Serving staff have to declare and pay income taxes on their tips. If they don’t, they’re guilty of tax evasion and could get huge problems down the road.
I have a friend who did a bunch of work for cash and the CRA came after him for unpaid taxes. I would never want to go through that.
But the prices are already too high because of the expected tipping? Are you counting on people to eat at the restaurant because they didn’t expect to pay more and you can secretly price gouge them at the exit?
If anything the total expected price for a meal will come down because servers will be paid the fair market rate for their labour and not the current guilt trip percentages… the rise in prices won’t exceed the savings from not tipping.
I’m not counting on anything. If you read my other comments in this thread, it’s clear that I’m not defending tipping. I hate tipping. But I have to pour cold water on this all too common claim that one restaurant owner by themself can end tipping at their restaurant and survive as a business. It’s been tried before and failed numerous times.
About the best they can do is make tipping mandatory by putting an automatic 35% gratuity on the bill. But this is something only high end restaurants have gotten away with. Restaurants for budget conscious people (i.e normal people rather than rich people) cannot survive with anything like this.
The same story would apply for simply raising prices. People will see the restaurant as too expensive for what it offers and stop going.
If anything the total expected price for a meal will come down because servers will be paid the fair market rate for their labour and not the current guilt trip percentages
This claim needs a lot of support. Are you aware that 42% of all restaurants in Canada are already losing money paying the low wages as it is? To support your claim, you’d have to show how paying fair market wages, eliminating tipping, and charging more for meals would translate into higher sales.
I’d also like to point out that not everyone tips the same percentage. Some tip a lot, some less, some not at all. Those who tip a lot are in effect subsidizing the meals of those who cannot or will not tip as much. For people who cannot afford to tip at all, a move to a non-tipping system would represent an absolute increase in the cost of their meal.
If a meal is priced $50 + a 15% tip is expected, you expect customers to pay $57.50 for the meal.
If you instead eliminate tipping and increase the prices by 15%, your customers will still pay the same $57.50 for the meal. You still have the extra money to pay your servers. How does that lead to fewer customers? They still see the same final price at the end of the day.
The rest of the world operates perfectly fine without tipping and in fact has better service.
Tips are optional. People tip anywhere from 0-100%, with most tips in the 15-35% range. A person who regularly tips 0-10% will see their prices go up if they’re forced to pay 15% more on every meal.
But my broader point doesn’t address the “what if society wakes up tomorrow and bans tipping for the entire country?” scenario. That’s a fantasy scenario.
The issue I’m raising is the question “what if one restaurant owner decides to eliminate tipping at their restaurant and just charge 15% more, passing all that money over to the employees?” The answer is that this has been tried before and the restaurants did not survive. People saw the higher prices and switched to a restaurant with lower menu prices, even if they tip 15% or more anyway.
You might say this is irrational, and it is, from an economic standpoint. But people in a tipping culture do prefer it that way. The fact that a tip is optional but customary makes them feel like they are in control, and of course they are, given that people decide how much they want to tip.
We’re talking about irrational behaviour by customers and you’re surprised that it happens? Why do you think entire industries routinely use hidden fees that dramatically raise the final price above the advertised price?
Because it works! You may not like it, I certainly don’t like it, but I can’t dispute it because it does in fact work.
We’re talking about irrational behaviour by customers
No, we are not. The article is about foreigners in the US not tipping, which is not irrational behaviour, at all.
Why do you think entire industries routinely use hidden fees that dramatically raise the final price above the advertised price?
Because some governments, especially the US government, would rather punish their citizens than the companies scamming them.
Regardless, anyone in the US who is economically conscious enough to choose to eat out or not depending on prices, would inevitably take tipping into consideration, and anyone who isn’t, wouldn’t. The alternative would be people who cannot afford eating out not tipping, equally screwing over service workers, so your point is moot.
Any difference in behaviour between North Americans (who do tip) and foreigners (who don’t) is by definition economically irrational behaviour, because economics predicts that a rational consumer would seek to pay as little as possible. The actual behaviour may be rational from a social perspective (social pressures, signalling, etc) but it is economically irrational to pay more than required.
Tipping in this way functions no differently from hidden fees in that consumers do not accurately take them into account when purchasing, even when the information is publicly available and widely known. That foreigners do not tip is a cultural (irrational) difference, not a calculated difference. In some sense it’s no different than other cultural differences that annoy locals, such as public spitting or littering.
