The Gratuity Revolution

A topic of great discussion recently has been the New York Times extraordinary presentation on the "OP ED" page, 8/10/05, of Steven A. Shaw's thought piece, "Tipped Off", focusing upon renown Chef, Thomas Keller, who plans to change the gratuity practice at his restaurant, Per Se, to a flat service charge. This is a decidedly European concept, considered by many US hospitality businesses and then dismissed out of hand. This is a wise decision, for the premise of a service charge versus customer gratuity reflects confidence in product, service and facility with high standards on display at all times.

In Europe, these standards are almost codified, whereas, in the US, standards are like a visit to our sock drawer — hosiery of all shapes, sizes, colors and ingredients. Our European colleagues have a standard issue black sock — not much deviation there!

It is not easy to establish standards and compensate appropriately for performance. Our Restaurant Industry has the largest percentage of business failure of any sector. We have created a food service discipline of itinerants, loyal to the work station assigned rather than the dining establishment. Just as the casualties of corporate America have learned, a career now is merely a number of "starts", changing jobs every 3-5 years, advancing the portfolio of skills in advance of that next "green pasture". For food service personnel the move tends to be lateral, seeking better hours, better working conditions, or improved gratuity opportunity — but still, little improvement in standard of living or expertise. And, the Tip Credit. Whoever thought of that concept? Major compensation components held to the whim of the consumer. It is almost reminiscent of the farm subsidy — pay me for not growing, sweet land of subsidy! And, Management spends their energies on continually orienting and training personnel, as well as recruiting for "warm bodies", for our restaurants also enjoy the highest turnover rate of any industry. What's not working for these three parties: the restaurant manager, the restaurant employee and the Consumer? Mr. Stevens, in a very influential forum, began to poke the holes, raise the questions and create a cacophony of groans.

Firstly, the US restaurant industry is not prepared to embrace the flat service charge concept; we simply do not have a reliable level of standards or product. Some hospitality related businesses have adopted such an approach though, like the cruise lines and a number of resorts. The advantage there, of course, is that you essentially have a "captured" audience, but these enterprises still need to maintain high performance levels.

A service fee would make life so much easier!

But, our restaurant service personnel believe that the gratuity is a right rather than a reflection of their performance. We have tried all sorts of deviations on that theme. "Pooled tips" allow for too many fingers in the pot, and, sadly, actually promotes a lower level of performance, due to team member level of participation. And, our customer, by and large, wearily dispenses close to 15% most of the time, almost robotically, with not much thought given to service level. They are pleased with a tepid entrée, delivered in some time warp. Let's face it, we are lazy on this subject of standards, yet we work at a frantic pace to deliver an undervalued product and service. Why have we not assessed our resources, realigned the process, people and product, so that we can compete with advantage, better than meeting Consumer expectation?

It is all about the Experience! The gratuity can be a powerful tool and also a "crutch". The market will eventually move towards a higher appreciation of and demand for improved service. The Consumer will pay eagerly for that attention, care and comfort. But, they need to be educated as well. They have some powerful assistance out there. The Internet has a vast field of services, blogs, and forums, which evaluate the dining experience by either peers or professionals. These will become, if not already, the policing arm of public taste, discretionary income decision maker for dining, and the determiner of a restaurant's success.

The three parties can coalesce and become responsible and accountable for this paradigm shift. The Restaurant operator can frame that experience, the food server can deliver on the promise, and the Consumer will reward the effort. You do not have to be a five star restaurant for this to be accomplished, but you certainly do need to be aware, directed, and committed. We "Colonists" here in the US can take the lead rather than perpetuate a declining dining experience. Standards are the equalizer and the goal.

John R Hendrie is the CEO of Hospitality Performance, Inc. and can be contacted via jhendrie@hospitalityperformance.com