What's your view on tipping servers?

[Kaemon]

It's not about your eggs going from $13 to $20, It's your eggs going from $13 to $35. A restaurant has to make certain percentages to become profitable.

Food Cost - The amount it costs to make a meal compared to the price it sells. Theoretically this runs between 25-29%. There are items on the menu that can generate a higher food cost such as Ribs and Steak, which can be as high as 45% per item. This generally offsets with other items on the menu that typically is a lower food cost item.

Beverage Cost - Liquor, Beer, Wine, Non Alcoholic. See above. This theoretically runs 16 - 22%

Gross Profit= Total Sales - Beverage Cost - Food Cost.

Sales in a week - 65,000
FC - 27% - 18090
LC - 19% 12730
Gross Profit - $34,180

So the Gross Profit is $34,180. We'll do labor last.

Benefits - $500 - This could be pizza for the staff, free meals, incentive prizes, or straight up Medical. This could vary. I could break it down even more. But we'll leave it as is.
Supplies - $1200 - Dishes break, silverware gets lost, Light bulbs go out, to go boxes, doggie bags, napkins, Toilet paper, hand soap, paper towels to dry your hands, garbage bags, to go condiments and utensils, you get the drift.
Linen - $65 - I'm talking about just mop rags to clean with and aprons - If a restaurant used linen napkins this number would be higher.
Chemicals - $225 You want those plates cleaned and sanitized right? Floors washed nightly? Equipment cleaned and sanitized nightly? No spots on your plates and silverware right?
Telephones - $150
Electricity - $450 (depends on the seasons, summer will be higher, winter lower)
Gas - $450 (depends on the seasons - winter will be higher, summer lower)
Water - $100
Cable - $150 (This could be higher or lower depending on the type of service you want. ) You want the NFL package from Direct TV? Prepare to pay upwards to $300+ a week during the season if you want your sound coming from the big middle TV at the bar, it costs more. Don't ask me, I don't make these rules up.
Managers Salary - $4076 - At 65,000 a week, you're going to need help running a 3.3 mil dollar business
Night Cleaning - $200
Insurance - $300
Licenses - $75
R&M - $750 - This is a variable expense, some weeks it's $0 other weeks it could be up to $5000 depending on what breaks.
Landscaping/snowplowing - $200 (you want a pretty place right? Snow removed at first sight of snow right?)
Real Estate Rental - $4000 I'm lowballing it here, stand alone building with it's own parking lot.

Total expenses - $12888 - off the top of my head.

Still leaves you with a gross profit of $21,192

Let's work with the back of the house first.

The average cook makes $12-$16 dollars an hour. We'll say $13, you have 10 guys on your staff. 4 of them make 39 hours $2028, 2 of them make 50 hours (your key guys) $1040 plus $390 in OT , the other 4 are part time at 25 hours $1300. Total Cooks pay is $4758

Dishwashers are paid on average $9-$12 and hour. Let's average at $10 and hour, 3 dishwashers at 30 hours each. $900.

Total Back of the house pay is $5658

That leaves us with $15,634

Front of the House - Host's, Servers, Bartenders, Busboys, Expeditors.

Hosts, and possibly Expeditors would be the only ones to be payed over minimum wage. Hosts - $10-$12 an hour. We'll just say $10. 6 of them at 20 hours. $1200

Expeditors are the ones that assemble the dishes to a tray and ensure your food is exactly the way you ordered it and it goes out in a timely fashion. Hot food hot and cold food cold. This is normally paid $8-$10 and hour plus the servers and bartenders tip out to them as well depending on how good a job they did. Maybe 3 in a week. $9 and hour at 15 hours each. $405.

That leaves us with $14,029.

Throughout the week, staffing level for a $65,000 restaurant is probably 20 servers and 6 bartender, and 4 bussers. They each average 25 hours are 2.13 per hour. $53.25*30 = $1598

Total profit left is $12,431, theoretically. Because of human error, productivity, and sales. These number fluctuate. That profit can drastically change.

NY now pays their servers, bartenders, and bussers at $5.00 and hour.
So $125*30 = $3750

Profit is 10,279

CA I believe pays @$9 per hour.
So 225*30 = $6750

Profit is $7279

Margins are tight, profits are tight. There are other things that going into a P&L statement that would lower the net profit even more that I didn't cover. There's a reason why many restaurants went out of business in 2008. most can't survive 6 months if there is no traffic coming into the building.

This is a corporate restaurant. Look at how tiny that profit is really, especially when you factor in that they have a home office that pays accountants, real estate, lawyers, HR, Marketing, etc, etc.