As for broader trends in terms of how often people eat out, those tend to be economically rational. People don’t tend to go deeply into debt to continue eating out when they can’t afford it, though there is likely a small percentage of exceptions. In general though, the existence of tipping means people eat out less often than they otherwise would.
Any difference in behaviour between North Americans (who do tip) and foreigners (who don’t) is by definition economically irrational behaviour
The difference between foreigners and Americans isn’t relevant, since the benchmark is maximizing value.
because economics predicts that a rational consumer would seek to pay as little as possible
Good thing I said that the article was about foreigners not tipping while in the US, which by your own definition is not irrational behavior, quite the opposite.
In some sense it’s no different than other cultural differences that annoy locals, such as public spitting or littering.
Nice examples. I wouldn’t put “refusing to participate in a custom exclusive to the US that has historically been weaponized to keep wages as low as possible”, at the same level as spitting or littering, but that’s just me I guess.
Let’s say that I refuse to go to a restaurant staffed exclusively by 14 year olds, because I don’t like child labor, would that annoy you too?
In general though, the existence of tipping means people eat out less often than they otherwise would.
Right. That’s what I said in my previous message: people take tipping into account before going out, especially when they are economically constrained.
It honestly feels like either you didn’t really read my comment, or a LLM wrote your response.
Honestly, it’s not even worth talking to you. You’re intent on interpreting everything I say in the most uncharitable way possible in order to elevate the toxicity of the discussion and win points for your imagined side, rather than learn anything.
The saddest thing is how common people like you are on lemmy. My block list grows ever longer…
Landlords are definitely an issue that needs to be handled as well but that doesn’t absolve the employer of paying their people a living wage. Tipping culture in general needs to die off.
If that’s not possible but they believe in their business, they could consider a different business model, maybe become an employee co-op so the employees have a stake and could see the fruits of their own labor one day.
Are you aware of any restaurants that pay an actual living wage? For Toronto (and the GTA), that’s $27.20 per hour, or nearly $10 above minimum wage. For restaurants that already operate on razor thin margins, that’s impossible.
I don’t go around inquiring what everyone pays but I try to frequent local, reputable business so I’m going to say, “yes, as much I can get in the capitalist dystopia we operate in.” There are several locally that actually try really hard to compensate their staff, including a couple co-ops, they’re pretty vocal about their tipping policies and the benefits they give their workers, they aren’t hard to find if you look around. They are slightly more expensive but the quality is usually there.
Kind of unrelated but I’ve noticed here locally (I can’t really comment on any other regions as I’m not that familiar with them) there seem to be a handful of successful restaurateurs that own several restaurants that underwrite or try out new concepts. If it’s successful it ends up staying around, if it’s not successful they usually know within the first year. I’m not sure if that’s how it is everywhere or if we just have a cabal of young chefs in my city but it’s something I’ve noticed. There are several brick and mortar stores that started out as food trucks and grew into more so it’s not like you have to open a big storefront initially either. Start your concept and bring in investors if you need to but if you can’t pay employees it’s not a viable business model.
FWIW servers can do really well in nicer places, If you want to see what a restaurant really pays look at how the kitchen staff is compensated.
Yes, I’m aware that high end restaurants can afford to pay their staff more and actually do so rather often. But those restaurants are unaffordable for most people to eat at outside of special occasions.
If restaurants were forced to pay a living wage then only the high end restaurants would survive, then everyone would be complaining that restaurants are only open for rich people.
Everyone in the west knows about tipping. No one is being misled. There have been many attempts to run restaurants with higher prices but no tipping. They always go out of business.
That’s a bold assumption. I’m in the west too. Tipping is not a thing here (at least not in that way). Having a price on the menu and asking for more is also frowned upon here, not to mention illegal.
When one mentions “the west” it means the western world, not “west of the Atlantic”. If you’re going to make your own definitions for words you should at least be clear about it.
Or just gasp include it in the price like civilised countries…
If you raise prices then fewer people will eat at your restaurant because the prices are too high.
It is literally the exact same price.
They don’t do it because then they have to pay taxes on those tips
Serving staff have to declare and pay income taxes on their tips. If they don’t, they’re guilty of tax evasion and could get huge problems down the road.
