39
votes
California junk fee ban could upend restaurant industry
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- Title
- A New Law That Goes Into Effect July 1 Could 'Upend' California's Restaurant Industry
- Authors
- Lauren Saria
- Published
- May 3 2024
- Word count
- 1375 words
I don't know about "upending" the restaurant industry. They will just have to do exactly what they should've done which is build the service fees into their prices, and say that no tip is necessary.
In fact, it doesn't quite go far enough:
Taxes should also be included in the advertised price, as they are in other countries. A common complaint from people visiting the US is getting "scammed" by that. We're all used to that form of drip pricing, but it's still wrong. Tipping also needs to be abolished.
I’m fine with showing prices before tax. In the US, sales tax is set by cities, counties, and states. You can have a different tax rate at the store down the street than at the store 10 miles away. It would be confusing to people to have different prices posted on stores in the same area.
In places like the UK where VAT is the same rate across the whole country, including it in the advertised price isn’t a big deal.
As opposed to the difference in pricing between different stores for other reasons? It's not like you expect different chains to have exact price matching for any other reason; why would that price being different because of local taxes be a problem?
I don’t necessarily cross shop prices at the grocery store, but larger purchases like electronics, appliances, and furniture are cross shopped at multiple stores. If someone could see that they would get $50 off their new iPhone if they drove to a store 10 miles away, it could actually upend local economies. Stores could have a competitive advantage by having storefronts in lower tax zones and cities could see drops in sales tax revenue.
An extreme example is Portland, Oregon and Vancouver, WA. Vancouver, WA has a 8.4% sales tax and Portland, OR has no sales tax. Vancouver, WA brings in $100 million a year less in sales tax than they would expect for their population. This causes issues for providing the services people expect from their local government.
If sales taxes are included in advertised prices, this could happen in more areas on a smaller scale, or cities could start a race to the bottom for sales taxes to make it more attractive for businesses to move in. Eventually consumers may have lower prices, but they come at the expense of budget shortfalls to run city services.
This is arguing that it's a good thing we trick people. The customer still has to pay the full price, including taxes. You're arguing a town should be able to say, "yes, our taxes mean the customers will pay more than in the next town over. However, if we allow businesses to not advertise the true price, we'll get more business into our town!" The customers are still paying the full price, you're effectively just justifying a reason to get them in the door with a fake price.
A town could use the same argument to allow all kinds of violations of truth-in-advertising laws. If Washington businesses are helped because that they don't have to include the 8.4% sales tax in the price in their adds, why not give them further exemption? Why not let them falsely advertise the pre-tax price? That would bring even more customers to Washington businesses!
Customers should be able to see the full price of something in an ad. If that means lower sales for a city or state, so be it. All taxes, of any form, have some undesirable secondary effects. Governments are supposed to take those into account when deciding how to set their tax policy. If Washington is unwilling to accept the decline in Vancouver, they could adopt Oregon's model of having no sales tax. Or, the state could provide subsidies to the municipal coffers of border cities particularly affected. There are plenty of ways around this problem without letting stores trick people by advertising fake prices.
I understand that sales tax is regressive, so replacing it with a progressive tax would be better. The issue is that politicians have an easier time repealing taxes than they do creating new ones. If sales tax is included in the advertised price and sales taxes are lowered to attract more people to local businesses, it hurts the locals. If you save a few percent off your grocery bill that’s nice today, but people will suffer when the roads deteriorate, the firefighters take too long to arrive, and the library shuts down.
Come on, that's an easy problem to solve. You pass them both simultaneously. You don't repeal the sales tax and a year later pass an income tax. You pass both of them with a single law. The same bill repeals the sales tax, imposes an income tax, and establishes a means of revenue dispersal. Optionally, write the bill as a ballot initiative to give voters the final say on the whole package.
On the other hand, sales taxes are regressive, so maybe some additional pressure to limit them isn't so bad? (Relying on property taxes might be better?)
The amount of tax can still be disclosed (in advertisements and on receipts), but it wouldn't be the biggest number.
I believe prices on gasoline do include taxes, and it doesn't seem terrible.
McDonald's prices their burgers differently in cities next door to each other. How is an included tax any different?
