This is the third segment of our nascent series analysing the many facets of tipping culture, speaking with those who advocate for a better way, and those who feel that the hospitality sector’s unique set-up works and should not be trifled with. This week we speak at length with Bruce McAdams, Assistant Professor at the School of Hospitality, Food, and Tourism Management at the University of Guelph.
Seeing as Bruce has researched tipping in considerable depth, we felt that there would be no one better to answer some of the more difficult questions surrounding the topic.
Like myself, he sees servers as incredibly valuable elements of the restaurant ecosystem, but through his research has come to the conclusion that the tips, that are their bread and butter, are something that the industry, as a whole, should rethink and reassess.
Good Food Revolution: First off, would you mind explaining your current position a the University of Guelph?
Bruce McAdams: Assistant Professor, School of Hospitality, Food, and Tourism Management.
GFR: And before anyone imagines that you are some ivory tower-ensconced academic, you actually come from a deep industry background, don’t you?
BM: I come from 30 years working in restaurants, as a dishwasher, cook, kitchen manager, server, General Manager, my last gig was as VP of Operations at Oliver & Bonacini. I moved to education in 2009.
GFR: What led you to your in-depth study of tipping? and how expansive did your research get?
BM: Interestingly enough when I was in the industry I never questioned or thought about tipping, I just accepted it as an social and industry norm.
In 2012 I was having a beer at the campus pub with a colleague who was not from the industry. We ended up talking about tipping and I mentioned to him how messed up the entire pay system was in restaurants, cooks make no money, for the most part, servers make out like bandits! People don’t want to be managers because they can make more as waiters and work less hours.
That colleague Dr. Mike von Massow suggested we start doing some research on it. Our first work was looking at the relationships between front and back of house, we called it A House Divided. It looked at how each house of the restaurant felt about each other.
That research saw me reading every academic paper ever written about tipping. What I realized from doing this was that although there had been lots of research it was mostly based on the relationship between the customer and server. Many papers had been written on “if you wear red you’ll get a bigger tip”, if you touch your customer on the shoulder they’ll tip more, men tip more than women etc…
What hadn’t been studied was the effect that tipping has on the various stakeholders in industry, including the industry itself.
Mike and I then started studying this. That year I also did a TedX talk on the subject which garnered a lot of attention on the topic. We ended up writing our paper on the effects of tipping on restaurants as organizations and it has been accepted for publication in a journal this spring.
GFR: Back in your days with the OB group, what were your thoughts surrounding tipping culture, and how have your feelings changed over your years studying the topic? Were you ever reliant upon tips yourself?
BM: I will say that I accepted it and managed the system the best I could. I have at times in my career and in order to pay for my education relied on tips. My wife is also a server so my current family income is closely related to her making tips. Shes not my biggest fan when it comes to my opinion on tipping!
GFR: I can only imagine…
You have also stated that tipping promotes discrimination. Why is this the case?
BM: Research done by other academics show that many servers make a pre-judgement on a table ahead of serving them and that this may in fact affect how much attention they get. Our research in which we conducted two hour interviews with 52 owner/operators showed that all of these people acknowledged that servers pre-judge tables and that they believed in many cases servers would give a certain level of service based on these preconceptions. This is not good for the restaurant owner who should expect all of his customers to be give equal service.
Our findings showed that tipping creates a mercenary effect where the server is interested not in the long term goals of the restaurant but in meeting their personal income goals. This is not good for any business owner to not have their employees goals aligned up with their organizational goals. In fact, our findings show that the two big losers in the tipping system are restaurant owners and the industry in general. This is somewhat contradictory to the common notion that it only about cooks making less money. This is of course a major result of tipping as well, and a huge one but important to note, not the only one.
GFR: And restaurateurs are cognisant of this, aren’t they? Their acceptance in nothing less than complicity, no?
BM: Restaurants are small businesses, even chain restaurants are run like small businesses at the unit level. When you are a small biz owner you are focused on day day ops, not changing systems. Like I said, I never questioned the system when I was in it. Now I can tell you from my study and research of the topic that tipping is at the root of the transient nature of restaurant work in North America, this has incredibly huge economic consequences for restaurant owners and they are [for the most part] oblivious to it.