A mom and pop shop - it's worse. Every nickel and dime counts. Rent, utilities, and insurance alone can cripple you. Most deliveries are COD because they don't have to equity to start a line of credit.

Right now, the only thing that affect price is oil. Oil affects everything, it's not just about cars and gasoline. It's about production and transportation. If the Milk act goes away, and milk goes up to $8-$10 a gallon watch prices increase again.

*Edit - Please excuse the errors in grammar.

Also please note, I know this is about tipping, but I wanted you to see the overall picture on what it takes to function a viable restaurant. Then think about that when tipping your server. Most only make $2.13 in your state.

[leah]

Drem, you're a funny dude. Let’s sum up the conversation.

Jay: Tipping?

Brinstar: Over tipping is great.

Leah: *something about being pregnant I wasn't really paying attention*

Me: I ALWAYS TIP but here's a legitimate reason why I don't like the social contract in order to move this discussion somewhere.

Jay: Plays devil’s advocate to keep this going or simply didn't think things through, either way, he at least read what I wrote.

Drem: MOTHERFUCKING RAGE TIME BOYS! You should always tip, Zanchief! You're also greedy, a 10-year old, uniformed, absurd, self-centered and bitter.

Brinstar: Zanchief is right (the most important post in the thread).

[Zanchief]

That's all well and good Kaemon, but that's not what I'm talking about it. I get that restaurants are kind of in a shitty spot right now, and people may or may not want to pay for the increase in food that's coming, but that isn't really about tipping.

If at the end of the night a restaurant shares tips with all the staff they will know exactly how much per day/week/month/year they get in tips. Just take all that money raise salaries accordingly and raise prices by whatever people tip (15-20%). This has no bearing on oil prices and what ever else. It's a zero sum game.

Now, as I mentioned earlier, this is a thearetical excercise and isn't the least bit viable. It's just a more equitable system. The current one succeeds solely because employees aren't declaring their income to the IRS.

[Kaemon]

I disagree Zanchief, it is about tipping. I'm trying to point out in what it takes to make a restaurant viable and why a server and bartender are paid what they're paid. I've even forgot to include payroll taxes and state taxes. That's just a restaurant.

Let's include a doorman in NYC, he probably makes 25k a year. The rest comes from tips and Xmas bonuses from their tenants.

A maid in a hotel - Hourly rate to clean your room. You can choose to not get your room made, but then it's left up to you to make sure the room is pretty good condition before you leave. I typically do $8-10 a day depending how many days I stay so a 5 day stay is $40-$50. Don't forget they're changing your body fluid infected sheets and towels and cleaning the feces off you bowl at probably at $10 an hour.

A hairdresser works on commission, or splits the till on the total clients she does with the owner 50/50 or possibly rents the chair and gets a bigger percentage. Still, there's no hourly rate, she makes nothing if she isn't working. So that tip varies depending on what you're getting done. A $5 tip on a $400 dollar Japanese hair straightening procedure that is going to take 4 hours of her time isn't going to cut it, but it will on a $25 dollar hair cut.

A pizza delivery guy? Couple bucks, no more than $5. He's risking his car and using his fuel to bring you a pizza.

Coffee place with a tip jar? Change. Unless of course if you're one of those dudes that orders a Venti Machiatto with soy milk frappacino. If you're going to order that shit, you better be like Obama and share the wealth.

[Jay]

I guess the problem here is that I'm operating under the assumption that 1) I report everything to the IRS and 2) I pay no one under the table. I play by the rules. I don't ever wanna get audited. Here's what you're saying Zan.

Zan: I'll do it, but I don't think tipping is cool
ME: Well if business owners had to cover the wages with no tipping in place your food cost is higher
Zan: Ok well charge me 12-13 for the eggs and hash that woulda cost me 10 plus tip

That's where the the breakdown is. My cost to do business and maintain my level of profit will be more than simply adding a few bucks per plate. Own a business one day and look at your tax form and see how much you get raped. End of the day, you'd pay more than you would have paid with a standard tip or something like equal to what you would have paid with a generous tip. So now your food cost is higher and that's with figuring in what you would've tipped before. Once again: what you would have paid for your meal including your tip will cost less than the cost of your meal with prices adjusted for wage increases.

You lose, I lose, my employee loses.

[Gaazy]

Leah: *something about being pregnant I wasn't really paying attention*

hehehe (sorry, had to laugh, that hit my funny bone)



As far as how I tip, I tip on how much I think they deserve it. Shitty, service, shitty tip. Good service, well over 15%. Sometimes 25 or 30%. Not my fault that some people are too stupid to handle a simple job like waiting tables.

