Canada may be at a tipping point around gratuities

COVID is changing approach, Sylvain Charlebois says

In North America, our tipping culture always has been a source of pride, giving customers the last word when human interaction is involved. Good service deserves a good tip, while an unsatisfactory experience results in no reward for the server. In some European and Asian countries, the tip already is included in the price at the restaurant, but not here. The problem is this, though: Defining what good service looks like is a purely subjective process. Most importantly, some in the industry see tipping as a lever for discrimination against certain employees.

But last week, a Toronto-based restaurant stopped accepting tips in a move that the owner says is an effort to pay its staff more equitably. Richmond Station, a restaurant located on Yonge and Richmond streets in downtown Toronto, has moved to what it calls an inclusive compensation model, meaning that all tips for staff are included in the price already. Prices on the menu have been adjusted for an average tip of 18 per cent.

Embedding tips can solve some problems. First off, tipping clearly contributes to the disparity in pay levels at restaurants, so waiters often earn double what cooks earn. Hiring back-of-house has been problematic for many restaurateurs.

Studies have shown that tipping promotes age, race and gender bias and that tips make servers more vulnerable to sexual harassment from customers. This is the dark side of tipping that customers often do not see.

The concept of subjective tipping always has been a little odd. No other profession would accept that pure strangers can determine the salary of employees. Methods to evaluate performance will vary from customer to customer. What is incredibly subjective also has the potential to be biased and inequitable. It is human nature.

This certainly is not the first time a restaurateur has tried to eliminate tipping.

No other profession would accept that pure strangers can determine (staff wages).

In both the U.S. and Canada, some restaurateurs have run experiments. A 2017 study found that the quality of service declined by eliminating tips directly from customers, and another study in 2018 concluded that the restaurateur’s revenues decreased as prices on the menu increased. Most abandoned the initiative as it made their operations less competitive. Most of these projects were failures and the markets were not ready for it.

But COVID-19 has changed many things. First, since the reopening of restaurants in June and July across the country, many have noticed that restaurant prices have not decreased. On the contrary, prices have increased, mainly because food is more expensive. Prices also are set to make operations profitable despite new public health standards and physical distance measures. Most would hardly notice if tips were suddenly included in menu prices.

Second, since the beginning of COVID-19, the desire to offer a decent wage to employees, who constantly interact with customers during a pandemic, is palpable. The current situation has made us realize that many of these positions are filled by people who earn quite little. They take risks, several times a day. The people who hold these positions are often women and/or minorities who are often discriminated against — another important challenge communities are currently facing.

Ending tipping will not be easy. Tipping grants power to customers and many of us are addicted to it. However, with decades of high staff turnover, ongoing staff shortages, stories of harassment and questionable employment practices, the hospitality industry has shown that it cannot follow standards that make the sector an attractive option for job seekers. A recent Canada-wide survey conducted by Dalhousie University suggests that most Canadians (56 per cent of respondents) are now in favour of including tips in menu prices. A surprising change. For years, Canadians felt differently.

If the sector wants to value its employees and make it a decent option for people who want to work, a conversation about the future of tipping is long overdue.

Sylvain Charlebois is the senior director of the Agrifood Analytics Lab at Dalhousie University.