More restaurants are changing to a ‘no-tip’ system, and experts explain what to expect for your next night out
By: Emily Di Natale
Canadian consumers are feeling the pressure to tip higher amid inflation and economic crises (Sam Don Truong/Unsplash)
We’ve all been there. It’s a stressful experience for some and downright baffling for others. The music is loud and the mental math you are attempting while staring at the total on the bill is suddenly impossibly hard.
Where do you put the decimal again? Should you just pull out the calculator on your phone? Wait, is that rude? What’s a good tip? 10 per cent? 15 per cent? Why is the server staring at you? Why is everyone staring at you? Okay, just close your eyes and pick a random option! That’s a good idea, right?
Sometimes, tipping feels like an Olympic sport.
Following the government-imposed shutdowns during the pandemic, people have rejoiced in the ability to go back to restaurants, get drinks with friends and flirt with a cute waiter every once and a while. But there is one part of the outing that everyone seems to dread: the tip.
The payment service company Square revealed that the average tip has increased from 16 per cent to 20 per cent since 2016. The company also reports that only 13 per cent of Canadians believe that service has improved as tips have increased.
Square reports the newest tipping phenomenon coined as “tip creep,” where customers are noticing pressure to tip goods and services that have not previously asked for tips. Many consumers have taken to the internet to voice their concerns, questioning how much customers should tip — should you tip for every service? Every single coffee, cookie or oil change?
In light of changing times and high inflation rates, many restaurants in Toronto have decided to ditch tipping altogether.
One restaurant leaving tips in the past is Richmond Station, a Canadian-style restaurant at the intersection of Yonge and Richmond streets co-owned by Top Chef Canada winner Carl Heinrich and Ryan Donovan.
Richmond Station is a certified “living wage employer” and operates a “hospitality included” business. On the Richmond Station website, they define “hospitality included” as the business model that removes the need for customers to tip and “all the necessary revenue to properly compensate all staff members is built into the menu items.”
The Ontario Living Wage Network comprises employers, non-profits and researchers, all campaigning to change "what the minimum standard of pay for low-wage workers should be in the province,” according to their website. To calculate the living wage in different areas, the organization considers the average employment income, the income provided by the government, taxes and annual family expenses. The living wage designated for the city of Toronto is $23.15/an hour.
“At first, we were a little anxious about whether guests would feel that maybe an opportunity was being taken away from them to tip, but we've found that people have never wanted that responsibility,” said Donovan.
Inspired by New York restaurateur Danny Meyer, Richmond Station adds to the list of no-tip restaurants in Toronto. (Richmond Station)
While there is no standard for how a no-tip restaurant works, Richmond Station calculates its service into its menu prices. When you pay, you only pay for exactly what you see on the menu.
“The system is not complicated. It’s a lot like the other things you buy in your day or your week,” Donovan said. “There are no additional fees, no percentages, no tipping, no anything.”
Other restaurants may include an automatic 18 per cent gratuity on the check at the end of your meal, removing the need for the customer to choose the tip amount.
The shift in Richmond Station’s tipping policy occurred recently when employees were laid off due to pandemic closures across the service industry. Between the weeks of closings and reopenings, Donovan says the employees collected COVID relief subsidies from the government when they couldn’t work. However, most times, the subsidies did little to help the employees make ends meet.
Donovan said staff with high earnings because they were salaried or hourly paid employees were captured in the social safety net. For workers who were part of their tip pool, their cash tips are not included in their paychecks, “so they were not calculated in those subsidies, and the social safety net didn’t catch them,” he said.
As a result, Richmond Station witnessed many of its employees change careers because the service industry could no longer support them. Seeing so many of their staff lose the opportunity to work at their restaurant inspired the owners to test out the “hospitality included” model, and it stuck.
Brain Heasmen, an instructor at the Hospitality and Tourism Management Department at Toronto Metropolitan University, weighs in on what forgoing tipping could mean for individual businesses and the industry as a whole.
“It will absolutely affect the industry because you're changing something that's been very customary for a long time, and a lot of servers go into the business because tips can be a major lucrative income,” said Heasmen.
If servers don’t get tips, the question arises of what will motivate them to work in the industry.
Donovan highlights that there are many benefits to receiving a higher paycheck regularly. Many big steps employees might want to take in life, like buying a home, having children and investing financially, have the potential to be delayed due to unofficial income, such as cash tips.
Whether you are taking maternity or paternity leave, applying for a loan, trying to secure a mortgage or building a pension, the outcomes improve the higher your tax bracket is. Donovan says the incentive for people to want to work at places like Richmond Station is the flexibility for professional and personal growth.
Hospitality included is much more forgiving than the old model, says Donovan, where flexibility is limited and often employees find themselves stuck when they need to make decisions that could help them generate more personal revenue.
“[In the old model] if you want to earn more money, you work on a busier night, or you take on extra tables. Now, if you're a mother or a father, and you need to be home in the evening time, you can't make more money by working Friday night, working Saturday night, because you need to be with your family,” said Donovan.
There's also more equity in the Hospitality Included model, says Heasmen. He said that better wages across the board for all employees ensure all team members are paid for the effort and work they put in.
“Everyone is a stakeholder in your restaurant experience — from the hostess to the person in the kitchen, to the person taking your wine order to the server — they play an equal role in your dining experience,” said Heasmen.
The prospect of moving toward an industry with no tipping can change everything, from the people who work in the industry to the people who consume its services, says Heasmen. And yet, despite the drastic changes that he believes are to come, Heasmen posits there are reasons to be optimistic.
“This is the opportunity to make changes,” he said. “And again, at the end of the day, equity is my biggest concern — that's what I think needs to be changed the most.”