[Zanchief]

End of the day, you'd pay more than you would have paid with a standard tip or something like equal to what you would have paid with a generous tip.

Then you're not implementing it right. The only one losing are those sheltering income from the IRS.

At a specific restaurant you have 10 waiters who all work the same hours (for simplicities sake). At the end of the year you calculate the total amount of tips (or more practically the percentage of tips for the year). Let’s say it's 80,000. Each person’s wages is then increased by $8,000 annually. There's an estimation being done here obviously and nothing is perfect, but tell me where the money is being lost? This is very simple accounting. You're saying your employees more money is increasing your operational costs so you have to further increase the cost of your food by more than the amount you're paying you employees. Tell me where this is coming from if not from taxes (which are otherwise being withheld from the government).

[Narrock]

Is it true that the waiter/waitress has to split their tip with the busboy and seating hostess? And tips are taxed too. 15% or something. So, out of a $5.00 tip, let's say, the waiter/waitress ends up with a net of about $1.50 or something. That sucks balls.

[Drem]

End of the day, you'd pay more than you would have paid with a standard tip or something like equal to what you would have paid with a generous tip.

Then you're not implementing it right. The only one losing are those sheltering income from the IRS.

At a specific restaurant you have 10 waiters who all work the same hours (for simplicities sake). At the end of the year you calculate the total amount of tips (or more practically the percentage of tips for the year). Let’s say it's 80,000. Each person’s wages is then increased by $8,000 annually. There's an estimation being done here obviously and nothing is perfect, but tell me where the money is being lost? This is very simple accounting. You're saying your employees more money is increasing your operational costs so you have to further increase the cost of your food by more than the amount you're paying you employees. Tell me where this is coming from if not from taxes (which are otherwise being withheld from the government).

Tips aren't uniform, dipshit. The average every year would be drastically different. Quit trying to argue about this. You don't get it

[Lyion]

The answer is robot servers. No wages and no tips required. Win!

I'm sure thats what the Japanese do. Jay, what's your Azn stance on Mecha-server-zillas?

I generally tip 20-25% always.

[brinstar]

Is it true that the waiter/waitress has to split their tip with the busboy and seating hostess? And tips are taxed too. 15% or something. So, out of a $5.00 tip, let's say, the waiter/waitress ends up with a net of about $1.50 or something. That sucks balls.

kaemon or drem would know better, but this sounds about right. and it does certainly suck. fun fact: food delivery people (at least in NE) are NOT subject to tipsharing, and they are paid a regular (minimum) wage. this is primarily because as was mentioned above they do risk their vehicles/lives and pay their own fuel to bring you your food - so you shouldn't tip them less, i'm just saying it's a nice loophole

----

in full disclosure i had expected you to post something heinous about how you don't ever tip, but you completely destroyed that expectation. good on you, and i'm sorry for selling you short on this particular topic*


*THAT is what a brinstar apology looks like. also realize how easy it would've been to simply not mention it at all

[Zanchief]

Tips aren't uniform, dipshit. The average every year would be drastically different. Quit trying to argue about this. You don't get it

http://en.wikipedia.org/wiki/Law_of_large_numbers disagrees with your yearly average argument. For an entire restaurant for an entire year, I'd bet the tips could be calculated pretty closesly based on annual revenu. This has nothing to do with Jay's argument though.

[Drem]

Me: I ALWAYS TIP but here's a legitimate reason why I don't like the social contract.

You obviously missed the part where i acknowledge this

And seeing how tips flow in on a regular basis, i don't believe you could really average that out. Apply theories all you want, but tips are pretty random

[brinstar]

Brinstar: Zanchief is right (the most important post in the thread).

i lol'd

tips are pretty random

boy ain't that the truth. when i was still slingin' pies on the side, there were nights where i'd get a 65% tip in a trailer park and an hour later get stiffed from a three-story house in a gated community - and just as many nights when i'd score a $50 tip on a football party in a nice burb, and then have some asshole in a shitty apartment hand me a jackson on a $19.58 order and make me stand there and count out the 42 cents

you just never know

[leah]

interested to see how josh fares with tips now that he's started driving. so far he's been averaging about $12/hr (including base pay, which is just minimum wage i think).

[Jay]

End of the day, you'd pay more than you would have paid with a standard tip or something like equal to what you would have paid with a generous tip.

Then you're not implementing it right. The only one losing are those sheltering income from the IRS.

At a specific restaurant you have 10 waiters who all work the same hours (for simplicities sake). At the end of the year you calculate the total amount of tips (or more practically the percentage of tips for the year). Let’s say it's 80,000. Each person’s wages is then increased by $8,000 annually. There's an estimation being done here obviously and nothing is perfect, but tell me where the money is being lost? This is very simple accounting. You're saying your employees more money is increasing your operational costs so you have to further increase the cost of your food by more than the amount you're paying you employees. Tell me where this is coming from if not from taxes (which are otherwise being withheld from the government).

