Should tipping in restaurants be banned? | Give Me Back My Five Bucks

Should tipping in restaurants be banned?

Should tipping be banned in Canadian restaurants?Tipping has been on my mind a lot. A few days ago, I read about a new restaurant in Parksville called Smoke and Water that will be banning the act of tipping (they don’t open until June). As someone who has really struggled with the concept of tipping, I find this really intriguing.

So instead of tipping, as you can imagine, the menu prices will be higher – about 18% higher. The owner will pay his staff a living wage (between $20-24/hr for servers and $16-18 for cooks), instead of having them work for less and rely on tips to make up the rest.

The owner will eliminate the tipping line on credit card/debit receipts altogether, and if someone does leave a tip, they will give it back to them. If they can’t get it back to the customer, they will donate the money to charity.

The newspaper articles I read about this restaurant said that this is likely the first in Canada of its kind. But I found that this is common in many places in Europe, and I know it’s the model of countries like New Zealand and Australia as well.

After the news broke about this new restaurant, I listened to a Freakonomics podcast about tipping, and a Wait But Why article called Everything you don’t know about tipping. And now I feel like the whole concept of tipping could be at its tipping point (hahahaha).

But the problem is, until the system is fixed – until workers get paid fairly – I will always feel a moral obligation to tip people in the service industry. When I get a massage or have my hair cut or go out to a restaurant, I often wonder how much of what I’m paying is actually going into the pockets of the people performing the service – and how much is going back to the owner. So I tip. Not necessarily because I got good service (bad service gets 10%, good service gets 15-18%), but because I feel like I have to. And that’s not right.

Related: How much do you tip?

Another thing is, why do some customer service jobs get tips, and others don’t? I’ve worked in retail and customer service for over 10 years, and never once got tipped. I had repeat customers, people knew me by name, I made them smile, and I worked just as hard as those people in tip-based jobs … except I only made a base wage. Doesn’t seem fair to me.

Recently BF has thought about not tipping as a mandatory practice. Instead, he thinks he should only tip when he feels he receives good service – and even though I agree with what he’s saying, I scoffed at that idea because the system is broken. We’ve never NOT tipped, but the man has a point. Tipping shouldn’t be mandatory, and it shouldn’t be expected. You should only tip if you want to, but unfortunately our society seems to be a bit tip-crazy, and a lot of people will openly judge if you don’t leave a tip wherever you go. Maybe these little changes could be the catalyst needed to make a big change to the whole system.

Related: The one where the waitress added in her own tip

It’s going to be interesting to see what customers think of seeing a significantly higher priced menu, and whether they will buy into the no-tipping model. For people who regularly tip less than 18%, perhaps that will be their cue to dine elsewhere. Or maybe customers and workers will start demanding this model be adopted by other restaurants.

What do you think about this no-tipping policy?

Do you think the Smoke and Water restaurant will be able to attract staff, as well as customers?

About Krystal Yee

I'm a writer, personal finance blogger, and marketing professional based in Vancouver. I'm a former Toronto Star (Moneyville) columnist, author of The Beginner's Guide to Saving and Investing, and co-founder of the Canadian Personal Finance Conference. When I'm not working, you can usually find me running, playing field hockey, or plotting my next adventure.

57 comments

  1. In my mind, paying servers a living wage is much better than tipping for all of the reasons you just mentioned. You also bring up a good point about other areas of customer service – I’ve worked as a barista and in a clothing shop, and only got tipped being a barista. I’ve always just assumed that most of my tips go to the wait staff, a portion to the bussers/host, and some to the cooking staff as well. Hopefully that is what happens, but who knows.
    We live in Washington state, where they’re trying to raise the minimum wage to a decent level – $15/hour, and it will be interesting to see how that changes the price of goods as well as the amount of tip that’s left. I still tip, and usually too much, but I’d also like to see those workers get paid a fair wage!

    • Minimum wage for servers is different than minimum wage for everyone else – servers do not fall under the same law. Minimum wage for servers is $2.90 an hour, which hasn’t changed in over 20 years, because it is assumed they make all their money in tips. Some restaurants have servers share tips with bussers/hosts, but never with the cooking staff who are subject to the regular minimum wage rates.

      • That’s not true in all states. Also, the employer does have to make up for any gap between the minimum wage (or some standard, I think it’s minimum wage) and the server’s wage + tips. That said, it means someone could be getting tipped just to get to minimum wage so… yeah.

      • I’m not sure if that is the minimum wage in Canada or if you’re referring to the US. In Washington state the minimum wage is around $9 and does include servers. It varies by state so I think what you’re referring to is shown here: http://www.dol.gov/whd/state/tipped.html I’ve also worked in a few restaurants where the cooking staff does receive tips, but I’m sure that depends on the facility’s own rules.