In addition restaurant owners give up control of 15% to 20% of their revenue, money that guests are willing to spend on the restaurant experience. I have actually walked away from studying tipping twice due to frustration. I honestly can’t believe that restaurateurs are not opening their eyes to this in what is such a challenging and competitive landscape.
It was only Danny’s [Danny Meyer] move to no tipping last year that has gotten me back on the advocacy bandwagon. Danny is arguably the most successful restauranteur in North America. Many professionals, including myself, feel that he is the most intellectual of thinkers when it comes to restaurants. Why would he make such a move if it wasn’t the right thing to do?
GFR: Contrary to popular opinion, servers actually make pretty decent money… with, as you say, some making out like bandits. When did this myth of the starving server come into being? (see Reservoir Dogs)
servers in the U.S. can be paid as low as $2.12 an hour in the states and this has been like this for a while. Thirty years ago restaurant meals were not as expensive and tipping rates were closer to 10-15% so servers did indeed make less money and so the thinking was hatched. It has stayed with us even as tip percentage move closer to %20 and the price of full service restaurant meals grow.
GFR: In your work, and in this interview, you refer to the mercenary restaurant worker, the worker that has no vested interested in the business… they come in for the money and leave. How does this affect the restaurant industry as a whole?
BM: Let’s look at three groups of restaurant folk:
1. Cooks: many go to college to learn cooking, spend tuition on this and graduate to a job where they make $13/hour, a year later they are making $13.50 and hour, at this point they usually realize that they can’t make a living wage in the industry and leave.
2. Servers: Everyone knows that when you need to make some good money quick you can either deal drugs or become a server. A good proportion of servers (not all) are often only in the industry for a short period either to pay off student debt or support their ‘real jobs’ like acting and writing. They work for a year or two until the real thing comes along, they take a disproportionate amount of the wage pie, and then they leave the industry.
3. Restaurant Managers: Let’s use graduates from my program as an example. They go to school to study for 4 years and then enter as a manager, committed to a career in restaurants. They make $35-40$k in their first year while working 50-60 hours a week. During their first year they realize that servers are making more money working less hours. A year later they sign up for a post grad college program in another industry and become servers to pay for their schooling… then they leave the industry.
This is how restaurants in Canada have become transient in nature and this is the single biggest economic and quality issue in Canadian restaurants… yet very few people are paying attention to this.
GFR: And then we can look at the disturbing pay disparity between Front and Back Of House. What did your studies show here?
BM: Our research showed that servers made an average of $18/hour in tips, before tip out. They also make close to $10 in wage. They tip out an average of 3% other staff. We figure they make $26/hour on average. This server survey was from a sample of close to 200. A relatively small sample of cooks was taken in which the average wage in Ontario was approximately $13/hour
GFR: And yet these issues are particular to north America, not in Europe… why do you feel tipping, the root cause of these issues, has prevailed in countries that prides themselves on their progressiveness? What makes north America so special? (or not)?
BM: Here is what very few people realize. In north America we have used service as a point of differentiation, it started in the 80’s. A few companies started to try and “wow” their guests with service, “kill them with kindness” to differentiate from their competitors. Soon everyone had to deliver at this level and service was no longer just about getting people what they needed, it started being about the friendliness of your server.
This does not exist in Asia, many parts of Europe etc. In those countries service is all about making sure people have what they need, it’s not about a pretty girl (or guy) wearing tight shirts putting their hand on your shoulder. Service is different in north America and hence tipping reigns!
GFR: To the outsider, the simple solution to the wage equity problem would seem to be for restaurateurs to raise the wage of the cooks. Why is this not a viable solution?
BM: Great points. I’d be for that if you lowered server minimum wage to $3.00. By making restaurants pay $10 an hour to servers in this province operators are hamstrung as to where their money goes. Margins in Ontario full service restaurants are at an all time low. Owners have to pay servers too much money and that prevents them from giving raises to cooks… ask any of them and they will tell you that is the case.
GFR: Now, some establishments participate in tip sharing, but the money going to the back of house is nominal at best, right?