I responded in another reply to my original comment, but the gist of it is that we have extreme examples of this on cities that are on the border of two states in the US. Even though sales tax is not currently included in final prices, extreme differences in sales tax across state borders are noticeable to consumers. This has caused a $100 million dollar sales tax revenue shortfall for Vancouver, WA because they neighbor Portland, OR where there is no sales tax.
In areas where multiple cities blend into each other and sales tax differences are lower, including sales tax in the advertised price would make it easier for consumers to choose to shop in a place with lower sales tax. This could cause a race to the bottom where cities cut sales tax to try to compete for businesses.
This would not be an issue if there was a national sales tax like many European countries do, but the wide range of sales tax rates across metropolitan areas in the US could cause budgetary problems for some cities.
Tbh sales tax is not the best tax option IMO anyway, but regardless, I live in a twinned city (cross a street and new taxing entity) and there are absolutely price differences between places, but no one drives further for the slightly lower sales tax. Statewide practices being so different do cause more issues, but locality to locality it's really common for base prices to be different based on all the various differences in taxes, wages, etc.
If anything including the tax would likely hide the reason for higher prices. If the only solution to the tax disparity is "try to trick the consumer into not realizing there's a tax" by surprising them after the fact, that's a bad model.
I think the US might be a special case where including tax in the price is more difficult. For a local restaurant it’s easy, but for any advertising that will cross city or state borders all you know that will could the same is the base price. Some states have no sales tax. Others have high state sales tax plus varying sales tax from your city.
There's several reasons why the arguement that advertising makes tax-inclusive pricing impossible. The first is that there are other countries which seem to manage that just fine. The second is that these kind of advertisements basically don't exist. Advertising campaigns are controlled and customized for the markets they appear in, so giving a customized price for the market isn't completely out of question. They could also do what car companies already do, and advertise MSRPs instead of actual end-user prices. That's not necessarily an improvement on the advertising front but it's a marked improvement for in-person transactions, especially considering you can call a business to get a price and get the actual price you will be paying.
Beyond that, as @DefinitelyNotAFae mentioned, prices already vary across regions regardless of their different tax rates.
This is already the case though, higher minimum wages in some states make national marketing campaigns have caveats about how in Illinois that pizza is 6.99 not 5.99 or whatever. And I have seen different base prices for regular (not big special sale) prices depending on area. A taco from Taco Bell in one town may be a different menu price than a taco in the next town over as it stands.
I've seen less of that over the years which may be partially less cable TV on my part and more targeted ads on the advertisers parts.
I'm going to say yes and no to this, I think the ideal is to display the total price but also have the price without taxes also someway labeled. Consumers, most of whom are frankly not savvy enough to process the information in their head, deserve to know both how much the provider/restaurant/retailer are charging for a product as well as how much the government is adding to that price in taxes. Transparency on both sides would lead to better information for both consumers and citizens, neither vendors or the government deserve to hide their "prices" and either system is just advocating for one or the other.
This is the norm in Australia. The advertised price includes taxes, and the receipt breaks it down and shows you how much is going into sales tax (called Goods and Services Tax, or GST, here). It is displayed something like this:
Or like this:
I am from the US originally, and it's really hard going back to the way they do things there, even though I spent most of my life living that way. The low level of unnecessary friction applied to seemingly everything makes me want to stay home and do nothing when I'm there.
This is what I think makes the most sense. In the US taxes are fairly low (though when it comes to sales tax, YMMV to an extreme), so simply adding the ceiling tax rate to the price before advertising allows companies the ability to advertise the real price of the product while also pulling extra revenue from the stores that have lower taxes.
Exactly. I still can't wrap my head around how enforced tipping is even legal. Just charge me the money and then lroject it to your employees' salaries!
If I'm pleased with how they serviced me, then I can tip them on my own. This is basically how it works here in Czech Republic - you are oleased with the service, you leave a tip. How big? That is uo to you. You can just round up or think about say 5-10% or be really generous by giving even more. Or if the service was bad and the food wasn't much better, you can have them give you all the change (and send the message this way). It isn't mandatory and it shouldn't be! People should be paid by their employer, not their guests!
Yeah, and it's just gotten worse here. Tipping shows up everywhere now including retail where the worker simply rang your stuff up and took your money. It's finally reached a... tipping point 😎... where people are finally fed up with tipping culture.
