Speaker 1: Welcome to brain Stuff from how Stuff Works, Hey, brain Stuff,
Speaker 1: Lauren Vogel bomb here. Why do restaurants use tipping? Is
Speaker 1: it a reward for good service? Studies show that tips
Speaker 1: don't go up or down significantly based on the quality
Speaker 1: of service. Does tipping attract and retain better wait staff? Not? Really?
Speaker 1: Is it a bribe so the waiter won't spit in
Speaker 1: your soup the next time you come? Probably depends on
Speaker 1: the waiter. In most countries, a service charge is included
Speaker 1: in the bill. However, in America, instead of an upfront
Speaker 1: service charge, diner's hand over fifteen or more of the
Speaker 1: price of the meal to the server at their own discretion.
Speaker 1: It's not required, but it is customary. But this seemingly
Speaker 1: generous practice has some unpleasant hidden costs for starters. The
Speaker 1: existence of tipping allows restaurants to pay servers a federal
Speaker 1: minimum wage of two dollars and thirteen cents an hour,
Speaker 1: so waiters in most states basically live and die by tips.
Speaker 1: The result is that tipped workers are twice is likely
Speaker 1: to live in poverty and depend on food stamps as
Speaker 1: other workers. Then there's the opposite problem. In stronger restaurant markets,
Speaker 1: like big cities, the existence of tipping means that waiters
Speaker 1: in busy restaurants end up making a lot more money
Speaker 1: than neque cooks and dishwashers, who get paid a fixed
Speaker 1: hourly wage while working just as hard. Add to all
Speaker 1: that mess the fact that America's tipping system is rooted
Speaker 1: in racist hiring practices that emerged after the Emancipation when
Speaker 1: white business owners were trying to avoid paying new black employees,
Speaker 1: and tipping comes out looking decidedly ugly. So when does
Speaker 1: it make sense to abandon tipping in favor of raising
Speaker 1: restaurant prices so that all staff is paid fairly or
Speaker 1: would customers bulk get that? Sarah Clifton is a mathematics
Speaker 1: professor at the University of Illinois who specializes in modeling
Speaker 1: complex social behaviors. In a recent paper, she created mathematical
Speaker 1: models of two hypothetical competing restaurants, one with conventional tipping
Speaker 1: and one without. The paper was published in the February
Speaker 1: issue of Chaos, a journal from the American Institute of Physics.
Speaker 1: The key variable in Clifton's models is the average tipping rate.
Speaker 1: Tipping rates have been creeping up of the past few
Speaker 1: decades from ten percent to fift and now close in
Speaker 1: major US restaurant markets. Clifton's models are designed to be
Speaker 1: as simple as possible, with every player in the system
Speaker 1: motivated purely by monetary gain, meaning that when cooks are
Speaker 1: paid better, they're more likely to stay, meaning that food
Speaker 1: quality goes up. When waiters are paid less, they're more
Speaker 1: likely to leave, decreasing service quality, but eventually the waiters
Speaker 1: would return if diners flooded the restaurant because of the
Speaker 1: food quality, which would presumably mean more profit and higher
Speaker 1: wages for all. What Clifton found was that when the
Speaker 1: average tipping rate crosses a certain threshold call it the
Speaker 1: tipping tipping point, restaurants will make more money by abandoning tipping. Unfortunately,
Speaker 1: Clifton doesn't have enough real world data to calculate exactly
Speaker 1: what that magic tipping point is. Dozens of end restaurants
Speaker 1: across the United States, led by New York chef and
Speaker 1: restaurant tour Danny Mayer, began experimenting with no tipping policies.
Speaker 1: These trend setting restaurants either increased MANU prices by an
Speaker 1: average of twelve to fifteen percent or included gratuity in
Speaker 1: the final bill. That way, the restaurants could distribute the
Speaker 1: earnings more fairly and pay everyone a fixed hourly wage,
Speaker 1: but this plan was not popular with the public. Michael Lynn,
Speaker 1: a professor of consumer behavior at the Cornell University School
Speaker 1: of Hotel Administration who researches tipping, reported that online customer
Speaker 1: reviews of no tipping restaurants went south when those no
Speaker 1: tipping policies were instituted, and we're worse when tips were
Speaker 1: replaced with service charges. Lynn said, people hate service charges,
Speaker 1: and if I increase my menu prices, They're going to
Speaker 1: think I'm more expensive, even if the combined bill is
Speaker 1: no different. In other no tipping restaurants, it was the
Speaker 1: waiters who revolted. At Bar Agricole in San Francisco, servers
Speaker 1: were used to making twenty five dollars to forty dollars
Speaker 1: an hour, including tips, while the hitchen staff was only
Speaker 1: making thirteen to twenty dollars an hour. When owner Thad
Speaker 1: Woggler decided to ditch tipping, his cooks and dishwashers were psyched,
Speaker 1: but the serving staff kept leaving for more traditional restaurants,
Speaker 1: so Waggler like lots of other pioneering restaurant owners switched
Speaker 1: back to the normal tipping scheme. Clifton, our mathematician, feels
Speaker 1: that these restaurateurs were simply ahead of their time. She said,
Speaker 1: when restaurant owners get rid of tipping too early, as
Speaker 1: we've been seeing with some really nice restaurants, they sometimes
Speaker 1: have to reinstate it because it's not profitable that would
Speaker 1: conform with what customers want. Her model indicates that casual
Speaker 1: restaurants should actually make the move before fancy ones, because
Speaker 1: the point at which the tipping rate becomes profitable would
Speaker 1: be lower for them than in the high end places. However,
Speaker 1: Joe's Crabshack, a decidedly not high end chain, tested the
Speaker 1: waters in late when eighteen of its restaurants abandoned tipping.
Speaker 1: Although customers were essentially paying the same exact total for
Speaker 1: a meal as they were when tipping was allowed, said
Speaker 1: they didn't like the no tipping policy. According to restaurant research,
Speaker 1: customers said they didn't trust management to share the money,
Speaker 1: and they felt it took away incentive for good service.
Speaker 1: Joe's dropped the no tipping policy less than a year
Speaker 1: after it started, after losing eight of its customers. During
Speaker 1: the trial, so Americans themselves haven't reached the tipping tipping
Speaker 1: point yet. In the meantime, restaurants will likely keep experimenting
Speaker 1: with various tipping policies until they find one that keeps customers, waiters,
Speaker 1: and kitchen staff all equally happy. Today's episode was written
Speaker 1: by Dave Ruse and produced by Tyler Clang. For more
Speaker 1: about the history and science of tipping, check out our
Speaker 1: episode on the topic over on my other podcast, food Stuff,
Speaker 1: And of course, for more on this and other depressing
Speaker 1: but important topics, visit our home planet, how stuff works
Speaker 1: dot com.