Why Tipping Is Impossible to Get Rid of in America
Eric Huang is the chef/owner/operator of Brooklyn’s lauded Pecking House fried chicken joint. In a recent Instagram post, Huang explains why tipping is a part of the experience at his restaurant.
We do NOT use a tip credit at Pecking House. If we do not take a tip credit that means we pay every employee at least $15/hour. We then pool the tips and divide them among the entire hourly staff, including all back-of-house employees. This helps to foster an equitable team culture where everyone feels they are participating in the restaurant’s success.
So far, we’ve been able to pay every front-line employee an average of an extra $7 per hour on top of their hourly wages. We’ve been managing that while collecting a tip average of 18% on a check average of $26. So even an entry-level employee at Pecking House is making $22/hour if not more.
Almost no one in New York City does this. This is pretty damn unique. And while people have been generally enthusiastic about supporting restaurants as they weather a furious storm of inflation, this is an easy way for us to take better care of our restaurant workers. Because the pandemic revealed quite painfully that we are a sizable, important and vulnerable population. And this is all perhaps even more relevant given that certain Best Restaurants have been outed about certain abhorrent business practices. Their example should be motivating us to take a look at how we can change the restaurant industry for the better.
So when you add a tip at Pecking House, you’re really helping to take care of the whole team and acknowledge their effort in creating your experience. I think we’ve all been guilty of having a great time and leaving a fat tip, but forgetting at that moment that the cook who made you that taglioni isn’t seeing an extra penny. So for those of you who have been helping us out with 18% on $26, an extra $4, know that it’s going to everyone. Except and rightfully so, the chef standing there pointing at stuff, not being terribly helpful, i.e. me.
From there, he goes on to explain why eliminating tipping doesn’t work from the standpoint of the restaurant (customers spend less), its employees (they make less than they could elsewhere), or, surprisingly, its customers (they want the illusion of control/agency). And there’s also a sort of tacit collusion that happens amongst restaurants — no one wants to eliminate this obviously unfair system because of the financial hit so none of them do. The whole thing is worth a read.
Back when I lived in NYC, a restaurant I frequented experimented for a few months with eliminating tipping. In practice, it meant that the bartenders and servers made less money and the chefs got paid more. As a regular customer who knew and liked everyone who worked there, I thought that was much more fair than front-of-the-house staff being paid more than the kitchen folks due to some antiquated racist bullshit. In the end, they had to revert to doing tips again because customers weren’t spending as much money and it eliminated the restaurant’s profit margin. Customers looked at the higher prices ($25 for the chicken instead of $21, $17 cocktails instead of $14) and ordered fewer and less-expensive items, even though they were paying exactly the same amount for them by tacking 20% onto the check at meal’s end. It’s just economic reality: lower posted prices with added fees will encourage people to spend more money because the posted price is what gets stuck in their heads.
It seems like the only way to get rid of tipping in the US is for every restaurant to do it simultaneously, either by mutual decision (ha!) or through some kind of legislation (double ha!). But because of the pandemic and the ubiquity of digital payment screens, tipping is more engrained in American commerce than ever so…??
See also The Failure of the Great Tip-Free Restaurant Experiment.
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