Tipping in the US is generally not legally enforced, but is strongly socially enforced, and is larger than most other countries: around 15-25% at least, and in many places 15% would not be seen as appropriate except from the elderly. It is nominally related to how pleased you are with the service, but in practice, you need to tip regardless. Not tipping at all, even for bad service and bad food, is generally considered socially unacceptable, and you could expect to be harassed for doing so, potentially publicly.
Let me say up front, I wish we lived in a world where waiters made a living wage without tips, but until we do...
I was a big fan of the Waiter Rant blog (and some other food service blogs) back in the day, and I learned that a lot of times bad service you get has nothing to so with the waiter. If the kitchen is backed up or the food is not good, that's nothing the waiter can control. Even when the service is "bad", a lot of times this is due to understaffing. Reading that convinced me that unless my waiter insults me to my face or spits in my food in front of me, I always tip.
For me, not tipping is similar to yelling at customer service reps on the phone. It's taking out frustration for a bad system on the person who is most vulnerable and least able to change anything about the system.
Plus, from a human compassion point of view, anyone can have a bad day or make a mistake. In an office setting, there are usually processes in place to catch these mistakes, and you don't have your pay docked if you make one mistake. But if a waiter is having an off day, maybe missing out on those tips means not making rent or otherwise not being able to provide for their family. That doesn't seem right to me.
Dn't get me wrong. I'm no against tipping, I'm against it being mandatory - like a part of my receipt. Me, the customer, should be the one who decides how much to tip. And I would never tip 15% in a place where I have to wait for several minutes before being seen and where the waiter acts like a machine.
Enforced tipping is not the default in the States. The default here is what you described, but with 15-22%.
Bad choice of words. You can tell I'm not native English speaker. I meant the part where the tip is part of your receipt. I meant part that can't be undone from there.
The right word is probably mandatory?
I think I understood, but let me know if I'm not still. I meant that in most restaurants, under most circumstances, there is no tip on the receipt. It's not a required part of the bill. But people feel compelled to give 15-22%, so even though it's not required, there is great social pressure to regardless of actual service level.
There are some restaurants that do charge you a mandatory tip. It's usually for groups of 5+ in my experience, and they'll tell you ahead of time or there will be a sign. This part is enforced, since they tell you ahead of time.
BOTH scenarios are problems though, in my opinion. The first situation is close to what you experience in the Czech Republic, although the amounts are higher here and it's more expected, but it's not good to have a system where voluntary fees really aren't voluntary.
The last sentence of your comment sums it up perfectly.
It is not common here to not leave a tip, either. But when you do that, when you don't tip, you are sending a message. You may be frowned upon by waiter, but I suspect you had the reason to not tip and the service was so bad that you don't care that you are frowned upon by that person.
It is also kinda expected to be tipped here, but the amount is... Well, nobody expects certain amount or percentage. Someone may just round up or add a few tens of crowns, other may throw in like 10-20% on top of the bill.
1USD is around 25 CZK, not exactly, but good to have just some kind of context, 100CZK is 4USD for ease of maths.
For example midrange restaurant has main meal for around say 300-400CZK (12-16$), let's say drinks are another 150. Two people will do say 1150CZK (46$), you may tip restaurant at 1300 and give the waiter another 100 (it goes straight to his/her pocket; or to the "bank" and they sort it out to at the end of the day to all waiters of that day). This sums up to 1400CZK (60$) and is exactly what I paid recently. I think this was considered generous by the waiter (by the looks). The tip was over 20% which is kinda surprising to me now when I calculted it. But they certainly deserved it.
I had also not given a tip in the past. When you are waiting for the service for too long and then the waiter looks at you like you are some burden to them, then I'm really not pleased. Such people should really work somewhere else, have different job.
There are some I’m okay with, like automatically setting a service fee for large groups. Deciding how much to tip seems hard to do as a group decision.
Thats why you just ban tipping, increase prices 20%, pay staff that revenue directly, and call it a day. Anybody who gives a tip on top of that, gets split among all staff working that day.
Tipping is a terrible practice as it exists in the USA. It's mostly used to justify paying waitstaff like $3 or less per hour.
That doesn't sound like a tipping ban?
I believe vord meant "ban mandatory tipping". I believe customers can tip by themselves the amount they consider worthy of the service they received.