BM: Yes, we found that 30-60$ was usually what a cook received in restaurants where they shared tips, usually 1-2 $/hr
GFR: What is your take on the house taking a cut of tips in order to cover the cost of credit card transactions, breakages and the like? It’s now against the law, right?
BM: New legislation comes into effect June 1st I believe… what a bunch of BS.
I’ll leave it at that. You’ve just asked me about a few different touchy and controversial issues that revolve around tipping… there are dozens more of these that all exist because of this archaic and broken system. All of these would be non issues if we just got rid of it and paid people based on the value they create in restaurants.
GFR: Speaking of tips and the law, once we look into the area of tipping we discover a whole can of worms that would keep The Law Society of Upper Canada busy for a good few years, don’t we?
BM: There are several really serious issues both in Canada and the U.S. We are talking multi-million dollar class action suits and restaurants putting themselves in seriously risky situations if they don’t know what their responsibilities are.
GFR: I was surprised to discover recently that if an establishment has any records pertaining to the redistribution of tips (which many, many restaurants do) then the employer is obliged to record these payouts and tax at source accordingly… and yet that is rarely done?
BM: It’s done a lot more now since we’ve been talking about it. If a business manages the tips, it is considered controlled tips and they are responsible to collect CPP EI etc.
GFR: Which brings us to the whole tax question. In speaking with around 20 servers I discovered that the vast majority of them admitted to reporting only 10% of their additional income (tips) on their T4s. I was told that this, with a few notable exceptions, was the norm. The more I think about it, this is morally indefensible, and yet it’s what keeps tipping culture bobbing merrily along isn’t it?
GFR: Now, with it only being a matter of time before the CRA introduces the infamous “black boxes” between Point-Of-Sale terminals and credit card machines that will record all digital transactions, there is going to be a huge impact upon the take home pay of the server, isn’t there?
BM: I figure there will be, it definitely seems to be heading in that direction. Now that almost all transactions are cashless there is a paper trail. It is the elephant in the room in many discussions I’m part of.
GFR: So, if tipping culture is a wonky cog in broken system, there have to be better ways… what can be done to change the culture and make it better for the industry as a whole? What are the different options available to restaurateurs?
BM: There are two major options:
1. Inclusive pricing or as Danny Myer calls it “Hospitality included” . This means raising menu prices 15-20% and saying NO TIPPING. This is what makes sense to me.
2. You can add a service charge, lets say 18% to the bill and say NO TIPPING as we have added a charge for that. To me this still has many negatives associated with it. I’m 100% for moving to including it in our menu pricing… Hey, if Danny does it, must be right!
GFR: So I’m sure that you have been following the development of these initiatives closely. Anecdotally what can you tell us about their level of success or lack thereof?
BM: I’d suggest that you and your readers check out this recent podcast.
GFR: What do you feel it would take for a revolution in the restaurant business, a movement to address the imbalances and inequities of current tipping culture?
BM: Everyone is watching how it works for Danny, you will see more and more independents join the ranks in the next two or three years. The 100% change will happen when the first national company does it, or when the CRA starts changing the landscape. It will happen in the next 5 years!
GFR: Also… In speaking with 10 owner/operators, all 10 admitted that the system was broken and would really like to see an alternative to tipping… But none wanted to go on record as having said so. What would you put that down to?
BM: I’m not surprised. I think operators are scared that their staff will hear and anticipate that they are thinking about changing. It’s also impossible to bring this topic up without opening up yourself to having to discuss many other potentially sensitive issues in this issue but thats an answer for another day!
GFR: Thank you so much for your insight Bruce. It has been very much appreciated and I am sure will prove to be most thought-provoking for our readers.
Edinburgh-born/Toronto-based Sommelier, consultant, writer, judge, and educator Jamie Drummond is the Director of Programs/Editor of Good Food Revolution… And, for the record, although he has worked in restaurants since he was around 18 years old, through circumstance he has never relied upon tips as a major portion of his income ; from Michelin recognised establishments in the UK (where tipping wasn’t a major thing), through a private club (where tips were forbidden), to a management position (that saw no part of the tipout), he’s never really benefited from tips.