The face of dining is always changing and growing. Lately, the idea of doing away with tipping completely in favor of a flat service charge is picking up steam as minimum wages rise and servers and line cooks alike voice concern with their pay structure.
But what would implementing a standard service fee do to your business? How would it affect your operations, your customer satisfaction, and your bottom line? Read on for the low down on service charges versus traditional tipping.
With a flat service charge on each purchase, your servers can now make a comfortable wage without fretting about paying the bills if they leave a shift without many tips. Some managers may assume this would cause a dip in service quality as servers become complacent, but the opposite is true.
In reality, most customers tip the same amount every time they eat out (whether 15%, 25%, or anywhere in between) regardless of the service quality due to social expectations. This leads servers to actively try to turn as many tables as quickly as possible, which invariably leads to less attention placed on each individual table. Paying servers a calculated wage eliminates this mentality and allows them to focus on the customer.
Many bar and restaurant managers are acutely aware of the financial headache caused by tipping when tax season rolls around. In many U.S. cities a server’s tip is subject to a myriad of confusing regulations and tax laws on the federal, state, and city levels.
Eliminating tipping from your restaurant cuts down the amount of calculations and paperwork and streamlines your bookkeeping process, saving valuable time. You also don’t have to be concerned with servers pocketing tips directly or disputing reported tip income later.
One effect of switching to a flat service charge that hasn’t been properly discussed from a financial standpoint is the quicker rate of table turnover such a fee would entail. Without attempting to do math and calculate their tip, customers can easily pay their bills and leave sooner so tables open up faster.
With Buzztime’s digital dining system you can still speed up the checkout process when tipping is included by allowing customers to pay at their tables without interacting with a server. But by charging a service fee and reducing the amount of choices and calculations patrons must make before leaving you’ll undoubtedly make the process even quicker than before.
Switching to a service charge isn’t completely free of potential problems. One of the biggest hurdles for restaurants and bars in a no-tip culture is acclimating customers to higher prices on the menus. Even if they’re paying the same rate at the end of the day, seeing the total price on a menu can turn patrons away who are accustomed to lower menu prices.
If you choose to do away with tips and implement a flat service charge in your bar or restaurant, your top priority must be communicating to your customer that the rate increases reflect the lack of tip, and that ultimately they’re paying about the same price at the end of the day. This message must be strong on your menu, in your servers’ communications with customers, in your advertising, and in your social media marketing.
Now that you’re armed with the necessary information, you can weight the costs and benefits of doing away with tipping and determine if a service charge is the right move for your bar or restaurant.