I'm not vord, but I would support actually banning tipping. The problem with banning mandatory tipping is that the tipping culture itself is the problem. Mandatory tipping, such as that applied to large groups, isn't a problem. Restaurant mandatory tip policies for large groups are just meant to ensure that individual servers don't get completely screwed over by a large group not doing what is already socially expected. Tipping is socially expected at sit-down restaurants (and the practice is expanding to other areas.) Most people will simply do it. If a server has many small tables over the course of a night, and if one table stiffs the tip, well the server is still fine. But with large groups, that group may represent a substantial portion of a server's total work that night. And if that one group decides not to tip, then that server is severely harmed.
The real problem is not mandatory tipping. The problem is tipping culture in general. That is the practice that needs to end. The problem of course is that if a single restaurant bans tipping, then they will have to raise their prices. Customers will see the menu prices as higher, not factor in the tips, and go elsewhere. Plus, there are a certain portion of people who just get a kick out of being able to exercise some small amount of power over random strangers. For some people, going to a sit-down restaurant lets them LARP as an old-money aristocrat for an hour.
If we really want to drive a stake through the heart of tipping culture, I would propose that we create a tipping tax, a tax payable by the tipper. Tax tips at 300%. Require people to keep record of their tips, and then file a tip tax return once per year. If you tip with a card at at restaurant, the tip will be reported just like employers report your wages to the IRS.
Are you really a big-money aristo who wants to lord your wealth over your humble server? Fine, let's see how deep your pockets really are. You can pay the state three dollars for every one you pay the server. Tipping will become a rare and extravagant act of benevolence, rather than a normal social expectation.
Can anyone else chime in on this portion of the comment?
When I read this, it sounded completely insane. But when I spoke with some other people they said it sounds plausible.
I invite others to reply as well, but I can elaborate on my thoughts there.
I obviously don't mean that people show up to restaurants dressed like members of Louis XIV's court. It's more a change in behavior and demeanor that I've observed among many people. People who are otherwise very casual and informal will suddenly adopt an out-of-character stiff and formal demeanor. They'll change the tone of their voice. They'll start being very formal with please, thank you, making formal requests, enunciating their words very rigidly, etc. And they won't act this way when encountering say, cashiers at a grocery store. They will only act in this faux-aristocratic manner when being served at a restaurant. They'll act casually with every service-sector worker that they don't control the wage of. But when working with a tipped employee, they'll adopt a formal demeanor.
In the world of old money, whether British, American, others, a culture developed to regulate the social interactions between the wealthy and "the help" or the common folk and "their betters." The help was supposed to adopt an attitude of polite unquestioning supplication. The wealthy were supposed to act with detached, polite, and disinterested benevolence. This class divide was built into the very architecture of buildings. See the dumbwaiter.
There is a long tradition, a culture that developed of how the rich and their staff were to interact. And middle class people were never wealthy enough to afford those kind of servants. Tipped waitstaff represent to the middle class the one time that they will get to experience a brief taste of that power over others. And it continues to this day.
Perhaps this could be viewed as a uniquely American phenomenon. A broader theme of American culture is an attempt to democratize experiences and goods that were once the exclusive purview of the wealthy. And for many, a sit down restaurant represents just that. It's where anyone, for a modest price, can get to experience complete power and control over someone else's paycheck. It's where people of even modest means can get a taste of the power the old aristocrats held over their servants. In a way, there's a weird democratic spirit to the whole thing. It's something that could only exist in America, with our weird cultural contradictions between the democratic tradition and worship of the wealthy.
At the end of the day, people go to sit down restaurants for more than just the food. Counter service places can give the same exact food for substantially lower cost. They instead go for the experience of having a nice evening out in a setting different from home. But for some, part of the appeal of the experience is that they get to, for a brief moment, have power over others.
If you're in the US, I suggest you listen for it. Observe the people you know when they go into restaurants. See if any of them subtly adopt the affectations of old money aristocrats (or at least the cultural stereotype of that group.) Then see if they adopt those same affectations when dealing with non-tipped service sector workers. What I have observed is that many people who are casual in normal settings and when addressing non-tipped workers will suddenly adopt an elitist and formal demeanor when being served by tipped waitstaff.
When you really start to notice it, it become quite disturbing. Even people who themselves have worked shit jobs and have been abused by those above them will suddenly take on a superior demeanor when dealing with waitstaff. It is not enough that servers provide good service, but they must act like servants, servile peons on a lower social status than whoever happens to walk in the door with a dollar in their pocket.