        • $9 in WA? That’s great. I’m more familiar with East Coast US states, who still receive $2.90/hour. That’s the first I’ve heard about tip-sharing with cooks though – maybe another difference between Eastern and Western US. Now I want to do a comparative study.

        • Also, wow – U.S. federal minimum wage for tipped workers is still just $2.13/hour. I guess that’s where the states come in.

  2. I don’t know how it works in Canada, but in the U.S. servers are taxed on a minimum of 8% of their sales because the IRS assumes that all tables tip. I don’t know if the percentage has increased since I waited tables, but when a server gets stiffed, they still have to pay taxes on a percentage of that sale whether they actually received a tip or not. Granted, most servers are making more than an 8% per check so that balances it out some, but I won’t stiff anyone because I don’t want them paying tax on income they didn’t actually receive.

  3. Have you ever worked in food service? People who work in food service work 10x harder than people in retail or any other customer service job. Perhaps you or your boyfriend should take a job in food service and see what it’s like to work that hard and than have people stiff you with a 0-10 percent tip!

    • They do not work 10x harder.

      • I’ve worked both and I’ve worked in restaurants. Working in a restaurant or food service is MUCH more physically/mentally taxing. Krystal has never worked in a restaurant so I don’t think she can ever really understand.

        • I’ve also worked in both retail, restaurants and food service, and I do NOT agree that serving is harder, mentally OR physically. Honestly I found retail harder mentally.

          I also don’t agree with tipping being considered all but mandatory. I believe tipping is supposed to be a sign of you doing a good job or a great job – you shouldn’t be tipped just for doing your normal job, that’s what your wages are supposed to be for. That’s why it’s ridiculous to me for servers to be paid less in some places because they get tips.

  4. Does the minimum wage in Canada not apply to restaurant workers?!

    • It does – we have minimum wage requirements for restaurant workers, and they receive tips on top of their hourly wage. But I believe in the USA your assumed tips can be part of your wages so that your actual hourly wage is quite low.

      • Minimum wage in Canada does not always apply to restaurant workers. BC and Ontario have a ‘serving minimum wage’ and a ‘regular minimum wage’.

        • True, but it’s definitely not the discrepancy you’d find in the USA. Some servers work for close to $2/hour as a base salary. That seems ridiculous! I wonder how much they end up making after tips are added. :|

  5. If your boyfriend wants to fight the tipping system, he should only patronize places where tips are not expected rather than screw over an unlucky server.

    • Agreed. Refusing to tip in order to change the system? Krystal has lucked out and found a boyfriend as cheap as she is!

  6. My husband and I have this discussion from time to time. He hates the idea that tipping is considered mandatory.

    That said, when we receive really good service I have to be the one from stopping him going crazy with the tip. (I once had to talk him down from a 100% tip. The bill was only around $30 but still…)

    I’ve worked in restaurants before, and it was tough. And I wasn’t even a server. I just verified orders and took them to the tables. Things still got pretty bad. So I try to tip fairly.

    I give a standard of 15-20%. Notably good service gets 25%. There’s one server at a specific restaurant we go to who gives such good service that we routinely tip her around 30%. To be fair, the bill is usually $30ish. So we’re not exactly breaking the bank.

  7. If people don’t want to tip, don’t go out to eat! If you don’t believe in tipping – don’t patronize restaurants that pay their staff 8-10 dollars an hour and expect them to make up the rest in tips. I find that people who oppose tipping are either a) cheap b) have no concept of hard work

    • Or, strange as it sounds, believe tipping is precisely what tipping is – a comment on their service. If I get crappy service, I’m not tipping you; if I get normal service you’re getting tipped low-normal. Great service gets a good tip. That’s what tipping is; it’s not the customer paying their wages.

      And I’m sorry, but a SHIT TON of people make 8-10 dollars for way crappier jobs than food service – I should know, I’ve worked plenty (as well as working in food service and restaurants). Being paid 8-10 dollars AND getting tips was golden.

  8. Jackie @ Our Nashville Life

    I’m a big tipper, like 20-25% because I know there are some people with the mentality that they shouldn’t have to tip unless the service is above and beyond. But I wish we didn’t tip. I wish that a server would get an amazing hourly pay because it’s not fair that he doesn’t get paid for going into work if the restaurant is slow. I can’t count the number of times I’ve been at a restaurant and groups of servers are cleaning or wrapping up the silverware in the napkins. It’s not right that they get paid less than $3/hour for that job.

