Surcharges or Tips? Restaurant Experts Weigh In

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Tipping is a long practiced behavior with most restaurant, bar and dining patrons. Whether it is the mug for change at the local coffee place or the tip you add to your five-course meal at a famous eatery, it is an expected part of dining out. Yet, those who work in restaurant management and operations know that there has been a lot of grumbling lately about the issue of tips. Specifically, the discussions focus around the use of surcharges rather than tips. Let’s see what experts say…

Tipping Explained

For a long time, restaurant owners, patrons and workers have discussed the merits of the entire dining system. Rather than adhering to average (some might argue “fair”) wages, most restaurants with table service provide minimum wages to their workers. They count on tipping to make up the difference, and many in restaurant management and operations even see it as incentivizing premium customer service from their workers.

Clearly, this is not the wisest view because it all boils down to the tipper. After all, there are many restaurant patrons who find any reason to give the most minimal tip – or none at all – and some are just extremely tight with money and will do just what is expected, regardless of the superior service. This leaves restaurant workers in a bit of a bind.

And this is why some restaurant management and operations experts advocate for the “surcharge”. Different from tipping, a surcharge is mandatory and fixed in price. It is cost tacked on to a bill and designed to cover the costs a restaurant might otherwise absorb itself, i.e. healthcare for employees, water service to each table and even wage inequity.

Of course, surcharges are not always implemented evenly. For instance, some restaurants are using them instead of tips, while others tack them on to a bill in addition to expecting a tip to be added, too. Regardless of how it is done, many restaurant management and operations professionals think of it as the fairest answer to the issue of fair pay for restaurant workers.

Diners Respond

As something once reserved to only the most expensive eateries, the appearance of surcharges on more and more tabs is creating a negative backlash among many diners. Some think of it as invasive, some resent the enforcement of fees they see as padding on their bills. After all, why should diners be asked to pay further amounts for employee healthcare? Water at the table, or inequitable wages? It is a fair question.

However, what many diners or patrons do not consider is that restaurant management and operations professionals have found it essential to tack on surcharges due to recent changes in legislation. In recent years, laws have been drafted that require any business with more than 50 employees to also provide health insurance. This is a new, and quite substantial cost, that millions of businesses have suddenly had to underwrite.

Because restaurants operate at some of the lowest margins in any field, and because minimum wages have been rising, food and energy prices climbing and competition changing and growing, most eateries struggle to keep afloat. This is why so many restaurant management and operations experts have weighed in publicly on the matter. Consider what Los Angeles restaurant owner Bill Chait said about the matter. He owns many establishments throughout the L.A. area and has been using surcharges in most of them.

He said, “diners are generally fine with the additional fee…[and] finds it very strange that anyone who is affluent enough to afford a $75 cote de boeuf would complain over such a minuscule fee that would allow the person who prepared the meal to receive a modest healthcare plan.”

However, there are still many voices of dissent. Fortunately, there is a good solution, and that is making them voluntary. Menus and bills can clearly state that a diner may opt out and find their bill adjusted. Until restaurants can find effective ways to factor so many new costs into operations, this may be the wisest way to approach the tipping and surcharge issue.

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