particular case, it's the wait staff that loses. I'll bet the stuffed shirts in Congress didn't see THAT coming!

Taxes, and fees paid by businesses are ALWAYS passed onto the consumer as you say. I don't know why many people have such a hard time with this concept. Businesses exist to make a profit. If they can't, they are dissolved.

 

[Jay Honeck]

Taxes, and fees paid by businesses are ALWAYS passed onto the consumer as you say. I don't know why many people have such a hard time with this concept. Businesses exist to make a profit. If they can't, they are dissolved.

It's appalling how few people understand or appreciate that simple concept. In my dream world, you wouldn't be able to graduate from high school without being able to write a simple, two page paper on how Capitalism works.

It would be fun to interview the protesters camped out on Wall Street right now, to see what sort of fantasy economic world they've concocted in their heads.

 

[tonycondon]

It's appalling how few people understand or appreciate that simple concept. In my dream world, you wouldn't be able to graduate from high school without being able to write a simple, two page paper on how Capitalism works.

It would be fun to interview the protesters camped out on Wall Street right now, to see what sort of fantasy economic world they've concocted in their heads.

 

[jtheune]

It was posted over in spin zone but one of the protesters put up a list of demands. Some of my favorites was the forgiveness of all debts for everyone and a immediate raising of the minimum wage to 20.00 per hour.

 

[Richard]

I'll bet the stuffed shirts in Congress didn't see THAT coming!

Some may see that as proof Congress is inept. Yet it is the epitome of foolishness for govt to try to foresee every possible permutation of human activity and then attempt to legislate it.

The true measure of ineptitude is how govt attempts to see everything coming. Look at OSHA rules as but one example.

 

[wsuffa]

Y'all really want to send this to Spin Zone?

As for tipping, should we move to a model of having the service charge built into the bill, and little or no tips? Like the custom in many other countries?

via Tapatalk

 

[MadseasoN]

As for tipping, should we move to a model of having the service charge built into the bill, and little or no tips? Like the custom in many other countries?

No thanks. There needs to be a financial incentive for prompt service.

 

[gprellwitz]

Another issue with tips on credit cards is that some locales use the average percentage on credit card tips to predict what the waitstaff's tips were on cash transactions, to determine if they're declaring their full income come tax time.

 

[flyingron]

Another issue with tips on credit cards is that some locales use the average percentage on credit card tips to predict what the waitstaff's tips were on cash transactions, to determine if they're declaring their full income come tax time.

If the waiter is doing what the IRS recommends and maintaining a proper contemporaneous log of his tips, this is not much of an issue.

 

[Dave Siciliano]

The folks I know on waitstaff have little barganing power. I think this will hurt them.

As to the protester comment, if one isn't liberal when young, they don't have a heart; if not a conservative when older, they don't have a brain!

Best,

Dave

 

[BillTIZ]

I started paying cash at restaurants years ago, when the economy went south. We tip well, in cash.

We are moving back to a cash basis, not credit/debit cards. I deal primarily with three banks. One bank charges a monthly fee if I write checks, they charge me to "image" the cancelled check on the monthly statement. No I have not gone "paperless". I no longer write checks on that account, just free online bill pay. I have been with that bank through various owners for over 35 yrs. Now they want to charge a monthly fee for using my debit card. (BoA)

Another bank, local, that I use primarily for local debit card action, and what few checks I do write, will start charging a monthly fee for debit card use. (WF)

It's about time to drop both of those banks and go back to a credit union.

 

[dmspilot]

Taxes, and fees paid by businesses are ALWAYS passed onto the consumer as you say.

Not exactly. It is always shared between the parties involved in the transaction, but the manner in which it is shared cannot be controlled by laws. Only economic conditions can determine that.

 

[Kelvin]

We took credit card fees to task about a year ago and reduced the over all percentage lost in the transaction from about 3.1%ish down to 2.2%ish...this made a substantial impact on our bottom line for credit card transactions...

The processing companies make it difficult to get the best rates but we worked it until we now just do not simply swipe a card...we gather the information necessary to get the lowest rate from the processing company...

Unfortunately, in a restaurant environment, this is not always possible...for that matter, in our environment, it not always possible..but teh 1% or so advantage is a great motivator.

I understand the proprietors not wanting to pay these fees...

 

[N801BH]

No thanks. There needs to be a financial incentive for prompt service.

I disagree... Prompt service happens first, then food quality. If that meets your expectations then a tip should follow. You infer that a tip will bring the food to your table faster.... .