  9. Not only do they pay income tax in the US, but they also tip out bartenders and table bussing staff. I’d rather pay a higher price tag and let the restaurant owners pay well, but not only is that not happening, but the tipping rates are increasing. 20% is now the base! but people are starting to go to 25%.
    I found a new hair dresser in the Northern Virginia area and the salon does not accept tips! I only get my hair cut about once or twice annually, so this doesn’t save much, but it was so refreshing! I happily paid more for the cut, knowing there was no ambiguity at the end.

  10. I worked as a server for many years and made decent money at it! I have no problem tipping, always tip at least 20%, and consider that standard. I would love to see restaurants pay waitstaff a decent wage, though. Nothing was worse than being stiffed.

  11. Canadian here, and have worked in a variety of service occupations during post-secondary school including serving.

    Tipping when you get poor service is ridiculous. In no other profession does the customer/client have the opportunity to provide immediate feedback on the service than with serving. I have no problem giving (or at the time receiving) 0% when the service was crap. I tip 10% for good/decent service and RARELY do I actually see exceptional service, like seriously exceptional service. However, when I do, I’m happy to tip 15-20%.

    There should not be and I refuse to be bullied by society into a 20% standard. Tipping used to mean: To Insure Prompt Service…now that the tip happens at the end of the service, rather than before, it’s turned into a payment for service. The payment should be representative of the service received.

    Also…
    I refuse to tip on taxes…I tip on the cost of food…which is why I hate the auto % on machines…that’s just shady.

    • Definitely agree. I really dislike how I’m forced to tip, even when I don’t think anyone deserves it. It’s a mandatory voluntary act, and that makes me resentful of the entire system. Banning tipping altogether makes a lot of sense to me. That way I know the workers are getting paid fairly, and it leaves out the need to decide how much to tip. My main concern with banning tipping is that there will end up being too much mark-up, and as consumers we’ll end up paying more than what’s fair.

      • f you don’t like tipping, don’t eat out – or, patronize only restaurants that pay their employees a decent wage. They do exist.
        You act like it’s your God-given right to eat in restaurants. Your entitled attitude makes me embarrassed for you. I think if you had ever worked in food service, your attitude about tipping would change 100% – you’re often extremely picky when describing dinners out you have, and you’ve been known in this city to be rude to servers too.

        • Well, to be fair, I’m not sure I ever really describe dinners that I’ve had before on this blog. And I’m known in this city to be rude to servers? I really, highly doubt that’s true. If you could kindly provide me with examples, that would be greatly appreciated.

          Jessica, you seem to have an issue with me. I’m not sure how I’ve offended you so much with this blog post. I think it’s interesting to look at different ways to handle finances. This is a personal finance blog after all. :) And if restaurants like Smoke & Water can come up with an innovative way to try and change what (in my humble opinion is) a broken system, then you can bet I’ll want to blog about it.

          • luminousgloww@gmail.com

            If you want to focus on changing a broken model, again, stop patronizing restaurants that underpay their servers and expect them to make up the rest in tips. No one is forcing you to go out to eat. Tip or don’t tip, but don’t blame “the broken system” because you are notoriously cheap.

  12. there is a balance when it comes to tipping. I find its better to tip poorly if the services is poor compared to tipping 0. When you work in the service industry if someone tips 0 it is typically because people assume that they are cheap.

  13. I don’t understand why it’s expected (almost mandatory) to tip in restaurants/food service industry yet in health care (not necessarily, nurses… but maybe PSWs, those that clean up after people and tend to the sick) DON’T. I mean, do people really value their food more than ACTUAL service. Eating out is a luxury in itself – this, however, doesn’t mean that people SHOULD tip just because they can afford to eat out. What about those who work in the health care industry, get $20 an hour, work crazy long, nightshift hours, and clean up after poo/vomit/tend the sick, carry the elderly, and have to deal with the patient’s crazy know-it-all relatives… why don’t THEY deserve “tips”.

    I’d rather pay more for the “right” price for food (taking into account real wages and not wages dependent on tips) than be expected to tip just because they expect part of their wages from tips.

    There’s definitely something wrong with the tipping system.

    • Yeah, I find that strange as well. Why do some industries require a tip, and others (that are arguably more important, or are more taxing on a worker) get nothing? It has always baffled me. I’m really interested in seeing if other restaurants catch onto this idea, and if consumers end up demanding a change to the tipping system because of it.

      • In the US, it’s because you’re charged so much for medical services that you’d think they’d pay more. I can’t speak for Canada.

