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In the restaurant business, servers 'TIP OUT' to the rest of the staff (kitchen, bar, hosts, dish pit), on average 3% of their sales. So when you tip 15%, they really only get 12%. Then when you dont tip, they're left to cover 3% with their own money. Its not unheard of for servers to walk away owing money after a shift..so when people choose not to tip its a real FUCK YOU...if service was bad then granted...but I believe generally why tips are 'automatic' is because the server automatically tips out too...

just another way costs get passed down to the end consumer..

However, from working in a restaurant i'm no longer afraid to leave no tip cause i can better tell good service from bad service and tip accordingly

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Originally posted by Joe Drust Restaurants / clubs cannot afford to absorb a 15% increase and be able to operate as they do now. (In the current model)

Of course it would only be a 15% increase if server wages accounted for 100% of your total operating costs and if 15% were actually the difference between pre-gratuity and post-gratuity income. Neither one of those assumptions is true.

They both offset each other so I can accept that it might be somewhere in the general vicinity of 15% of your operating costs (give or take maybe 10%, it really depends on the restaurant), but mathematically it's nonsense to say that raising wages would raise your operating costs by 15%. There's the cost of food, rent/property taxes, legal/licensing fees, electricity, security, cleaning, and all that other fun business overhead, all of that factors into the price of a menu item.

As for clubs, I have zero sympathy. At a restaurant you have a server working his/her ass off for an hour for maybe half a dozen tables averaging $100, normally earning somewhere in the area of 10% after tip-outs for a total of $50-$60, and that's on a busy day when most patrons were generous. Compare to a bartender at a club pooping out a hundred drinks an hour at a ridiculously inflated $6-$8 a pop, 15% of that is over $100 per hour, that's more than *I* make. Sorry, but the service just isn't worth that kind of coin, I'm not paying for your Porsche. Bar tips should be closer to 5%, 10% tops, in order to compensate for the price inflation.

At a dead club I'll try to be more generous, but at a place like the Guvernment where the bar is always rammed... blow me.

Is muzik as nice as everyone makes it to be?

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Originally posted by DigiNut Of course it would only be a 15% increase if server wages accounted for 100% of your total operating costs and if 15% were actually the difference between pre-gratuity and post-gratuity income. Neither one of those assumptions is true. They both offset each other so I can accept that it might be somewhere in the general vicinity of 15% of your operating costs (give or take maybe 10%, it really depends on the restaurant), but mathematically it's nonsense to say that raising wages would raise your operating costs by 15%. There's the cost of food, rent/property taxes, legal/licensing fees, electricity, security, cleaning, and all that other fun business overhead, all of that factors into the price of a menu item. As for clubs, I have zero sympathy. At a restaurant you have a server working his/her ass off for an hour for maybe half a dozen tables averaging $100, normally earning somewhere in the area of 10% after tip-outs for a total of $50-$60, and that's on a busy day when most patrons were generous. Compare to a bartender at a club pooping out a hundred drinks an hour at a ridiculously inflated $6-$8 a pop, 15% of that is over $100 per hour, that's more than *I* make. Sorry, but the service just isn't worth that kind of coin, I'm not paying for your Porsche. Bar tips should be closer to 5%, 10% tops, in order to compensate for the price inflation. At a dead club I'll try to be more generous, but at a place like the Guvernment where the bar is always rammed... blow me.

Not quite. Tips are generally determined typically by sales revenue and have nothing to do with what actual staff labor is. Your comment actually really got me thinking though (because this is not what we deal with typically)and I wanted to think this through.
10K in staff labor is 22% of my total costs on 45K.(these are actual examples)
On 45Kin sales the restaurant generates around $7000 in tips at around 15%.. if the restaurant paid out that wage in addition to the regular hourly wage that brings your 10K to about 17K and 37% (if the restaurant absorbed all of it)
However there is another thing, a restaurant pays 15 to 20% in insurance, benefits etc on every dollar it pays out to a staff member. So that $7000 becomes $8050, and the 10K $1850.. now we are at 41% just for staff labor.

The example I just gave would be a total financial failure. Food and bev costs typically make up the next 30-35%. ops cost another 5% to 10% Management labor 10-12%, rent, taxes, insurance, utilities...no chance for this place. (with this cost increase)

No one here is really assuming that any place could just absorb this cost (at least I dont think they are) and the ones that are in support the no-tip-cost included in price theory...are assuming some sort of price increase... but to keep the bottom line in balance the top line increase would be huge, and people are super sensitive to that, especially considering current conditions (people shit bricks and write emails over 15 cent pop price increases) Declining guest counts are this industries biggest challenge. Flat has become the new "growth"

The truth is tipping is in our culture, and culture takes a long time to change.

BTW I relocated here from Michigan.... servers we paid 2.65 an hour. That was min wage for servers. THOSE were shit wages.

I tip out of guilt, and tips are part of the culture because North American culture has little or no shame.

How ironic that tipping is most prevalent in the most capitalist of societies.

To those that hate tipping, or even the entire concept of tips, I would suggest either stop tipping, or move out of Canada.

