Observations From a Tipless Restaurant, Part 4: Return to Tip Country at El Take It Easy

This is part 4 of a series detailing what I learned from operating our farm-to-table flagship restaurant, the Linkery, as a “no-tipping” restaurant that instead charged a fixed percentage for service, from 2006 to 2013. We also operated a sister restaurant, El Take It Easy, that followed the traditional tipping model, allowing for a fairly direct comparison. Part 1 is here; Part 2 is here; and Part 3 is here.

A few years into operating the Linkery, we got the opportunity to open a second restaurant, which became our “gastro-cantina”, El Take It Easy. While the Linkery had proven successful with a menu driven by housemade sausages, local produce and craft beer, our personal interests were taking us further afield. Specifically, we were becoming involved in the exciting cuisines developing a few miles to south — on the streets of Tijuana, along the sea in Ensenada and in the valleys of Mexican wine country.

Creating a separate restaurant for our Baja-influenced food would, we thought, both make the Linkery more focused on its core cuisine and also give us the opportunity to do our best work in the contemporary Mexican idioms. More importantly, we hoped to help spread the news, well-known in North Baja but well-hidden in the US, that San Diego/Tijuana is functionally one city, albeit one with a wall running through it. We aimed to encourage San Diegans to enjoy some of the best parts of our region, specifically the chefs, artisans, winemakers and brewers that worked next door to us, who in many cases call upon the resources of both San Diego and North Baja to create their art.

It now seems our project was surprisingly successful in its cultural goals. Over the last few years, we’ve seen San Diegans embrace the culinary world of Baja as a regional treasure, and many of our friends from the Mexican side of the region have become much better known in San Diego and in the US as a whole. We don’t know how much of this we caused, but we do know that we had a lot of success with dinners featuring visiting Baja chefs, with other events featuring Mexican producers, and that we got our message out through a lot of media outlets. We think that all this helped bring the culinary region together.

In spite of those successes, though, we never did get El Take It Easy to work right as a restaurant. The were times when we couldn’t make anything in the restaurant work well. There were also brief moments, a year or two in, when we felt we were serving some of the most compelling and delicious food that you could get in the city, in a fun environment with good hospitality. Ultimately we came to the conclusion that it didn’t matter — either way there wasn’t a very big market for what we wanted to do. In the end, the small size of our (awesome and loyal) customer base made it impossible for us to achieve the level of excellence we envisioned. In fact, our quality started to go in the other direction. We closed the restaurant, accepting that we were not in the right business. I own all the mistakes and miscalculations: I thought El Take It Easy was going to be a vibrant part of the neighborhood, and I was wrong.

That said, there was a huge contrast between leading the Linkery and leading El Take It Easy, which unlike the Linkery accepted tips.

When we opened El Take It Easy, we used the Linkery “no-tipping” system, because it had proven to give us a competitive advantage on several fronts. However, a little while in, we introduced liquor and craft cocktails to El Take It Easy, and things changed. In a crowded bar, bartenders are expected to just say the price of a drink order to a guest — we wouldn’t present physical checks. And it was during the presentation of the physical checks that we could best explain the service charge/no-tipping concept. The check also had the policy explained on it, so guests had a pretty good chance of understanding what was going on.

In a loud bar, even if we had insisted on presenting checks, we observed that guests weren’t listening or reading much — they just wanted to know the price, and to pay. Given that the line item service charge seemed like a lost cause, we switched to building the service cost into our pricing. This is known as service compris, and a lot of people advocate for it, but it wasn’t a success for us.

With service compris, an $8.50 cocktail became a $10 cocktail on the menu, and that was a huge psychological leap for our market, where $8.50 craft cocktails were still a fairly recent development. Talking to people in our community, we got pushback on the idea of $10 drinks. Not many people were subtracting the now-missing tip from the price. Explaining service compris at the bar itself every night was an issue, too, because the explanation “don’t tip, it’s already included, anything extra you leave goes to charity” is frankly too damn confusing for someone who just wants their G&T, ASAP.

So this, then, is my answer to a question I’m commonly asked about the Linkery, why didn’t you dispense with the service charge altogether and just increase the prices on the menu? When we included the service charge in the menu prices at El Take It Easy, many people then thought our prices were more expensive than equally-priced competitors who accepted tips and listed lower menu prices. When people see prices on a menu, they don’t look deeper to calculate how many surcharges (including supposedly “voluntary” surcharges like tips) will be added on. People just assume the place with higher prices on their printed menu is more expensive.

If we wanted to charge a fixed amount for table service, then, we’d need to have a line item charge — but we hadn’t been able to make the line-item charge work in the bar environment.

Faced with these logistical and competitive constraints, we looked once again at the tipping model, and decided it was probably our best option. If it was good enough for every other restaurant and bar in the US, we reasoned, surely we could find a way to make it work. So we switched back to the tipping model, at El Take It Easy only.

