After our post last week about a new law that requires restaurants to record automatic gratuity as employee pay, we heard a range of feedback from restaurant leaders. Some shared their experiences with adapting to the new law. Others shared concerns they see moving forward. One thing is sure: the new law has people talking.
Matthew Simmons, President and Director at Capital Ale House in Richmond, Virginia, reports that at first, his staff and management decided to do away with auto-gratuities. Instead, they opted for a "suggested gratuity" calculator, which lists tip percentages and amounts on the bottom of the guest check.
Their hope was that staff would make more money with the switch. But one week after adding the suggested gratuity calculator to their checks, Simmons said his service staff "want it removed:"
“It seems they are making less money because the calculator uses the subtotal before tax to calculate the tip percentage whereas most people tip off the total including the tax.”
David Schearer is an Operations Manager at Wild Wing Cafe in New Orleans. In cases where restaurants decide to ditch automatic gratuity for large parties, he urges managers to take a proactive approach to let customers know of the change:
“Most consumers will not know that gratuity is not automatically included and servers could lose some of their tips because of this. It’s just a matter of managers educating the public.”
Yet another manager, this one at a high-volume restaurant in South Carolina, said his servers have been hit hardest since they did away with automatic gratuity:
“We have a lot of large parties and quite frankly, they don’t tip even if they receive excellent service. It is causing my service staff to really question the service industry right now. My company as a whole is working to sort the problem out, but for now, that is how it stands.”
In the wake of the new law, it will be interesting to see how service industry practices adapt. Will servers' pay go up, down, or stay the same? Some restaurants may choose to keep automatic gratuities, while others may try suggested tip calculators, or other approaches to encourage tippers without the requisite. What's clear is that we are seeing shifts in the culture of tipping practices and the conversation is only getting started.