In Europe, and other parts of the world, it's VERY simple. Higher prices, no tips, everything is straightforward. No having to deal with any guilt or shame of not paying a tip.

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Originally posted by haqq Is muzik as nice as everyone makes it to be?

It's overrated, like many clubs in Toronto.

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Originally posted by Jayx1 5 Gs is a lot in toronto.... but this booth would sell quickly for this event most anywhere else.

I'm really curious; when you say "most anywhere else" what places are you exactly referring to?

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Originally posted by Joe Drust 10K in staff labor is 22% of my total costs on 45K.(these are actual examples) On 45Kin sales the restaurant generates around $7000 in tips at around 15%.. if the restaurant paid out that wage in addition to the regular hourly wage that brings your 10K to about 17K and 37% (if the restaurant absorbed all of it) However there is another thing, a restaurant pays 15 to 20% in insurance, benefits etc on every dollar it pays out to a staff member. So that $7000 becomes $8050, and the 10K $1850.. now we are at 41% just for staff labor.

Interesting, so a 15% increase in wages would actually raise operational costs by about 18% (8.05/45).

So there you have it folks, a 15% tipping policy actually gets you a 3% cheaper meal!

Thanks for actually showing us some numbers, all too often it's just rhetoric from both sides.

One niggle though - does that original $10K apply only to gratuity-supplemented wages or does it also include salaried work (managers, accounting, etc.)?

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Originally posted by DigiNut Interesting, so a 15% increase in wages would actually raise operational costs by about 18% (8.05/45). So there you have it folks, a 15% tipping policy actually gets you a 3% cheaper meal! Thanks for actually showing us some numbers, all too often it's just rhetoric from both sides. One niggle though - does that original $10K apply only to gratuity-supplemented wages or does it also include salaried work (managers, accounting, etc.)?

The original 10K is just for hourly labor. (All of which is supplemented by tips to some degree or another) The example I was using has management as a separate piece. (But I did include it in the end breakdown)

This was a corporate example..

Thats the first time I really ever ran that info through, and the end result even turned out worse than I thought.

quote:

Originally posted by Joe Drust The original 10K is just for hourly labor. (All of which is supplemented by tips to some degree or another) The example I was using has management as a separate piece. (But I did include it in the end breakdown) This was a corporate example.. Thats the first time I really ever ran that info through, and the end result even turned out worse than I thought.

I don't see why you would calculate like that.

Waiters make what $8.90 (or they will come march)...
Minimum wage is going to be $10.25

So why not just raise their pay to regular minimum wage? Or say even a little more. Raise their pay by 20% so that will make their wage $10.68. Bringing your costs from $10000 to $12000 plus the insurance/benefits...so say $13000. So just under 29% of your sales.

I don't think most people would complain about food price increases, because they go up every year anyway as soon as minimum wage goes up. So raise the price in April by 5-10% and there you go.

And now the employees make just over minimum wage. Sounds like a fair wage, considering the main skills consist of writing down order and carrying things.

.

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Originally posted by Cro_Addict So why not just raise their pay to regular minimum wage? Or say even a little more. Raise their pay by 20% so that will make their wage $10.68. Bringing your costs from $10000 to $12000 plus the insurance/benefits...so say $13000. So just under 29% of your sales.

Think about what you're suggesting though. As I pointed out in my original reply to Joe, the 15% figure for tips has no significant relationship to the difference between pre-tip and post-tip income for servers. Tips are calculated on sales, not salaries.

If salaries for wait staff were increased by 20% but tips were eliminated, the majority of the staff (at least the competent staff) would walk, immediately. Nobody would do that work for minimum wage, it's too stressful, might as well take some equally low-paying but also low-responsibility job at a coffee shop or fast food joint.

At some point every business owner realizes that you have to offer at least the potential for competitive salary/benefits if you want to attract good people. Imagine telling a staff of salespeople that they'll no longer make commissions, but hey, it's all good, because their salaries are going up by 20%. Think most of them would stick around?

quote:

Originally posted by Cro_Addict And now the employees make just over minimum wage. Sounds like a fair wage, considering the main skills consist of writing down order and carrying things.

I tried to explain to you the concepts of equilibrium wage levels, set at the corresponding cost of effort in my previous post, but you obviously don't understand. I don't really have the time to give you a lesson in labour economics, but let's just say that the wage level for the average server is a lot more complicated than what you consider "fair" compensation.

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Originally posted by LKD over 90% of the world hasn't heard of tips. when friends of mine visit, they pay face value and then i have to "correct" them so we don't get bad service after

Most probably your friends come from arab countries (i.e. UAE) where they are served by "slave" workers (i.e. coming from the indian sub-continent)... so obviously they're not gonna tip them.

I had a buddy coming from Dubai and I had to tell him that tip is 15% minimum, he was outraged... "but I just paid 15% tax..."

Now can we argue about how much utility one receives from being a 'good' tipper?

lol -- In all seriousness $5000 for that booth is F-ed

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Originally posted by iant56 Now can we argue about how much utility one receives from being a 'good' tipper?

[tip]MAX <= [utility]MAX

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