Which created a context, in my opinion, where we could never get our service as good as we wanted it. Tipping got in the way of us helping people get better at their jobs. In many ways tipping culture made leadership of the restaurant an unpleasant chore, no matter who stepped into the breach.

At both restaurants, like most businesses, we would always have a certain spectrum of abilities in our team. Some team members were excellent at hospitality, some were well-intentioned but inexperienced, and a certain number really needed to re-think how they did things if they were going to get good at their jobs. At the Linkery, we had a lot of successes in helping people improve all the way to the top level. At El Take It Easy, it rarely happened, and when it did, it was in my observation due primarily to the talent and drive of that person, not due to the culture or leadership at the restaurant.

For starters, Michael (our company’s Director of Operations) and I found that we just didn’t like working there. We felt that even though the service quality was almost always below our goals, we had a hard time getting buy-in that improving our service quality was important. Our sense was that our weak team members looked at their tips — which of course were close to normal since most people don’t adjust their tips much for bad service — and concluded that, in spite of what we were suggesting, they were already doing sufficiently good work. If I’m good enough to make my tips, it’s obvious that I don’t need to improve.

Restaurant owners and managers are encouraged to embrace tipping because, supposedly, the customer’s tipping decision holds the server accountable for quality, relieving the restaurant of costs spent on supervising and supporting their servers. But in truth — as shown by the Michael Lynn research mentioned in the last post — customers largely abdicate that role. Instead the customers give only very weak feedback to the server with their tips, and in my observation even the worst servers take the lack of strong negative feedback as confirmation that they are providing acceptable service. So here’s yet another, profound, way that tipping promotes bad service and hurts both businesses and customers: Because tipping correlates weakly to service quality, and because individual tips are always subject to interpretation, tipping removes the incentive for poor performing servers to improve.

At El Take It Easy, our top servers were aware that some of their peers were not doing good work, and spoke openly with about it with the managers. In fact, I’d say the whole team was at least somewhat aware that, as a team, we were not consistently providing excellent service. But few of our servers, if any, felt that they themselves could improve the team’s service by improving their own work. In any business, if the working team leads (in this case, the senior servers) aren’t setting the cultural expectation of accountability for the success of the group, it’s impossible to achieve excellent work.

To contrast, at the Linkery, we continually found great leaders in our floor team. It seemed like they came out of nowhere; someone would work with us for a while and then one day we’d notice that he or she was going the extra length to make the rest of the team better. Simultaneously, we had a system of raises and promotions like most companies do, and the people we saw as doing their jobs the best tended to rise through that system. So the very traits that made our business successful, and made working fun, were rewarded.

Meanwhile, at El Take It Easy, we would encourage our better servers to take a leadership role, but when they tried to do so, they’d soon let us know that they were getting too much resistance from their co-workers to have any positive effect. And, of course, at El Take It Easy payment ultimately came from the separate contract between server and guest; there was no meaningful path through the company for our most effective performers.

Obviously, accountability doesn’t end with the service leads, it goes all the way to senior management. I clearly was the core of the problem, and I accept that. There was something I was doing — I never really figured out what it was, but I know I’m the culprit — that was allowing our service to be consistently less than excellent. But here’s the thing: tipping made my job, all of our jobs, much harder to succeed at. The difference between me being good enough to run a restaurant with generally-quite-good-though-not-perfect service at the Linkery, and me being only good enough to run a restaurant with occasionally-good-but-usually-inconsistent service at El Take It Easy, was, in my opinion, mostly tipping.

To summarize: At the restaurant that ran like a small business in any other industry, we found it easier to do our best work and we had more fun doing it. At the restaurant that ran like a restaurant, but unlike other businesses, we found it much harder to be on the same page with the whole team, and much harder for all of us to be truly excellent at our jobs. Tipping was just one higher mountain we had to get over, if we were going to do great work.

So, I hear you asking now: if tipping promotes bad service, and hurts businesses, why do we still have tipping?

I’ve wondered about that question quite a bit myself. For the first few years, I thought it was just that people are threatened by change. I still believe that that is part of what’s going on. However, over the years, as I had more experiences with “no-tipping-fury” and read more research, I’ve come to believe that tipping promotes certain very important norms within our culture. Those norms have nothing to do with quality of service. The patently false idea that tipping improves service is just a blithe assertion that keeps us from talking about what tipping really does.

The reason we don’t want to talk about what tipping really does is that it gets into some dark subjects. Tipping hides some of our deepest discomforts with sex, gender, and power in contemporary culture. It’s to these discomforts that I’ll turn in the next installment of this series.

Click here to proceed to Part 5.

Click here to read Part 1.
Click here to read Part 2.
Click here to read Part 3.