        I just got two bills, each for $650. The first covered just blood work – thyroid and Vitamin D levels. The second covered a 5 minute conversation and the threading of a scope up my nose so the doctor could check out my swollen sinus area. That system is certainly broken as well. Luckily I have insurance and these were processing errors, but my insurance is $820 monthly. My employee pays 70%.

        If you’re cleaning poo, you deserve more than $20/hr.

  14. I usually tip about 10% minimum… And a greater price for food that eliminates tipping seems good. Working wage for servers etc is an awesome idea.

  15. This is a fantastic blog post! As an Australian living in Canada (I’m a permanent resident now) I am quite appalled by the whole tipping culture in North America yet I am part of it because I know that hospitality staff in particular make so little and I feel obligated to tip…even if the service and food weren’t that great.
    What I particularly don’t agree with is tipping at salons and spas – yet again I feel I have to do this. I pay on average $250 for my haircut and color at a high end salon every 2 – 3 months. But when I go to pay using my debit card and I am prompted for a tip, it makes me feel annoyed that I have to tack on an additional $20 – $30. Same thing at spas and even sport clinics for massages etc. I am already paying a lot of money for the service, so why do I need to tip? Is my gratitude and repeat appointments as well as recommendation to friends not enough?
    I am very impressed with this restaurant owner’s attitude and initiative and I hope that one day, the entire tipping culture in North America is eliminated and workers are paid a livable wage without relying on tips and I can go out without feeling guilty and annoyed.

  16. I tip based on the service. I’ve tipped from 10% to 30%, I don’t believe it is mandatory because I have encountered some miserable waiters and they didn’t deserve an extra penny. It depends on the culture as well, for example in Japan, tipping is an insult. And eating at Asian restaurants (in Toronto, anyway) which are more like fast food joints, they don’t expect anything more than a few bucks of change left on the table.

    I’ve surprisingly received tips when working my retail job (I know!) and my hair salon’s debit machine doesn’t prompt the option for tips so I always give them cash. I’ve always believed that tips equals the quality of service you give/receive. I completely agree that the system is flawed.

  17. I used to work at a Canadian lounge chain where the servers had to tip 5% to the house (goes to management and cooks), 1% to the bartenders and 1% to the bussers based off of their total food sales. This was because corporate management had decided that the average tip a server received was based on 15%. Tipping a server 10% or lower means the server may only take home 3% of that tip and if you are not tipping because of an issue with the food (late, poor quality) the server is still tipping the same amount to the kitchen regardless of a scenario outside their control. I don’t think its a fair system and yes that is the system the employee agrees to work within, but to not tip at all actually ends up with the server paying to serve the customer.

    I think paying a living wage to servers is a much better idea than tipping, but I also think if a server does an exceptional job you should be able to tip if you feel its warranted instead of tipping out of obligation.

    I think Krystal has made some very good points on how the system is broken (it is) and really the only people making a guaranteed profit off tips are the restaurants that collect a specific amount from total food sales. I would also note that Krystal says she does tip. It is obviously a hot topic for some and I think those comments should be directed at individuals’ employers if they are not happy with their wage or should seek out different employment if they are concerned about tip amounts.

    I plan on checking out that restaurant! (+ I love Parksville)

  18. You should read this article (and find the guy’s blog if you get a chance for a much longer version) about running a restaurant in Califorina that did not allow tips. Apparently things happen that you would never expect! http://www.slate.com/articles/life/culturebox/2013/08/tipless_restaurants_the_linkery_s_owner_explains_why_abolishing_tipping.html

    • Wow that’s a great article – thanks for sharing! I’m interested in seeing if this new restaurant in Canada will see the same results over the next few years.

  19. “I often wonder how much of what I’m paying is actually going into the pockets of the people performing the service – and how much is going back to the owner. ”

    I totally agree with that. For example… if you order Domino’s pizza they pay drivers often between $7.50 and $10.25 an hour and pay for the gas they use. They put a delivery charge on your order (my store is about $3) and they only give a small amount to the driver (like 75 cents.) So drivers work for minimum wage or less and then have to get enough tips to cover their own fuel and car repairs plus more to get above minimum wage! I know it’s really hard on the drivers.

    However I am against this restaurants solution. Lets say they do pay the server $22/hr. But what if I was wealthy and got good service so I wanted to leave a tip?! I couldn’t. I don’t like that.

    • Adam, read the blog of the guy whose article I linked to Krystal above. That is exactly the problem that many people (particularly men, but I’m not judging that) had with the no-tipping system.

  20. Tipping should not be banned, but its the choice of the customer to give a tip for the “generosity” and “proper accommodation” they get from the waiters.

    Giving a tip and how much you give also shows your social status.