I have a friend who did a bunch of work for cash and the CRA came after him for unpaid taxes. I would never want to go through that.
But the prices are already too high because of the expected tipping? Are you counting on people to eat at the restaurant because they didn’t expect to pay more and you can secretly price gouge them at the exit?
If anything the total expected price for a meal will come down because servers will be paid the fair market rate for their labour and not the current guilt trip percentages… the rise in prices won’t exceed the savings from not tipping.
I’m not counting on anything. If you read my other comments in this thread, it’s clear that I’m not defending tipping. I hate tipping. But I have to pour cold water on this all too common claim that one restaurant owner by themself can end tipping at their restaurant and survive as a business. It’s been tried before and failed numerous times.
About the best they can do is make tipping mandatory by putting an automatic 35% gratuity on the bill. But this is something only high end restaurants have gotten away with. Restaurants for budget conscious people (i.e normal people rather than rich people) cannot survive with anything like this.
The same story would apply for simply raising prices. People will see the restaurant as too expensive for what it offers and stop going.
This claim needs a lot of support. Are you aware that 42% of all restaurants in Canada are already losing money paying the low wages as it is? To support your claim, you’d have to show how paying fair market wages, eliminating tipping, and charging more for meals would translate into higher sales.
I’d also like to point out that not everyone tips the same percentage. Some tip a lot, some less, some not at all. Those who tip a lot are in effect subsidizing the meals of those who cannot or will not tip as much. For people who cannot afford to tip at all, a move to a non-tipping system would represent an absolute increase in the cost of their meal.
I still don’t understand your point at all.
If a meal is priced $50 + a 15% tip is expected, you expect customers to pay $57.50 for the meal.
If you instead eliminate tipping and increase the prices by 15%, your customers will still pay the same $57.50 for the meal. You still have the extra money to pay your servers. How does that lead to fewer customers? They still see the same final price at the end of the day.
The rest of the world operates perfectly fine without tipping and in fact has better service.
Tips are optional. People tip anywhere from 0-100%, with most tips in the 15-35% range. A person who regularly tips 0-10% will see their prices go up if they’re forced to pay 15% more on every meal.
But my broader point doesn’t address the “what if society wakes up tomorrow and bans tipping for the entire country?” scenario. That’s a fantasy scenario.
The issue I’m raising is the question “what if one restaurant owner decides to eliminate tipping at their restaurant and just charge 15% more, passing all that money over to the employees?” The answer is that this has been tried before and the restaurants did not survive. People saw the higher prices and switched to a restaurant with lower menu prices, even if they tip 15% or more anyway.
You might say this is irrational, and it is, from an economic standpoint. But people in a tipping culture do prefer it that way. The fact that a tip is optional but customary makes them feel like they are in control, and of course they are, given that people decide how much they want to tip.
This is the dumbest possible take on this matter.
Like, customers are stupid enough to both ignore that they need to add 20% on top of the bill, and still tip? What?!
We’re talking about irrational behaviour by customers and you’re surprised that it happens? Why do you think entire industries routinely use hidden fees that dramatically raise the final price above the advertised price?
Because it works! You may not like it, I certainly don’t like it, but I can’t dispute it because it does in fact work.
No, we are not. The article is about foreigners in the US not tipping, which is not irrational behaviour, at all.
Because some governments, especially the US government, would rather punish their citizens than the companies scamming them.
Regardless, anyone in the US who is economically conscious enough to choose to eat out or not depending on prices, would inevitably take tipping into consideration, and anyone who isn’t, wouldn’t. The alternative would be people who cannot afford eating out not tipping, equally screwing over service workers, so your point is moot.
Any difference in behaviour between North Americans (who do tip) and foreigners (who don’t) is by definition economically irrational behaviour, because economics predicts that a rational consumer would seek to pay as little as possible. The actual behaviour may be rational from a social perspective (social pressures, signalling, etc) but it is economically irrational to pay more than required.
Tipping in this way functions no differently from hidden fees in that consumers do not accurately take them into account when purchasing, even when the information is publicly available and widely known. That foreigners do not tip is a cultural (irrational) difference, not a calculated difference. In some sense it’s no different than other cultural differences that annoy locals, such as public spitting or littering.
