Should Your Restaurant 86 the Tip?

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As more restaurants have begun to adopt the no-tipping policy, more questions have started to hit the scene in an attempt to digest what this trend will mean for the restaurant industry.  If you’ve been following along with our content this month, you’re aware that in our last blog post we discussed the effect that eliminating tipping has on your guests. In today’s post we’re going to continue the discussion in relation to how it affects your team members.  To get there however, we need to take a look into how tip removal actually works.  As we mentioned last week there are two inevitable choices to absorb the cost of no tipping: menu price increases or surcharges.  Furthermore, hourly employees who were receiving tips will now be paid higher wages to supplement the income they were taking in via tips, and salaried employees will either remain the same or possibly see slight increases.  This new ideal is essentially working to close the pay gap between your FOH employees and your BOH employees; everyone will be treated equally.

With this, comes a whole host of complexities. How do you determine your scale of wages and how do you promote your team members? There are a range of methods to handles this. You can determine pay or promotions strictly by Job Code, or maybe you decide you’d rather determine wages by certain service milestones.  For instance if your team is willing to continue their education and take classes to receive various certifications etc., perhaps you’re willing to pay them more.  What about seniority or guest check averages? Possibly the determination could be something as simple as schedule availability – not having to work around anyone’s schedule could earn them more dollars in your eyes. In doing this, the thought here is that you will attract more career oriented individuals who clearly want to work for your restaurant as opposed to the people which simply show up for their shift, run through the motions and collect their paycheck; it’s no secret that a handful of people in the industry live off of knowing they can easily pick up an extra shift to make rent next week.  Those days will be long gone should you choose to jump ship on the tip.  This in itself is cause to create an entire mindset shift in your team. They will have to start thinking long term over short term: “how much money can I make this year vs how much money can I make this weekend?” Optimistically, this can promote longevity within your restaurant, in turn creating a culture full of seasoned employees who know what they’re selling; meaning better restaurants for guests to choose from… hopefully.

This is where the team unit steps in to play.  Your team members will now have to work together for the greater good of the restaurant since they can’t create better tips specifically for themselves.  They will have to think like a military unit.  We’ve all heard it before, “there is no ‘I’ in team,” and in this movement the statement will never ring truer.  Servers will essentially become sales associates who are required to understand the product and margins to sell properly.  This means that managers will be tasked with the responsibility of effectively training all servers to fully comprehend what items are margined out well that will created a greater EBITDA.  The better the restaurant does, the better your people do – so when the guest asks what’s good, “everything” better not be the answer.  Server ROI will take on a whole new meaning.  An additional challenge that managers will now face is getting creative and flexible about how to compensate the team members outside of their wages, and how to keep the team motivated when tips are null.  Do you feel that your team could rise to the top and take this challenge head on?