Is Now the Time for Mandatory Gratuity to Make Its Move?

A sign outside Old Hag's explaines the restaurant's 18% mandatory service fee.
A sign outside Old Hag's explaines the restaurant's 18% mandatory service fee. Lauren Drewes Daniels
Ah, tips. The bellwether of decency when eating out. That fickle territory where the customer squares up with a server. Or not. Big life decisions are based on tips. Bosses, first dates, in-laws want to know: What did they tip? And based on that slide across the table, is this a relationship they're willing to move forward with?

Meanwhile, as we’re all trying to figure out if there will be a second date, a person is trying to pay bills. 

During the COVID-19 pandemic, the service industry has taken some of the hardest punches from social distancing requirements. And now, for those who have tables of customers, tips carry more importance. 

New York restaurateur Danny Meyer has been a proponent of a no-tipping policy. In 2015, he began a practice of “factoring full liveable wages and benefits for all of our employees into our menu prices” at all his New York restaurants. 

More recently, when his spots reopened in late July after being closed because of the pandemic, he changed course and added tipping again, because, as he explained through a LinkedIn post, “We’ve come to believe that it’s the inability to share tips that is the problem, not the tips themselves.” 

Meyer wrote that tips can only go to the dining room team. As in Texas, tip-pooling only extends to the front-of-house and isn’t supposed to include janitors, dishwashers, chefs or cooks. 

Locally, some restaurants and bars are dabbling with mandatory gratuity or service fees. 

Local Restaurants Change Policies
When I placed an order at Old Hag’s a few weeks ago, there was an 18% service fee added to my bill. As I mentioned in this ode to their fettuccine formaggio, this stipulation was both on a recorded message that I had to listen to before placing my order and taped to the front window of the restaurant. 

Also, just prior to federal unemployment benefits expiring in late July, Ivan Pugh of Bucky’s Moonshine posted the question on his Facebook page. His servers were “freaking out” because they were about to lose federal stimulus money and business was down about 60% at his Deep Ellum restaurant. He was seeking input via social media about how patrons would feel about a mandatory tip. 

As of Aug 12, the post has nearly 300 comments. Painting with a really broad brush, most were in support of the mandatory tip, expressing disgust that customers could walk out of a restaurant without tipping, particularly during these stressful financial times. 

But, the responses came from his customers, friends or fans. When Allie Pillyards NBC5 posted her receipts with gratuity added in on Facebook, one of the first comments was that gratuity should only be determined by customers, which got 92 thumbs-up reactions, six mad faces and four hearts. Because that’s how we do science now. A mad face and a thumbs-up.

The Survey Says ... No, Thanks
Researchers at Washington State University recently studied mandatory fees, and they found that diners don’t like the idea of not being in control of the gratuity. 

Ismail Karabars, lead author of the study, concluded that nonvoluntary tipping was part of the experience for diners. When it’s removed, customers lose their ability to express their gratitude. And when it’s enforced upon them, customers are less likely to return.

Sort of like when your mom calls you to remind you to call your dad for his birthday and you want to say, “I was already gonna! But, you ruined it now!” It takes away from the sincerity.

Karabars also looked at how tipping affects back-of-house employment. As in the case of Meyers, many restaurants are looking for a more judicious spread of the extra funds.

"The person who cooks your meal may be working harder than the server, but servers end up making quite a bit more money when you add in the tips," Karabas wrote. "That's led to turnover of kitchen staff, which is a concern in the restaurant industry."

In complete transparency, when I signed my receipt at Old Hag’s, I felt a pang of guilt for leaving the tip line empty. I hesitated, but then reminded myself I’m paying 18% above price for takeout. So, I casually mentioned to the cashier, “The tip is included, right?” 

In a sigh he said, “Well, we don’t see any of that.” 

That cut. I’d already signed my receipt. I was irritated, but wasn't sure at whom or what. On the way home I kept going through it in my head: I paid a really fair and decent amount for my food. I went home and emailed Old Hag’s for clarity. 

Owner Michael Lindsey replied almost instantly: “Thanks for letting me know; and I will share clarification with people how to address such questions. The technical aspect is it is a service fee, but the response that should have been given is 'tips are not necessary as we are compensated well because the service fee' and we really appreciate you patronizing us and please don't feel bad, the employees we have working the front honestly are not concerned if people add a tip — I think they were just tongue twisted.”  

Perhaps. Regardless of how one employee spoke off-the-cuff, there's a bigger point to this; it has allowed Lindsey to keep all his staff. 

“The service fee has allowed us to not only [not] lay people off with the pandemic, but make sure we are able to pay all employees, front and back of the house, a really competitive wage and offer health benefits, while also absorbing the really high food and supply price increases happening over [the] last few months, all without sacrificing our employees' payroll,” Lindsey wrote.  “We pay our team members well, so you do not have to tip.”

Some servers may appreciate the security in knowing that they have a liveable wage guarantee and that rent isn’t left to the whims of diners. Others might be drawn to the profession for the opportunity to get tips. From the customer's perspective, it's in the air. Execution definitely plays a part; being transparent upfront is important.

But, when "this" is all over and we're able to pack restaurants, drink margaritas and order bowls of queso, will a mandatory service fee be more acceptable? Now that a greater light has been put on the vulnerability of restaurant workers, perhaps this is the time for "service fee" movement to gear up.
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Lauren Drewes Daniels is the Dallas Observer's food editor. She started writing about local restaurants, chefs, beer and kouign-amanns in 2011. She's driven through two dirt devils and is certain they were both some type of cosmic force.