As for broader trends in terms of how often people eat out, those tend to be economically rational. People don’t tend to go deeply into debt to continue eating out when they can’t afford it, though there is likely a small percentage of exceptions. In general though, the existence of tipping means people eat out less often than they otherwise would.
The difference between foreigners and Americans isn’t relevant, since the benchmark is maximizing value.
Good thing I said that the article was about foreigners not tipping while in the US, which by your own definition is not irrational behavior, quite the opposite.
Nice examples. I wouldn’t put “refusing to participate in a custom exclusive to the US that has historically been weaponized to keep wages as low as possible”, at the same level as spitting or littering, but that’s just me I guess.
Let’s say that I refuse to go to a restaurant staffed exclusively by 14 year olds, because I don’t like child labor, would that annoy you too?
Right. That’s what I said in my previous message: people take tipping into account before going out, especially when they are economically constrained.
It honestly feels like either you didn’t really read my comment, or a LLM wrote your response.
Honestly, it’s not even worth talking to you. You’re intent on interpreting everything I say in the most uncharitable way possible in order to elevate the toxicity of the discussion and win points for your imagined side, rather than learn anything.
The saddest thing is how common people like you are on lemmy. My block list grows ever longer…
The irony of calling me “toxic” when you block anyone calling you out.
Then your restaurant is too expensive to operate, this is very basic economics.
Restaurants are basically always operating on a razor thin margin.
I see them open and close every year in my city. Restaurants coming and going like a revolving door. The commercial landlords stay the same though.
Restaurants are notoriously difficult to run profitably (non-paywalled: https://archive.is/cQ2pB). I’m a patron of a lot of local restaurants and they definitely open and close a lot more than pretty much any other business I can think of (except maybe vape shops, remember those?).
Landlords are definitely an issue that needs to be handled as well but that doesn’t absolve the employer of paying their people a living wage. Tipping culture in general needs to die off.
If that’s not possible but they believe in their business, they could consider a different business model, maybe become an employee co-op so the employees have a stake and could see the fruits of their own labor one day.
Are you aware of any restaurants that pay an actual living wage? For Toronto (and the GTA), that’s $27.20 per hour, or nearly $10 above minimum wage. For restaurants that already operate on razor thin margins, that’s impossible.
I don’t go around inquiring what everyone pays but I try to frequent local, reputable business so I’m going to say, “yes, as much I can get in the capitalist dystopia we operate in.” There are several locally that actually try really hard to compensate their staff, including a couple co-ops, they’re pretty vocal about their tipping policies and the benefits they give their workers, they aren’t hard to find if you look around. They are slightly more expensive but the quality is usually there.
Kind of unrelated but I’ve noticed here locally (I can’t really comment on any other regions as I’m not that familiar with them) there seem to be a handful of successful restaurateurs that own several restaurants that underwrite or try out new concepts. If it’s successful it ends up staying around, if it’s not successful they usually know within the first year. I’m not sure if that’s how it is everywhere or if we just have a cabal of young chefs in my city but it’s something I’ve noticed. There are several brick and mortar stores that started out as food trucks and grew into more so it’s not like you have to open a big storefront initially either. Start your concept and bring in investors if you need to but if you can’t pay employees it’s not a viable business model.
FWIW servers can do really well in nicer places, If you want to see what a restaurant really pays look at how the kitchen staff is compensated.
Yes, I’m aware that high end restaurants can afford to pay their staff more and actually do so rather often. But those restaurants are unaffordable for most people to eat at outside of special occasions.
If restaurants were forced to pay a living wage then only the high end restaurants would survive, then everyone would be complaining that restaurants are only open for rich people.
So, you are actually defending intentionally misleading your customers?
Everyone in the west knows about tipping. No one is being misled. There have been many attempts to run restaurants with higher prices but no tipping. They always go out of business.
That’s a bold assumption. I’m in the west too. Tipping is not a thing here (at least not in that way). Having a price on the menu and asking for more is also frowned upon here, not to mention illegal.
I’m talking about west of the Atlantic, not Europe.
And I’m not defending the practice of tipping. I hate tipping. But what I hate even more are smug people who think it’s so easy to get rid of tipping.
When one mentions “the west” it means the western world, not “west of the Atlantic”. If you’re going to make your own definitions for words you should at least be clear about it.