Tipping: On The Take-Out

Tipping: On The Take-Out Photo by The Punch Pizza

I have done a lot of talking lately about the concept of tipping, but I thought I had gotten it completely out of my system. But then J. Money over at Budgets are Sexy brought the topic back up again, and I was reminded of an experience from this past summer.

A Surprise Tip

One evening over the summer, I placed a take-out order at one of those nationwide dinner restaurants that offers reasonably priced food for me and a couple of of my friends. The bill probably came to around $50, and I had no complaints with the process — everything was ready when I got there,  I quickly paid with my credit card and headed out, and then enjoyed the delicious food with friends.

Several days later, however, I got a surprise when I checked my American Express statement — the restaurant had taken it upon itself to add a 15% tip to my bill! I was stunned, as I most certainly did not authorize that. I quickly had a chat with the general manager of the restaurant who could not have been more apologetic. It looks like I had left the tip line blank on the receipt, and the waiter or waitress had added her own tip. I was completely satisfied with how the manager handled the situation.

One lesson from this, of course, is to always put something on the tip line, even if it is a zero. But that is not what I want to focus on — instead, I want to focus on the issue of tipping for take-out.

Tipping for Take-Out? Really?

I guess part of the reason why I ignored the tip line on the bill was that it never occurred to me that take-out might warrant a tip.

Much to my surprise, it seems that “tipping experts” often side with tipping for take-out. Real Simple suggests that the average take-out tip should be around 10 percent, possibly more depending on the size of the order, to reward timeliness and accuracy.

It also seems, however, that wherever this topic comes up, from the Baltimore Sun Dining Blog to the San Francisco Chronicle’s Between Meals Blog, it generates a lot of passionate comments, mainly with people coming down against tipping for take-out.

I Don’t Know.

I don’t really know how to feel about this.

On the one hand, if you are taking out from a restaurant that is primarily sit-down, I can understand the argument for rewarding the cashier or server who takes care of your take-out order. Someone has to put the food together, place it in take-out material, bag it with utensils and napkins — all while ensuring accuracy timeliness. Plus the food has to stay warm. That seems like an awful lot of effort for someone on your behalf.

But at the same time, I can’t help but ask myself — what is tipping supposed to accomplish in the first place? I think that my gut intention when tipping is to reward a server who has taken care of me and made my stay at a restaurant pleasant. Has a take-out server done that? Perhaps the restaurant pools tips with the cooking staff — does that change things? How do I know if the tips get pooled or not? At some point, shouldn’t some of this just be part of the expectations included in the base cost?

Ever since that incident this summer, I’ve been inclined to leave some sort of tip, but then I question how much is appropriate — is it offensive to leave anything under 10%? Do I really need to tip the same amount as when dining in?

I am very curious to hear what everyone thinks — especially those of you who have been waiters or waitresses in the past. Do you tip for take-out?

October 30, 2008 | Filed Under Frugal Philosophy | 17 Comments 

Tipping: Psychological Warfare?

Tipping: Psychological Warfare? Photo by rick

I already devoted my last post to talking about the article “Why Tip?” from this weekend’s Times Magazine, but there is one more aspect that I can’t resist commenting on. The quote:

Cassinelli prided himself on earning big tips. “I could always upsell my tables’ liquor and desserts,” he said… There are other tricks at waiters’ disposal. Studies demonstrate that waiters can increase their tips by introducing themselves by name, squatting alongside tables, touching diners and drawing smiley faces on the backs of checks.

Yikes! When I read that, I had a whole series of flashbacks to all of these moments at the end of a meal where I undoubtedly was influenced by some of these strategies.

Is tipping some sort of game of psychological warfare?

So What Are These Strategies?

It wasn’t hard to figure out what “studies” the article was referring to — Cornell Professor Michael Lynn published a paper in 2004 called “Mega Tips — Scientifically Tested Techniques to Improve Your Tips.” It is a fascinating read on how customers respond to their waiters or waitresses.  Some of his the strategies his research found effective include:

  • Wearing something unusual
  • Introducing yourself by name
  • Squatting next to the table
  • Repeating customers’ orders
  • Smiling at customers
  • Writing “thank you” on the check
  • Calling customers by name

There were also some sillier suggestions, including touching customers, forectasting good weather, and entertaining the customer with a joke. All of these strategies had some sort of demonstrable impact during Professor Lynn’s research experiments.

Building a Connection – OK?

There seems to be a common theme between all of the “tips for tips” that I mention above — they all have to do with strategies a server can use to build a connection with customers. If customers like you more and are happier, they will tip you more — makes sense.  