 

[JesseD]

Taxes, and fees paid by businesses are ALWAYS passed onto the consumer as you say. I don't know why many people have such a hard time with this concept. Businesses exist to make a profit. If they can't, they are dissolved.

Not if they're defense contractors or too big to fail.


Sent from my iPad using Tapatalk

 

[JesseD]

It's appalling how few people understand or appreciate that simple concept. In my dream world, you wouldn't be able to graduate from high school without being able to write a simple, two page paper on how Capitalism works.

It would be fun to interview the protesters camped out on Wall Street right now, to see what sort of fantasy economic world they've concocted in their heads.

I'd want a 40 page paper on the idiocy of continuing to believe in the outdated theories Keynes or Friedman. Tucked in there I'd like a nice dissertation on why Rand and Marx were great philosophies, but completely unrealistic and unworkable. Toss in a minimum of one page for each amendment and the bill of rights.


Sent from my iPad using Tapatalk

 

[flyersfan31]

I started paying cash at restaurants years ago, when the economy went south. We tip well, in cash.

We are moving back to a cash basis, not credit/debit cards. I deal primarily with three banks. One bank charges a monthly fee if I write checks, they charge me to "image" the cancelled check on the monthly statement. No I have not gone "paperless". I no longer write checks on that account, just free online bill pay. I have been with that bank through various owners for over 35 yrs. Now they want to charge a monthly fee for using my debit card. (BoA)

Another bank, local, that I use primarily for local debit card action, and what few checks I do write, will start charging a monthly fee for debit card use. (WF)

It's about time to drop both of those banks and go back to a credit union.

Fletch that, baby! I try to live a cash-free life. Charge it all, pay it at the end of the month (in full, of course). Let other people carry the float for me.

On the original topic, though, this move seems kinda jerky, since it's my understanding that waitstaff have always been somewhat underpaid with the tacit assumption that tips would make up the difference.

In the end, we pay. No doubt. It makes me laugh that people don't get it, but wha'evah.

 

[SCCutler]

I think this is chicken dirt.

 

[BillTIZ]

Fletch that, baby! I try to live a cash-free life. Charge it all, pay it at the end of the month (in full, of course). Let other people carry the float for me.

In the end, we pay. No doubt. It makes me laugh that people don't get it, but wha'evah.

I do that with my gas company credit card, large purchases are charged, and vacation travel etc. And pay in full when the bill comes. No CC balance for the banks to make 15+% interest. I've talked some merchants into a discount for cash on large ticket items, they balk, and I remind them that they can pay a % to the bank to process the CC, or to me for instant cash.

I always carry 1 CC, you can't rent a car or a hotel room without a CC.

 

[p1l0t]

Call me a commie but I think that a reasonable minimum wage no matter what your job is fair. Not that anyone cares about being fair. Most of the have nots I know are intelligent people, they just can't get there from here. Our super-capitalism has some nasty sides to it too and maybe we should step back and think what is the right thing to do. Sometimes I wonder if capitalism is inefficent. Healthy competiton is a great thing, but sometimes it seems like we spend more fighting amoungst ourselves to get our little piece then really doing something for the betterment of society. I know I'm a dreamer, the sadest part is it dosen't even seem like such a far fetched idea to me.

<---<^>--->

 

[Anthony]

Not exactly. It is always shared between the parties involved in the transaction, but the manner in which it is shared cannot be controlled by laws. Only economic conditions can determine that.

Businesses maintain whatever gross margin they target to make it worthwhile to operate. Additional fees, taxes, and other expenses are part of their costs. To maintain their margins, these are passed through as additional cost to the consumer.

 

[nddons]

Call me a commie but I think that a reasonable minimum wage no matter what your job is fair. Not that anyone cares about being fair. Most of the have nots I know are intelligent people, they just can't get there from here. Our super-capitalism has some nasty sides to it too and maybe we should step back and think what is the right thing to do. Sometimes I wonder if capitalism is inefficent. Healthy competiton is a great thing, but sometimes it seems like we spend more fighting amoungst ourselves to get our little piece then really doing something for the betterment of society. I know I'm a dreamer, the sadest part is it dosen't even seem like such a far fetched idea to me.

<---<^>--->

So, what should the minimum wage be? $10? $20? At what point would it prevent high school and college kids from getting summer jobs? Does "entry level" mean anything, and what do you think would happen to unskilled labor jobs if the minimum wage became unaffordable for the employer?

 

[dmspilot]

Businesses maintain whatever gross margin they target to make it worthwhile to operate. Additional fees, taxes, and other expenses are part of their costs. To maintain their margins, these are passed through as additional cost to the consumer.