Really, I find the whole thing vile. This kind of behavior has no place in a free and democratic society. It's one of the reasons I find tipping such a horrid practice. I'm in the US, and I realize servers do rely on tips. So I of course do tip when I go out to eat; it's not the servers' fault this broken system exists. But I do believe tipping culture needs to be excised from our society. It's a stain on the national soul. I would support banning tipping or taxing it so heavily that it would hardly ever be done.
I don't have problems with tipping in general. If the service was good, I'm willing to give out mone to the waiter - yes, directly to the waiter, not the restaurant. Recently I was so pleased in one of the restaurants here (in Czech Republic) that I tipped the restaurant for very very good food and also the waiter as he was able to read the energy at the table and was joking through the whole visit - he did awesome job and I'm returning there in the future and tipping again!
Problem would be when a restaurant with bad food and bored to death waiters wanted me to pay 20% of mandatory tip. This is what bothers me about that. But hey! I don't live in the US, so it really doesn't.
Also - it may no be right (from some legal point or whatnot), but when I tip the waiter here, the money literally exchanges hands. There is no tax involved, it is money from my pocket straight to his/hers. Tips are not written anywhere, it is just straight pure money. When you tip the restaurant, it goes on the receipt though.
Oh and when we go out in a group, it's each for him/herself, meaning we pay for our own expenses, which means waiter gets tips from each person on their own.
I suppose it could be done. But exactly how you communicate the ban on tipping would be key.
Oh no, I mean if a belligerent customer 'forgets' 100 dollars on the table or otherwise insists.
I think in America it would be a hard sell to tell wait staff to reject tips until the customer insists. I'm sure some places do that, but if you're looking for a society-scale change that's not likely to work. There should be a middle ground where the staff is paid appropriately, tipping is not required, but anyone can easily tip if they so choose.
In the case of US it would be kinda easy. Those (say) 15% extra must be paid by employer. If customers wants to give waiter some extra on top, they can tip them whatever they want - be it a dollar, ten dollars or 50 dollars (if the waiter took good care of the customer). But let me tell you that for 50USD you would get very good food with good service for two people here where I live.
I always hear this, but I think it's a little more complex than that. Sure, wait staff get paid a minimum cash wage of $3/hr or whatever it may be wherever (minimum federal tipped wage is $2.13/hr), but tips of course increase that. At high-end restaurants, probably by quite a lot beyond even the regular, non-tipped minimum wage. But even at lower-end restaurants, staff still have to get paid the regular, non-tipped minimum wage, if tips aren't enough to get them there. And that gets paid by the employer. So no one is actually making $3/hr. All staff make at least the regular, non-tipped federal or state/local minimum wage, whichever is higher.
Not that that's necessarily great. Federal minimum wage of $7.25/hr is pretty pathetic. It was back then and it still is now. Some states are better; California are at or above $16/hr and DC is at $17/hr. But quite a lot are still at $7.25 or the low teens at best.
Regardless, no one is making only that tipped wage.
California is now making it $20/hr for food service workers, iirc.
No one with a reputable employer, at least.
You'll need to factor in cost of living for the minimum wage. For example, California has one of the highest median incomes, around 5th of 50 states. But adjusted for cost of living Californian's are 48th. The poverty line in San Francisco for a family of 4 is around $125,000.
Which is why people commute, often long distances.
If you're not making enough in tips to reach the minimum wage and your employer has to offset that, you get fired very quickly.
California, which is what this article is about, does not allow minimum wage to be offset by tips. Tipping does not influence what restaurants are required to pay their staff, though it probably influences what the market rate is, above the minimum wage.
Edit: to try to reiterate this again. In California, minimum wage does not include tips at all. The weird ability of employers to pay less than minimum wage so long as tips make up the difference is allowed in much of the US, but not California.
Neither does anywhere else in the USA, offically. They're supposed to make up any gaps to minimum wage.
It's just that employers are happy to play fast and loose with the law and save a bundle, banking (correctly) that their employees don't have enough money for lawyers.
It's one of the largest contributors to the wage theft pie.
Edir: @JCPhoenix b/c you mentioned it too.
No, it's different. In other states, employers make up the difference only if you don't make minimum wage. In California, you get minimum wage plus tips.