    • That’s why I think the tipping system is broken. People shouldn’t be judged based on how much they tip. If I receive horrible service, why should I tip at all? Doesn’t mean I’m cheap or poor… it just means that a tip isn’t justified. I shouldn’t have to worry that people are judging me because of it. And maybe it’s just me, but I think it’s ludicrous that I have to tip extra money on top of what I’m already paying for a meal to be treated well. Good service should be automatic, shouldn’t it?

  21. justmytwocents

    I dont understand how someone can say “if you cant tip dont eat out”. What kind of nonsense idea is this. Does that mean fine, let the restaurants lose their business and the servers their jobs? Tips are meant to reflect the diners satisfaction for the service received, not a payment for the right to eat out. I will never tip for rude/bad service, regardless of how much the servers get paid.
    Also, I understand what you mean Krystal by it being mandatory. Why should a waiter who served a $500 burger get $75 vs $0.75 for a $5 one. It should be a flat $ similar to what they have in Europe, and calling it service charge vs tip. Also, one other thing I dont get is the whole if its a party of 8 or more you get dinged automatically. how is that different from 2 tables of 4 people each, doesnt guarantee you are receiving great service.

    • I was just talking to BF the other day about how ridiculous it is to charge an automatic gratuity for parties of 8 or more (usually 18%). It basically means the server doesn’t have to do anything in order to get what is usually a bigger tip than I’d normally leave. And it’s a bit deceiving as well, because some people don’t realize that they’ve already been charged an automatic gratuity, and end up adding on a tip on top of that. Although perhaps it’s the customer’s own fault if they don’t read the bill properly… :)

      • Ridiculous? Have you ever had to take care of a table of 8 people or more? Quite a bit of work. Then again maybe you are clueless as your BF. I have to agree with several of the previous posters regarding those who do not tip. Stay home!

        • The discussion is not about whether people should tip or not. The argument is the fact that people are forced to tip as if the diners owe the servers anything, especially the ones who suck at their jobs. I would like to see you give someone a $100 tip some day, you know, since you’re obviously one who’s quick to judge.

          • Forced to tip? You are forcing a server to serve your sorry butt by going out to eat. You are wasting a servers time and opportunity to make a tip off someone who appreciates going out to eat and having someone slave over them. I always tip decently when I use a service that traditionally depends on tips. Otherwise I stay home myself.

            • I don’t like someone forcing me to tip a certain percentage. What if I don’t think they deserved 18%? It should be my right to decide how much extra to give someone, and I shouldn’t be forced to do something in order to get good service. Good customer service should just happen within a customer service industry. Just like in all other customer service jobs where tipping doesn’t exist. I didn’t feel like people were wasting my time when I was slaving over them in my years of working in customer service – and I was working for minimum wage without even the option for a tip.

              The whole point of the blog post, is to talk about whether a “no tipping” policy would work. I wonder if servers would think they were wasting their time if they got paid a decent wage? What if everyone just got paid a regular wage, without having to rely on tips? That model is successful in many other countries, and it makes it more fair to the customer and the worker in my opinion.

          • I think the disconnect here is that you’ve never had a restaurant job, Krystal. Why don’t you or your boyfriend try working in one for awhile, and get back to us on your “no tipping” idea ;) it would be hilarious

  22. As someone who worked in the service industry for 8 years, I understand how important it is to tip. If you have a $300 tab and the table leaves you $10 (by accident, because their food was wrong, because they don’t believe in tipping – any reason) you could end up walking away with absolutely nothing. In the restaurants I worked at, we tipped a certain percentage to the bussers, bartenders, and hostesses. Say it was 1% to each department, that leaves you with $1. And you’re still paying taxes on that $300 tab. Hardly seems fair. That’s the nature of the business though and it encourages you to bust your ass day in and day out.

    Can’t say I agree with doing away with tipping. When you pay an hourly wage, the server is promised that amount of money so the service level can be stellar or abysmal – doesn’t matter. There is no incentive to provide good service. There is a small percentage of people who work in the service industry who truly enjoy their job and would provide excellent service regardless if it was from a paycheck or from a tip. Unfortunately, not everyone has the same job ethic.

    I think if we switch to hourly wage in the restaurant business, we would consistently have mediocre dining experiences.

  23. It’s funny, I had this same discussion the other day when I went with my parents to a restaurant for food. My dad is firmly against tipping and we began to discuss how broken the industry is as well as the social pressure to tip. I hope the industry adapts and actually pays people a living wage, but I’m sure there are amazing servers out there who make quite a living off those tips (and don’t put them down as taxable income). Definitely an interesting topic and it makes me wonder why it was all developed in the first place instead of being similar to retail jobs.

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