Looking back, I know I have been influenced by several of these strategies — inevitably, I feel more generous when the check says “thank you” or the server starts with an introduction. At first, this was a little unsettling to me; it didn’t sit well with me that I had allowed myself to be influenced by things like this. But is there really anything wrong with it?

Yes, someone could argue that wearing something unusual or squatting next to the table doesn’t really do anything to the service that warrants an increase in tips, but I’m not sure that matters. If I end up tipping more because of something my server does, it is because I am in a happier mood or feel a closer connection with the waiter or waitress; in other words, the meal has been more enjoyable, which seems like just as good of a reason to increase a tip than anything else.

Upselling, however…

I left out the most important strategy for a server to increase his or her tips — sell more. Given that most tipping is on a percentage basis, if you sell more, you get more. It is easy to forget this, but waiters and waitresses have a vested interest in selling you more expensive items.

It bothers me when I read quotes from waiters like the one at the beginning — “I could always upsell my tables’ liquor and desserts”. Asking for the waiter’s advice is always a strategy that should be taken with a grain of salt — I would hope that to get an honest evaluation, but the cynical part of me always has to wonder whether the price of an item comes into play. I hope for and expect to get a somewhat neutral opinion.

In fact, I wonder if “upselling” is not a risky path for a waiter or waitress — I get annoyed by upselling, and if I pressured into buying something I don’t really want, I’m likely to not only not oblige, but also be less inclined to leave a generous tip.

Good To Know

With the exception of upselling, I think most of these strategies are perfectly fair game, and I’ll probably continue to respond to them on some level. But I think its also a good idea to know what you are getting yourself into.

Any one have any other experiences with waiters or waitresses trying to increase their trips? Any good stories? Let me know!

October 14, 2008 | Filed Under Frugal Philosophy, Spending Wisely | 25 Comments 

Tipping: The “No-Tip” Restaurant

Waitress taking orderPhoto by Cubbie n Vegas

The New York Times Magazine featured an article this weekend called “The Food Issue – Why Tip?”, in which Paul Wachter chronicles the story of The Linkery, a San Diego restaurant that in 2006 eliminated tipping as a way of building unity amongst the staff and decreasing internal conflict. Don’t get too excited, though — while The Linkery does not accept tips, they do include a mandatory service charge of 18% on all of their checks. 

The story largely focuses on the internal perspective of the restaurant with regards to the no-tipping policy, but the piece raises some interesting questions from a consumer standpoint, too.

The Linkery’s Plan

The Linkery’s idea was simple: the issue of tipping was dividing the staff — with waiters angling towards better tables, cooks feeling lefts out, etc. — so why not eliminate the tip entirely? Raising prices was not feasible due to competition, so The Linkery settled on adding an 18% service charge that was pooled and shared. While there are certainly restaurants that add mandatory service charges, The Linkery takes it a step further by banning any additional tipping.

One waitress was quoted in the article as saying, “for the first time, I get to concentrate on the job, and I’m looking at the guests without seeing dollar signs or worried about what anyone else is making.”  Sounds great from a consumer perspective — your wait staff feel more involved in the restaurant, and are less likely to aggressively seek tips. 

Americans Don’t Like Service Charges

The problem, apparently, is that Americans don’t like service charges. The article mentioned a statistic from the Zagat Survey concerning a preference by patrons for tipping as opposed to a service fee. I tried to find out more information on that claim, but the best I was able to find was a New York Times article from 2005, “What, No Tip? Service Charge Faces Struggle at Restaurants“. That article provided the following statistics from Tim Zagat:

  • About 80 percent of people surveyed preferred to decide themselves how much to tip
  • Americans like to  reserve the discretion to give no tip (or a punitive tip), but rarely exercised that right
  • The average amount left (in 2005) was about 18.5 percent

Apparently, Americans like the comfort of knowing that they can punish or reward for service, but rarely choose to deviate from the normal tipping etiquette.

It is even more interesting when you consider that tipping really doesn’t make much sense from a logical perspective. As the article points out, the tip comes after the service, so unless you’re planning on building a future relationship with a waiter, you have nothing to lose by skipping out.  The waiter or waitress simply has to count on the fact that you are going to come through with a tip — falling back on psychological factors. 

Way of the Future?

I’ll admit — my gut instinct is that I fall into that eighty percent of Americans who prefer tipping over a service charge. I never penalize a waiter or waitress using the tip — I don’t think it is ever really appropriate (if I have a problem, I would talk to the manager). I suppose my attachment to the tip comes from the sort of inherent satisfaction that comes from rewarding (thanking?) someone for their work. It seems to me that simply paying the service charge doesn’t adequately thank the server for their work. Do they even need to be thanked? I suppose that is a fair question — it is their job — but it still seems like it is appropriate to make some kind of explicit action of gratitude. 

