The last piece I wrote about how to divide tips sparked a lot of online debate on this magazine’s website. Some readers agreed with the methods discussed with one reader saying she shares all the cash tips with staff but keeps the debit or credit card tips while others questioned whether I was qualified enough to comment on this issue.
So I decided to ask several more restaurateurs nationwide about how they manage tips and found they were either clueless about what happened to the tips on their premises or were unwilling to talk about it – as if it were a black art within the hospitality industry.
Many felt tipping was a personal transaction between the customer and employee. But those who did want to talk about tipping said they believed it shouldn’t be obligatory. Here’s how they prefer to divide this extra income:
Do customers tip?
All but one of the restaurateurs I spoke to said that their customers regularly leave gratuities. The only restaurant not receiving tips was Asian – its owner suggesting it was not a restaurant where customers would choose to tip. Restaurants that attracted overseas visitors received more tips than those patronised by locals alone. Interestingly, many said they had noticed an increase in the amount of locals tipping in recent years – perhaps suggesting a change in the mindset of New Zealanders?
Do restaurants encourage tipping?
The majority of restaurateurs I talked to openly encouraging tipping in one form or another. Some, like The Cow in Wanaka invite guests to either leave a tip on their bills or add a tip when paying by Eftpos – an option that is being used more regularly, says Viaduct director Mark Unwin. But the most common option, particularly among bistros and casual restaurants such as Riverstone Kitchen in Oamaru and Harbour Light Bistro in Nelson is to display a tip jar at the pay counter.
No restaurant adds an automatic service charge to bills, although one adds a small percentage for tables over a certain size. Lastly, only Logan Brown, True South at The Rees, and Pier 24 at St Clair Beach Resort did not actively promote tipping.
Should customers tip and what for?
Most were certain guests should only tip if they enjoyed their dining experiences while everyone I spoke to felt tipping shouldn’t be a staff expectation. Monique Smith, who co-owns Riverstone Cottage in Oamaru, last year’s Cuisine Magazine Restaurant of the Year, said she strongly believes customers should tip for exceptional service and food though this shouldn’t become the standard. As a customer, Smith says she wouldn’t tip a cent if the food or service was poor.
Mark Rose of The Rees Hotel and Luxury Apartments in Queenstown believes customers should tip if their server has gone the extra mile – referring to attention to detail, knowledge of the food and intelligent wine matches.
Steve Logan of Logan Brown in Wellington, on the other hand, believes guests should tip when four key elements come together – a warm and friendly welcome, knowledgeable service, a clean and comfortable environment and good food. Logan went on to say that at times with all the potential barriers, it becomes a miracle to deliver a great dining experience.
Surprisingly, one manager was somewhat astounded that guests regularly tip in his hotel restaurant – after being sure that the style of dining offered did not warrant them. He even referred back to when the only time he would see a tip was when serving American guests.
Should staff keep or split their tips?
More interesting is how restaurants deal with tipping – whether wait staff should split or keep their own tips and if they are split, how?
Restaurants that let individual wait staff keep their own tips were a minority, with only two restaurants doing this including the restaurant at Scenic Hotel in Dunedin.
Restaurants that split the tips at the end of each night included The Cow in Wanaka and the Harbour Light Bistro in Nelson. They differed slightly in their approach though, with one opting to split the tips equally between all staff and the other giving 20 per cent to the kitchen and 80 per cent to the front-of-house.
The most common method however was to pool and split the tips on a weekly, monthly or bi-monthly basis. Two venues had accrued tips for an entire year, with Paasha Turkish Cafe in Dunedin choosing to divide the tips annually while Riverstone Kitchen lets a senior staff member pool the tips for a group trip each year. The trips tend to benefit the staff in terms of training and every staff member including the cleaners, kitchen-hands and gardeners have been invited to travel to places like Queenstown, Nelson and Auckland.
The legalities of tipping
I asked operators whether their staff knew to declare their tips to the Inland Revenue. A few said they had told staff to do so, however most had not. Some readers may be irritated by the reality that gratuities are a taxable income.
From the many conversations I’ve had lately, I would suggest this could be a more pertinent area of contention than the idea of tipping itself. Many businesses openly said they don’t believe gratuities should be taxed, and that this is why they don’t tell their staff to declare them. Others pointed out that, as yet, the Inland Revenue has no way of enforcing this policy.
Some businesses had actually found a way around their employees paying tax on tips. One refers to tips as koha, believing that it would then not be tax deductable, while another encourages guests to gift money in a sealed envelope with the individual’s name on it.
Thus, a ‘one size fits all’ approach to tipping seems unlikely, as each business seems to find a system that suits them best.
James Hacon is general manager at St Clair Beach Resort in Dunedin and a consultant at James Hacon Associates.