Businesses cannot pass on costs that consumers are not willing to pay. Even if a business were to mark up prices to equal that of a new fee or tax, demand will be reduced. Business suffers.

As I said, the burden is shared.

 

[jesse]

As to the protester comment, if one isn't liberal when young, they don't have a heart; if not a conservative when older, they don't have a brain!

I must have no heart.

 

[gismo]

As for tipping, should we move to a model of having the service charge built into the bill, and little or no tips? Like the custom in many other countries?

That's not tipping, that's a server fee. Oranges and apples IMO.

 

[Jay Honeck]

So, what should the minimum wage be? $10? $20? At what point would it prevent high school and college kids from getting summer jobs? Does "entry level" mean anything, and what do you think would happen to unskilled labor jobs if the minimum wage became unaffordable for the employer?

This has already happened. Employment amongst the young people is at an all-time low, thanks to an unreasonably high minimum wage.

I would like to see an "introductory wage" that would allow us to take a chance on hiring young kids. Face it, most teenagers aren't worth more than $5/hour -- at first. Once they are trained, have proven themselves, and know which end is up, then maybe their wage should go up.

 

[JesseD]

This has already happened. Employment amongst the young people is at an all-time low, thanks to an unreasonably high minimum wage.

I would like to see an "introductory wage" that would allow us to take a chance on hiring young kids. Face it, most teenagers aren't worth more than $5/hour -- at first. Once they are trained, have proven themselves, and know which end is up, then maybe their wage should go up.

Many places allow "probationary" employees to be paid less, if I remember right. You know, the problem typically isn't small business. Even the gas station I worked for long ago paid a buck more than minimum, plus a third shift differential. Oh and if you worked an average of 32 hours per week, over the month you got a percentage of the profit from in-store sales. Oh, and insurance was available. Conversely, the larger "chain" paid minimum, and no profit sharing. Insurance? You farking kidding me?

I would argue with the assertion that the minimum wage is depressing teen employment though. My friend could pay minimum and get a teenager, but why? He can get an adult for that price. My old boss didn't hire a teen for the summer this year, he hired an adult. The fact is that many adults have been taking typical teen jobs while being "re-trained" into a different field.

-edit-
You'd still have to train the adult, but you don't lose your day help when school starts.

Sent from my iPad using Tapatalk

 

[dmspilot]

I would argue with the assertion that the minimum wage is depressing teen employment though. My friend could pay minimum and get a teenager, but why? He can get an adult for that price.

An adult and a teenager are the same price because of minimum wage law. I think you proved the point you were arguing against.

 

[denverpilot]

An adult and a teenager are the same price because of minimum wage law. I think you proved the point you were arguing against.

Somewhat disagree. There's a point where you're paying so little, neither than adult or the teen will work for you.

And those two numbers aren't all that far apart. Goods and services don't come with adult and teen prices. The teen might be saving for something smaller, but they'll still weigh the cost of the thing they want to buy against how many days of work it'll take to earn it.

I don't know where the break point is, but the teen isn't going to put in three months of labor to get an Xbox, for example.

The big difference between the adult and the teen is what they might be purchasing. Maybe.

Most adults start with room and board, and work up from there. Teens, if not from a poor family, might be working for a "luxury" item while mom and dad pay for food and their bedroom... that's not always the case, but often is.

The teen might be saving for a car. Think they'd even bother shooting for the multi-thousand-dollar goal of a used car at $5/hour? $3/hour? $1/hour?

There's definitely a point where they'd just decide riding the bus was easier.

It's the same thing that drove (drives?) the mortgage "restructuring" outcries. The people who signed those mortgages signed the contract during a time when they could make a wage high enough to pay the bill and have a little left over. So many lost jobs and/or went to work for much lower wages, that they're far more than willing to walk away and let the bank eat the loss.

The "moral hazard" involved in such dealings is the same motivation in reverse when the goods/services are priced out of reach of wages earned. Instead of "maybe they'll walk away from their obligations", it turns into, "maybe they won't bother to get a job and try to buy anything at all".

Ask any economist which is scarier. People who want to walk away from their overpriced commitments and choose bankruptcy, or people who just refuse en masse to purchase goods and services. Both are bad, but when the consumer doesn't buy in our consumer economy, it quickly snowballs into job losses and failing businesses.

Most businesses don't operate with a margin between paying their bills and making a profit, that's large enough to handle a 10% drop in overall revenues.

How does this relate to minimum wage? There'd be a lot of businesses closing up shop tomorrow if the minimum wage were repealed, but not all. Priorities of the consumers would shift and some would just stop working altogether.