But the arguments of The Linkery seem sound. I can definitely see how tipping can cause strife within a restaurant’s staff, and if Americans are going to on average leave around 18 percent tip, why not assess a service charge in that amount that fairly distributes it around the employees? After all, if you really have a problem with your service, a manager will almost always make it right. So I don’t know — perhaps it is not a bad system all things considered.

What are you thoughts on the idea of a mandatory service charge and no-tip? Yea? Nea?

October 11, 2008 | Filed Under Frugal Philosophy | 9 Comments 

Helping the Middle Class? Time for a crash-course in personal finance.

“What is the single most important initiative that the next administration should undertake to improve the economic health of the U.S. middle class?”

That’s the question that I’m tackling today, along with eight other personal finance bloggers in a synchronized blogging project (a “synchroblog”) that was organized by Mr. ToughMoneyLove. You’ll find my response below, and I then encourage you to check out the responses that each of the other eight bloggers posted on their own respective blogs (links below!). This is all timed, of course, to coincide with the second American presidential debate this evening — hopefully it will give you something to think about.

To Start: Personal Finance 101

There are certainly a lot of initiatives that the next President of the United States can (and, in my opinion, should) take to relieve the crushing burdens on the middle class, including addressing health care, college tuition, retirement plans, job transitions, and more. All of these are definitely important, and I am always interested in discussing these details, but I would like to suggest a much simpler undertaking for the next President of the United States: send all three hundred and five million of us back to “class” for a day for a crash-course in personal finance and financial responsibility.

It is no secret, really, that financial literacy in the United States is, to put it mildly, quite poor. Most of these report cards on financial literacy focus on the important technical aspects of our financial system — banking basics, how credit works, introduction to income taxes, retirement account plans, etc. The technical details are certainly important — there are countless stories of people who simply didn’t understand how credit cards function only to quickly find themselves deep in credit card debt. Many who have been hurt in the subprime mortgage crisis might have been able to choose a safer path with a stronger financial background (not to blame the victim — predatory lending practices deserve a bulk of the blame). More importantly, a solid understanding of the technical details of personal finance is key to making the most of limited economic resources.

However, when I refer to a crash-course in financial responsibility, I am referring to more than just the nitty-gritty of interest rates — rather, big picture concepts like spending within one’s means, coming up with a budget to work within, planning for the future — planning not only for the best case future, but also for the worst case future — and more. Personal finance can be intimidating for people, but I think there are certain key concepts that can be accessible to everyone. Yet for some reason, not enough people seem to heed these ideas.

This issue — which I think has always been important — has only taken on increasing importance in the last three weeks, as the world faces a financial crisis the likes of which we haven’t seen in quite some time. We may be entering a tough recessionary period, which makes it all the more important that Americans be prepared to cut back, live within their means, and conserve resources.  Being prepared to take such steps will make it easy to minimize as much as possible any impact on everyday lives.

As a current student, I have a somewhat unique viewpoint, and I am worried about many of my peers who are heading into the “real world” in the next couple of months. My own anecdotal experiences reinforces the common perception that many have a dangerous relationship with credit cards (one recent study put the average credit card debt for college students at $2700), and I question whether many of will be able to manage their finances responsibly as they face such a negative market. It’s a recipe for disaster.

All of this gets back to my original suggestion — the next President of the United States should take everyone aside for a day and give them some basic tips to handle their finances effectively. Responsible spending, living frugally, maximizing savings, an encyclopedia of technical concepts are all worthy subjects. The idea is to get Americans more informed.

A little far fetched? Perhaps. But the point remains — its time for Americans to step up, and education is the best weapon.

Why is this the *most* important initiative the next administration can undertake?

Simple:

  • It is fundamental to understanding the current economic crisis. Without financial literacy, Americans are at a distinct disadvantage when it comes to participating in the political process that is trying to fix it. Our politicians shouldn’t have a blank check to do what they wish simply because the American public doesn’t understand the situation.
  • Many, many economic problems faced by Americans today can be traced to a lack of financial literacy.
  • Providing advice on living financially responsibly and frugally is probably one of the best ways that the federal government can help prepare Americans for economically tough times.

And Now For Some Other Perspectives

Now that you have heard what I think, I encourage you to check out the responses of the other participants in this synchroblog project. Definitely some great responses; I’m very honored to be included in such a great group.

What Do You Think?

After checking out the other synchroblog entries, I’d love to hear your opinions — what do you think is the single most important initiative that the next administration should undertake to improve the economic health of the United States middle class?

October 7, 2008 | Filed Under Frugal Philosophy | 6 Comments