What you are referring to is legal in much of the US, but is not legal in California. The employer simply must pay at least minimum wage. Tips are not included or considered in that at all. There is no lowered non-tip minimum wage for tipped employees, or ability to pay less and only 'make up gaps'.
"ban on surcharges would mark a watershed moment for the state’s restaurant industry, which has in recent years relied on mandatory service charges to supplement optional tips and boost staff wages. "
Translation, having a forum for blaming their own wait staff for making minimum wage. But it's somehow the states problem, not the employer.
Yeah, that is the thing that has been missing in this conversation. Every restaurant I have seen with mandatory surcharges outside of large groups has implemented them in a way that makes it seem like a protest or retaliation to a change in labor laws that require fair pay to the waitstaff.
But the stupid thing is that they tend to keep them on even after they raise prices so at the end of the day it’s nothing but a way to gouge the customers. Personally speaking, I put a blanket ban on El Torito after being slapped with a 20% fee on top of incredibly overpriced low-effort food.
I don't see how that will happen, unless tipping is also banned or legally discouraged in some way. This will make it very difficult for no-tipping establishments to have prices at all similar to socially-required-tipping establishments; almost every no-tip restaurant I've been to has had a service charge. If those service charges are not allowed, not allowing tips will be a competitive burden; people are unlikely to go through the calculation of what something would have cost if they needed to add a tip, or may not even realize until it comes time to pay that the restaurant doesn't allow tips.
Unless an exception is made for places that don't allow tips, or action is taking against tips, my expectation is that the ban will almost entirely kill off no-tip restaurants in California. This is the sort of idealistic policy that seems likely, in practice, to make at least the tipping situation worse.
It's particularly annoying to me because, for various reasons, the service charge at no-tipping restaurants was essentially always less than the amount I would be socially obligated to leave as a tip.
A service charge is in leiu a tip. It may be less than you would have tipped, but it's still a fee. No-tip service charge places would build that charge into their menu prices just like tipping restaurants would increase their prices by 18% or so and pay their staff the wages they would've gotten.
Why would they do that, making their prices appear higher than places that expect tips, instead of surrendering to tipping culture and allowing tips? My point is that banning service charges but not tips means that no-tip restaurants will be pushed into allowing tips.
There's definitely a way to do it. There's a breakfast restaurant near me that does this, and people love the place. They advertise that they pay their workers a living wage, and tips are not requested. No service fees either. The place has been open for many years and is doing great.
So few restaurants do this that it could easily become an attractive advertisement.
I say tax the hell out if it. Levy a 300% tax on all tips, payable by the tipper. Any tips paid with card will be automatically reported to the state. Any cash tips must be accompanied by a form that requires the tipper to fill out a form that allows your identity to be established. And that form will be sent to the tax office. Once a year, any tippers must file a tipping tax return, and pay the state a tax equal to 300% of whatever they tipped over the last year.
In this system, you can still tip. However, it becomes a royal pain-in-the-ass. Giving the government $3 for every $1 you give the server really kills the mood on the whole "pretend to be an old money aristocrat" experience that some like tipping for. And then you either have to fill out cumbersome paperwork for a cash tip, or accept that your tip will be reported to a state tax agency.
And as far as enforcement? Well that's the real beauty of this. You don't need to drain state coffers, sending out inspectors to enforce a likely low-priority tipping ban. Instead, you have a tax agency! And tax agencies are self-funding. Just allocate a portion of the tipping tax to the creation of the necessary bureaucracy.
Do this, and tipping culture will collapse. It will still be possible to tip, but it would be a rare act of extreme generosity and benevolence. You are saying, "I like your service so much, I am willing to send the government $90 to give you $30. I like your service so much, I am willing to fill out paperwork in order to do so! You're the only person I've tipped this year. Your service is so good, I'm willing to fill out a whole separate tax return just for the privilege of giving you extra money!"
That is what tipping should be used for. The so rare above-and-beyond service that you're willing to jump through a ring of fire in order to do it. Alternatively, you would have a few genuinely rich bastards who would do it just as a way to flaunt their wealth. However, we're not worried about the edge cases here. Bezos can go to restaurants, tip like mad, and let his accountants figure it out. But there are only so many people like him out there. If less than 1% of customers ever tip, then servers won't rely on tips, and tipping will not be the cultural norm.