Taken to the extreme, if you make $10 a day, and a can of soup costs $10... you're probably not going to bother. You know your needs are so far above a single can of soup that there's no point in working for a wage. You'll find something else to do, ilke steal food or things you can trade for food.

 

[p1l0t]

When you pay someone so little that they begin to depend on either you or society as whole for basic needs it is basically slave labor. I make well over minimum wage, but its tough enough as it is to pay the bills even with my girlfriend chipping in. I can't imagine how someone can support a family on even $10/hr..

<---<^>--->

 

[jsstevens]

Call me a commie but I think that a reasonable minimum wage no matter what your job is fair. Not that anyone cares about being fair. Most of the have nots I know are intelligent people, they just can't get there from here. Our super-capitalism has some nasty sides to it too and maybe we should step back and think what is the right thing to do. Sometimes I wonder if capitalism is inefficent. Healthy competiton is a great thing, but sometimes it seems like we spend more fighting amoungst ourselves to get our little piece then really doing something for the betterment of society. I know I'm a dreamer, the sadest part is it dosen't even seem like such a far fetched idea to me.

<---<^>--->

Any system will work wonderfully with generous, honest, people who always put others first. Unfortunately history has shown those people to be in the minority. Capitalism has worked remarkably well in a society peopled with self-interested folks. Can it get ugly? You bet. Greed coupled with dishonesty is always ugly. Has anything else worked nearly as well? Not so far. Having traveled in the third world a bit (and only a bit, I'm far from an expert) the poor in this country are far better off than the majority of folks in any third world country you can name. Anybody have to walk 5 miles carrying 5 gallon jerry cans to get potable water? _Many_ folks do that every day in Uganda.

No system that doesn't take into account that any one person can be unscrupulous and greedy will fail. A benevolent dictatorship would be a wonderfully efficient system-until the dictator was unscrupulous and greedy. And generally unscrupulous and greedy people tend to find their way to the positions of power because that's where they can get the most. And in a democracy (or representative democracy) they'll promise whatever they have to to get elected. They're unscrupulous, remember? In a monarchy they become the power behind the throne (if not King or Queen outright). That's why laws are so important.

Anyway, ramble off.
John
John

 

[Anthony]

When you pay someone so little that they begin to depend on either you or society as whole for basic needs it is basically slave labor. I make well over minimum wage, but its tough enough as it is to pay the bills even with my girlfriend chipping in. I can't imagine how someone can support a family on even $10/hr..

<---<^>--->

Jobs, like these are typically stepping stones to more lucrative positions while going to school, etc, or a second job. Sure there are some career wait staff at restaurants, but I don't think that's the norm. They are not meant to support a family, but meant to offer income until you acquire skills to earn more. Maybe those skills are in the restaurant industry, or a field where you are focused elsewhere.

 

[Gerhardt]

1. Sorry folks, I think the restaurant is out of line on this. Withholding a small % of tips for card processing fees is disrespectful to your employees. It's not like they're overpaid and underworked already.

2. If I get terrible service I don't tip. Period. Anything above that gets 15-20%. Just a few times a year I get service that's so good I'll tip 100%.

3. But my pet peeves with waitstaff is a long list. When I'm talking with someone I don't like the waiter to walk up and talk over me, asking to take our order. It takes just a few seconds to let me finish my sentence. I don't like sitting down to find the table still wet. I want to be able to get the waiter's attention when I want something (like the check) within a short period of time. (it shouldn't take 15 minutes to make eye contact to signal for the check)

4. It's a thorn in my side every time I hear about how someone can't raise a family of four on minimum wage. It was never meant to sustain a family. Good heavens, it's not even aimed at most adults. It's designed to avoid teen summer job slave labor.

 

[flyingron]

If I get service bad enough that I'm not going to tip, I also seek out the manager/owner and complain. There's no excuse for that kind of behavior in a service establishment. The only times I've totally stiffed and just walked out was two times when the place was such a disaster that trying to even find someone to talk to was a waste of time.

On the other hand I almost always (in restaurants) tip 20% (rounded to something I can compute in my addled brain). Competent service staff do deserve that and you can argue how stupid tipping versus just paying a market salary without the Some people make more base salary because they're not in the profit-sharing plan. I can tell you the profit-sharing incentive is way more volatile (and often not under the direct control of a single employee) than tipping or commission based pay.

 

[MadseasoN]

I disagree... Prompt service happens first, then food quality. If that meets your expectations then a tip should follow. You infer that a tip will bring the food to your table faster.... .

There's more to prompt service than just getting the food to the table quickly. I would add that quality of service is a factor in the tip amount also.

For me the food quality is not a factor in the tip amount.