Features, The New Rules of Retail, Trends

Why An Automatic Service Charge Doesn’t (and Can’t) Work for Restaurants

rr_why_an_automatic_service_chargeThe conundrum facing restaurateurs right now is how to develop a pricing and business model that allows for fair wages to be paid to all employees, waitstaff and sous-chefs alike. The challenge is how to do it without the protocol on tipping that unequally rewards front of the house service over kitchen craft. Indeed, how to do it in the climate of rising minimum wages without creating an uptick in consumer prices that erodes the enjoyment of the meal. Fine dining establishments throughout the country are grappling with it with no genuine success. Savvy bartenders, wine sommeliers and seasoned waitstaff are leaving newly “all inclusive” restaurants to work for those sticking with the status quo. Sticker shock creates customer recoil, and that necessitates menu reconfiguration.

Why the stutter? It makes sense to offer tout compris, as the French used to universally inscribe on their menus (and never really meant). We can look to that example for possible clues as to why it is so difficult to remove tipping from our eating out enjoyment and rituals. Further evidence: The advent of tip jars at quick service and fast food outlets testifies to the power of the behavior. Even handing off a $1.19 donut in a bag seems to call out to us for our spare change.

Basically the answer is that nothing is ever logical about food. It’s a product we ingest. It’s an experience we literally cannot live without. Pause in that: What other category of goods do we willingly, thrillingly, excitedly make our own in that way? We sip. We savor. We anticipate. We take selfies with it. We remember it and tell others about it. Our first memories of it are typically grounded in our mother’s nurture and caretaking. Really. Each experience is actually a re-experience. An echo of the essential primary dependency, dense with its need to assert independence, autonomy and control, wresting away a childlike status that we sometimes revert to with our endless, “What do you recommend?” questioning. And then there’s our occasionally infantile need to regress by indulging in ‘naughty’ dessert transgressions.

A great waiter delivers an emotional wallop, dense with archived meaning. Tipping is our noblesse oblige. It’s how we honor and say thank you, not just for this meal but for so much else that is fraught with significance and implication. And occasionally, indignation that seems to rise up unbidden and overinflated, but comes from a forlorn sense of neglect re-invigorated by a water glass left too long half-empty or a meal delivered too late.

Remove that ability to express gratitude and food just becomes a price-centric transaction. I’ll spend $39 for an all-included steak dinner, but not $66. Retailers have learned the hard way where this slippery slope leads. But selling sweaters and jeans cannot compare to the emotionally dense interaction of restaurant, waiter and customer. Restaurateurs conflate it at their peril.

We’ve looked at the food, tipping, service covenant in a variety of restaurant contexts. It is always the same: The less control the consumer has in the pricing equation, the more price becomes the dominant determinant. All included pricing can be viewed from a variety of perspectives, but it’s a no-win scenario for most.

  • The customer loses the very experiential joy of thanking (or, far more rarely, penalizing) the bearer of the food, and along with it the joyful sense of his/her own ability to engage with the waitstaff in a dance of question and advice. With tipping included, interaction is commoditized. The waitperson is an employee of the restaurant’s, not an advocate for his/her co-patron, the customer. It breaks the relationship.
  • The waitperson loses the same thrill of professional advocate for the patron. Not simply an order taker for either the customer or the establishment, there is a genuine satisfaction that comes from being that hybrid figure, the gustatory shaman who shares wisdom and ensures the experience.
  • The restaurant loses the ability to avoid the sticker shock. Something has to give and in the place of a step-wise progression through the billing process, there is the slam-bam of full-on pricing right there, in black and white. Customers hide from the real reality of what a fab dinner costs. Portions get smaller to allow for smaller fees. Sides get cut. Elan and grace devolve.

The folks who are trying to re-imagine the dining experience are people of good will and laudable goals: They want to be able to pay fair wages to all. They want to be able to offer health insurance to employees. This isn’t a malicious evolution. As one restaurateur was quoted in The New York Times: “It took hundreds of years to build up the traditions of how things are done in restaurants. We can’t expect to change all of that in one year.” But can they expect to successfully change it at all, while maintaining the basic notion of nurturing hospitality for sale? It evolved the way it has for a reason. Traditions become enduring not because they are traditions, but because they meet a profound psychological hunger that is pervasive and permanent.

The fellow who wrote the Cheers TV show theme song knew it. We want to go someplace where everyone knows our name. In lieu of that precise type of recognition, we settle happily for being known through a complex triangulation of food, familiarity and funding. Who is in charge? The triangle is the essential fact to consider: The patron is one point on the compass. The restaurant is another. The third is that waitperson: sometimes working for us, sometimes negotiating in our interests because they work for the establishment.

The endgame? Shift the balance of power and shift the power of the experience, along with its value.

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