Here’s the dilemma printed at the bottom of a bill at an upscale restaurant in Minneapolis. "(Name of the restaurant) has replaced tipping with a 22 percent Hospitality Service Charge. This will provide all our employees a professional level living wage. Pursuant to Minnesota Statute Section 117.23, Sub. 9, this charge is not a gratuity for employee service. A separate line on your check has been provided should you wish to leave a gratuity/tip dedicated solely to your server."
What to do? What to do?
Do you tip the server as you normally would, and pay 42 percent in service charges? Do you stiff the server since you are already paying a service charge in which he or she is covered? Do you leave a smaller tip and feel cheap? Or do you make a mental note not to return to this restaurant?
Two academic studies have found that when tipping is taken out of the hands of diners, they are less likely to return to that restaurant.
Eliminating tipping in fine dining is trending, but it’s a slippery slope. An American Express survey of 503 U.S. restaurants found 18 percent have adopted non-voluntary tipping with an additional 29 percent planning to follow suit. And now limited-service restaurants, not content with tip jars as more people pay with credit, swing the POS screen around for customers to sign with tip percentages already spelled out, as the cashier watches you sign. Not only have you not received your food at this time, you probably will also be picking it up from the kitchen window and bussing your own table.
This isn’t the hospitality contract diners expect. Or so says a new study published in the International Journal of Contemporary Hospitality Management by three professors, Ismail Karabas and Sarah Lefebvre from Murray State University and Marissa Orlowski from the University of Central Florida. Their research shows diners expect to tip at fine-dining establishments and respond negatively to "service-inclusive prices." The majority also don’t expect to tip at limited-service restaurants and the request is likely "perceived as an unwanted or unwarranted suggestion…leading to a negative customer response."
To understand the consumers’ behavior, you first have to understand the motivations behind the desire to tip, and the study found several. For full-service restaurants, tipping comes from a place of fairness. The diner believes the employee is reliant on the tip as part of their wage compensation. And they want to reward good service (and sometimes punish bad).
For limited-service restaurants, the study says the motivation for tipping, since it’s done before the service has been provided, is more along the lines of wanting to avoid social disapproval or gain approval.
Ironically, the researchers found that if the check amount at a limited-service restaurant is high, the customer will be less likely to be irritated at a request for a tip because the higher price infers that they are getting more service. The opposite is true when the price is low. Go figure.
Either way, a request for a tip in a limited-service restaurant and the inability to tip in a fine-dining restaurant can influence whether a diner will continue to patronize a restaurant, the authors of the study say.
Another study on tipping—with the clever title, "The roll of blocked gratitude in non-voluntary tipping"— by Ismail Karabas of Murray State University and Jeff Joireman of Washington State University, found that customers in North America spend around $66 billion a year on tips. The sentiments behind tipping are the same as the other study found, but they’ve added a third insight: People tip or don’t tip "to communicate their dissatisfaction and retaliate when they prefer to avoid lodging direct complaints."
The studies found that no-tipping is detrimental to bringing customers back because guests both perceive it as unfair to the server and that without the promise of a tip, the service won’t be as good. Those responding to the survey also believe service charges are more expensive than tipping.
The act of tipping, the authors say, gives the customer a perceived sense of control over the service outcome, therefore, the service charges become even more problematic when the service is poor and the guest has to pay the, say, 20 percent fee.
So even though research is showing the majority of guests aren’t on board with no-tipping, the industry sees it as a way to make salaries more equitable between the front and back of the house.
Of special note is that while you expect diners not to return if the service is poor and the service charge high, diners in the surveys also didn’t plan to return even if the service was exceptional, because they couldn’t reward or punish—which diminished positive emotions.