Last fall, Django's became one of the first restaurants in Colorado to eliminate tipping. Our prices on the menu now reflect the full price guests will pay before tax: No gratuity expected, no tip line on the receipt, full transparency and no awkward decisions or math calculations at the end of the meal.
Prior to this change, we debated a lot about how it could work, and we were very concerned how guests and staff would accept the change. Below are some of the reasons we made the change, and a recap of what we’ve learned during the past six months.
Why did you eliminate tipping?
We shifted to a hospitality included model for several reasons:
First, our approach to service has always relied on a team to deliver an exceptional guest experience: from hosts receiving the phone calls and emails to book reservations and welcome our guests, to servers presenting and our nightly menu & navigating the wine list, to our kitchen staff preparing and delivering every small plate. It requires an entire team to deliver on this experience, and we all work together.
Many factors outside the server’s control influence the guest experience, and many team members contribute; but tipping in America is a federally-regulated financial transaction between a restaurant guest and a single staff member. A guest has sole discretion over the earnings of a server, and those tips - even if pooled - may not be legally distributed to supporting staff members in the kitchen.
Second, we believe the tradition of tipping in America is unfair. It’s unfair to staff, who can provide the same level of service to two different tables and be compensated differently; it’s unfair to the guests, who have to rate one component of their overall experience, in monetary terms, and calculate this while presenting their final payment; and it's unfair to the restaurant, who hires and trains staff, bears the overall responsibility for guest satisfaction, yet does not directly control the bulk of its front-line’s compensation.
Third, we wanted our server’s earnings to be more closely tied to their experience and performance. Historically their earnings would swing dramatically from shift-to-shift and across the seasons, influenced far more by their schedule and the nightly traffic than their individual role in providing guest service. As a result, the lowest-performing server working a Saturday night could typically earn more - Just by showing up - than our star performer could make on a Wednesday. This always felt wrong, so we found a way to fix it.
What has been the biggest surprise?
Guests overwhelmingly support and appreciate the model. Hardly a night goes by without a guest telling us “Thank you!” or mentioning that “I wish more restaurants would do it.” They’ve commented on the simplicity of the checkout process, how they appreciate the fairness and how they don't have to “feel like a jerk” if they tipped the wrong amount.
The most frequent complaint? “I want to tip more. How can I do that?”
That’s a tough one. It's a slippery slope, providing any mechanism for receiving gratuities; it runs counter to most of our concerns about a tipping model. So, we’ve opted to eliminate ‘the tip line’ altogether. But since we, too don't want to be jerks, we have politely accepted some cash gratuities.
How do you pay your staff now?
Our staff earns a much higher base hourly wage than before, so that provides the bulk of their earnings. This can increase and vary by server as they build skills and experience. We then supplement with bonus and profit-sharing incentives that are monthly and seasonal.
Our goal is to provide servers with a more reliable, competitive wage that is comparable to what they could earn under a tipping model. Our back of house team earns more than they did before, and they also participate in seasonal profit-sharing bonuses.
What would you change?
We will provide more structure to the front-of-house pay scale increases over time; and we need to communicate more frequently about bonus opportunities. While a key objective of our new system was to reduce variability in pay, we underestimated how much the highs-and-lows of tipping adds an exciting element of risk/reward to a serving position.
We had viewed the ebb and flow of servers’ tips as a problem to solve: we wanted to reduce the volatility and mitigate their downside. But servers are often comfortable with this risk and place a high value on earning more on ‘big nights’. (Those big-tip weekend shifts provide lasting memories that far outweigh the many normal shifts, mid-week lulls and getting cut early on slower nights.)
Will you continue?
Absolutely. While we have more work to do on communicating with our staff, the benefits of the new system are hard to ignore. So we will continue to offer hospitality-included pricing.
This is what we’ve learned so far. Hopefully others will share their comments? We would appreciate thoughts from our guests, other operators or hospitality employees.