So the success of your business requires lying to your customers regarding how much they're going to have to pay?
Yes, this is how it works. Advertising lower prices is a competitive advantage, and restaurants are a competitive industry. Most restaurants fail.
It helps if everyone plays by the same rules, but restaurants are a luxury and people can eat at home. So they’re competing with that, too.
Everyone will be playing by the same rules. Everyone must disclose how much they charge... I'm not seeing a problem here at all.
Yeah, I think that’s fine, but the new rules might still result in a drop in business for restaurants.
We don’t normally worry too much about this, overall. They are businesses and that’s how competition works. But it can be sad for the business and for workers.
I'd see that as a reason for customers to never come back after seeing their bill unexpectedly jacked up by 20% or more at the end of the meal.
Presumably every restaurant would need to do this, though. So there would be no competitive disadvantage.
I don't live in America and simply that random fees(as well as that mandatory "tips") are a thing is completely bizarre to me.
The sane thing is to simply price things in a way that covers your expenses. Anything else is using psychological tricks to force the customer to pay more than they would otherwise and should not be tolerated, with the only exceptions being things like shipping fees.
Now if businesses released actual breakdowns of their price structure that would be amazing but the advertised price should be the one paid with only very specific a very minimal exceptions.
Our "mandatory" tipping culture (you misplaced your quotes) is indeed strange and something I'd like to see go away but to be fair is not entirely American in nature but I don't know where you live but "random" fees are very common in many parts of Europe and Asia, and maybe other places as well, where service fees are routinely added to restaurant and bar tabs in order to pay servers better.
From the article:
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I see service fees as a bridge to get us out of the US tipping culture, so I'd like for us to keep them in the short term. Because people feel obligated to tip if the service fee was built into the menu prices people would end up tipping on top of that. I believe people should always be allowed to tip out of generosity, so the option of telling wait staff to reject tips isn't great. So that leaves businesses with the option of informing you they've mandated your tip and you don't need to do anything else. Maybe one day it will just be priced in.
I wish that was the case. Unfortunately, because of how taxes work, service fees will never replace tips. California is heading in the right direction with its junk ban interpretation. It's very pro consumer. The next step should be legislative action to end tipping, or dramatically redefine when tips are allowed (e.g. no tipping at POS for non-service work).
Yeah I think banning systematic requests for tips would work. Because at that point it's not a tip. It's just a service fee.
I read an article years ago about a restaurant opening a second location that didn’t allow tipping. The owner referred to tipping being “a parasitic economy” on his business- what with certain amounts of tips being paid out to kitchen staff and some wait staff using this to leverage the kitchen. He offered benefits to employees, had substantially lower turnover, and claimed it was much easier to foster a team-like atmosphere and was easier to manage.
Conceptually I wonder if this kind of operation isn’t more empowering to the business than restrictive? It might even offer up opportunities to move even more toward equitable employment via some kind of profit sharing or something?
I believe such an endeavor requires the owner to see employees as an asset to be invested in rather than a cost to be kept to a minimum.
It also requires a change of mindset in the employees. Some of the push back about eliminating tipping comes from wait staff and bartenders at certain establishments because they would make less at $15/hr or $20/hr than they do with whatever the state's service minimum is plus tips.
It’s not explicitly mentioned, but I wonder how much of this is about service charges for delivery? That’s where I’ve seen extra fees most often.
Definitely. I went to order a pizza from an app that aggregates pizza places that do delivery, and there were delivery fees, app discounts, and varying default pizza sizes and costs for increasing size. The comparative price for a large cheese pizza was absolutely obscured, and it wouldn't be until checkout that you could have even a vague idea of what the total cost would be. I'm really looking forward to enforcement of this law making it clearer what the final cost would be.
It is explicitly mentioned in the article. The bill bans “drip pricing” in California for all businesses. All advertised prices have to reflect the cost to the consumer minus government fees and shipping costs.
This should stop the sticker shock on online ticket sales, but I wouldn’t expect it to change much for delivery. A lot of the charges levied on delivery apps are actually for government fees. The delivery apps also mark up the advertised prices on the menu items already, so it’s worth ordering directly from the restaurant’s website anyways.
I meant, is the impact on restaurant businesses more about in-person or delivery service charges?