In the Hospitality industry, what’s best for servers – better standard wages or reliance on tips?

Canadians enjoying tipping and so do our American neighbours. Tipping plays a prominent role within our restaurant industry and our overall dining experience.

To be precise, over 80% of Canadians in 2021 feel that the gratuity system should remain a vital pillar of the restaurant industry. The Agri-Food Analytics Lab report found that most Canadians believe that tipping motivates staff to keep raising the bar on good service and that gratuities make the job “worth doing” for many hospitality workers.

In a separate piece of research conducted by Canadian and American professors of psychology and marketing, it was found that consumers experience “a warm glow of giving” from their “pro-social” spending as they tip servers for taking care of them for the evening.

So, tipping in North America is a big fat yes from the customers.

But is it best for the servers? And what do other countries seem to make of tipping?

Countries like the UK and Australia have traditionally adopted a standard wage approach, and generally, their attitude toward a reliance on tipping is skepticism and inequality.

A lot of UK restaurateurs have adopted the use of a service charge. Typically, this adds 12.5% of the price of your meal to the bill. This approach builds the tip into the final bill amount, ensuring that servers are not left empty-handed.

Misha Zelinsky, the national secretary of the Australian Workers’ Union, talks of “The Australian Way.” She describes how, in Australia, the “cost of good wages and conditions are included in the price” and that Australian servers don’t have to “sing for their supper.” Zelinsky states that a strong tipping culture is undignifying for workers as it enforces a hierarchy of servitude, whereby they are at the whim of their customers. She also argues that it denies them a solid and stable income.

Her preferred option, “The Australian Deal”: Where “workers give up their time in exchange for reliable wages” – not unreliable tips.

She does make a good point. Research has proven that white servers earn between 16-48% more in tips. Tipping has also been linked to worsening the sexual harassment experienced by female staff due to the “master-servant” nature of tipping. Avelo, Burdock Brewery, Richmond Station, and Ten are Toronto restaurants that have adopted a more UK & Australia-based approach with a no-tipping policy on the back of such research.

Many people in traditionally ‘non-tipping reliant countries believe that a tipping culture enables hospitality employers to offload their wage bill onto their customers. Employers can justify paying lower wages with the knowledge that workers are subsidized through gratuities.

The fact that in America (a high tip reliant economy), the minimum wage has not changed since 2009, despite inflation and increasing living costs, holds water for this argument. The UK’s service charge may also fall into this cynical way of thinking.

But why, then, is a tipping culture slowly shuffling its way into other countries? For instance, within London, a standard tipping rate of 10-15% is now regularly awarded by restaurant patrons (where a service charge is not included). Potentially, customers are now more aware of the fact that many restaurant workers are working hard to make ends meet, making them more generous (or charitable?) with their gratuity payments. Maybe, more importantly, customers feel that they are provided with a better service if they tip.

Nonetheless, the answer to the question, “what’s best for servers – better standard wages or reliance on tips?”, will significantly differ depending upon who you ask and where you ask them.

The answer to the overarching question may lie somewhere in the middle of the two options. Why not provide workers with a substantial standard wage but still allow customers to reward them for excellent service via a gratuity?

This way, everybody wins. Diners get to feel good tipping, while servers are motivated to work hard without the negative ramifications of a tip-reliant salary.

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