Hate Restaurants’ Automatic Tipping Policies? This Trend Will Please You

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A federal tax change is prompting restaurants to alter the way they charge large groups for gratuity. Many diners will be happy, though servers might suffer.

Several years ago, my husband and I had dinner with a group of about 16 friends at a sushi restaurant. Although the food was delicious, the service was awful. The waitress was rude, she didn’t write down the correct orders and then she argued with some of my friends over what food and drink they ordered and received instead of simply attempting to correct the problem.

In general, our server seemed to go out of her way to be unpleasant. As a result, that sushi dinner was one of the worst dining experiences I’ve ever had. When we received our bill, which totaled about $900, the restaurant tacked on an automatic gratuity of 18 percent – another $162 – because we were a large group. Of course, our group paid the gratuity because it was the restaurant’s policy, but I can guarantee you that not a single one of us left the restaurant happy that night.

If our group ate together at that sushi restaurant tonight, we likely wouldn’t be charged the automatic 18 percent tip, and we’d probably have better service.

Many restaurants have nixed their auto-tip policy for large groups of diners because of a federal tax change, which took effect in 2014, that folds mandatory tips into a server’s wage, so restaurants have to treat gratuity as income, Money reports.

“With the payroll taxes and other considerations like overtime, this isn’t advantageous to the restaurant owners,” so they’re leaving their servers on their own, at the mercy of diners.

While you may applaud the change as a diner, it’s a move that’s angered many servers, who complain that big groups tend to be Scrooges when it comes to tipping, according to The Washington Post.

“When large groups tip miserly amounts, the server can actually lose money on the table, since she has to share tips with the rest of the wait staff at the end of the night,” the Post explained.

Angry servers are now fighting back, organizing online petitions asking restaurants to reinstate their auto gratuity policy.

“Servers are struggling and not being tipped even 10 percent of parties,” wrote TGI Fridays’ server Heather Freeman on the petition she started on Coworker.org. “Servers either need auto gratuity or a wage raise from $2.83.”

A survey of employees at Olive Garden restaurants revealed that servers preferred to take a chance on earning a big tip from a group, instead of rely on the auto-gratuity, according to Darden Restaurants, which owns this and other national restaurant chains. Darden also told The Post that they haven’t seen a drop in the tip amount paid by large groups after they abandoned the automatic tip.

“If it is true that the size of the tips has not changed, that would fly in the face of the long-established ‘magnitude effect’ found in tipping theory, which describes how tip percentages tend to decline as the size of the bill increases,” the Post said.

Some restaurants, like Joe’s Crab Shack and Pittsburgh’s Bar Marco, have implemented no-tipping policies and boosted their workers’ wages.

I typically tip a standard 20 percent when I eat out. Although I had a bad experience with automatic tipping at the sushi restaurant, I can sympathize with a server having to devote a large chunk of their time to a big group of diners and then receiving a miserly tip when they could have been earning more by waiting on several small tables instead.

What do you think of many restaurants dropping their automatic tipping policy? Share your comments below or on our Facebook page.

Stacy Johnson

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