Wages increased are not proportionate to wages earned because of taxes that are accrued by the business owner. Money is lost there because the taxes are percentage based so more wages = larger net payment in taxes to the government, who are the only people who don't lose in this scenario.

Payroll tax is also increased because now I'm reporting higher wages whereas before my servers were reporting their own tip wages (or not but that's not my business if they report their cash earnings or not). Projected losses come from the simple economics of, shit costs more so les s people buy it.

Let's say in a perfect world my price increases are proportionate to the wage increases. Your service still declines as a result in loss of incentive even if the costs line up. You still lose.

Now your argument about how the numbers really wouldn't be different, ok, let's say they aren't. Customer perception is still on the side of " his prices went up" because let's face it, most people are stupid. I lose.

[Kaemon]

Servers do tip out to bussers. If there's a Maitre'd a server might tip him out as well.

All tips need to be declared, and yes, you are taxed on that. It's a best practice that you keep a log of all your tips in a book. In case you're ever audited by the IRS. They will compare your CC tips (which are automatically declared for you) to your cash tips and if there's a huge discrepancy such as avg of 15% to 5%, theres a good chance you'll get flagged.

When all is said and done a typical server walks out with about 10-12% of their earned tip income. A stellar server will walk out with 15-18% of their tipped income.

Gazzy - Serving is not a simple job, it takes skills of balance, memorization, math, and someone that's not an introvert and able to take criticism and sometimes rude behavior from guests and cooks without going postal or breaking down. Give it a shot bud if you think its so simple.

[Zanchief]

Payroll tax is also increased because now I'm reporting higher wages whereas before my servers were reporting their own tip wages (or not but that's not my business if they report their cash earnings or not).

And you can deduct more from your increased revenue...evens out. But if the government is the only one winning because they have access to taxable revenue they weren't before, then that goes to my first point that it's no business at all that succeeds by circumventing the rules.

Let's say in a perfect world my price increases are proportionate to the wage increases. Your service still declines as a result in loss of incentive even if the costs line up. You still lose.

Now your argument about how the numbers really wouldn't be different, ok, let's say they aren't. Customer perception is still on the side of " his prices went up" because let's face it, most people are stupid. I lose.

What moron would refuse to pay $12 for a burger tomorrow when he paid $12 for it yesterday with a tip? I think slightly better of people. Most business (well around here at least) don't list goods with sales taxes added. If everyone started doing that (another thing I would love), business wouldn't be folding because morons wouldn't want to buy stuff at the same price only it seems higher. Well Walmart might suffer, but who cares about them.

[Nusk]

in Oregon the minimum wage also applies to the wait staff and is not that horrid $2.13 alternate minimum for wait staff (much less than 15% of the going fed minimum rate)

now remember in most restaurants wait staff has to "share" tips with the kitchen crew further lowering employee costs so that dollar you left for the waiter isnt even kept by the waiter.

[Kaemon]

Sharing with the kitchen crew? First time I've ever heard of that.

Bussers, Expo's? Yes. Cooks? No.

[Drem]

Servers wouldnt have a job w/o the cooks. We take a % of their food sale tips. The only place i've ever worked that didnt tip out cooks was corporate. Surprised you've never heard of it

[Kaemon]

Nope, never heard of it. I've heard about restaurants pooling tips and distributing the tips depending on the amount of hours you worked to everyone. But in some states, such as NJ. It's illegal for a restaurant to force their employees to pool tips.

It also could be said that without servers and bartenders, Chefs and cooks wouldn't have a job. So I'm not quite sure why a Chef/cook who work on salary/hourly pay need to take the tip that a server worked hard for. But you're right, I'm corporate and the last time I worked in a mom/pop joint was when I worked for my dad at his pizza shop.

[Narrock]

Is it true that the waiter/waitress has to split their tip with the busboy and seating hostess? And tips are taxed too. 15% or something. So, out of a $5.00 tip, let's say, the waiter/waitress ends up with a net of about $1.50 or something. That sucks balls.

kaemon or drem would know better, but this sounds about right. and it does certainly suck. fun fact: food delivery people (at least in NE) are NOT subject to tipsharing, and they are paid a regular (minimum) wage. this is primarily because as was mentioned above they do risk their vehicles/lives and pay their own fuel to bring you your food - so you shouldn't tip them less, i'm just saying it's a nice loophole

----

in full disclosure i had expected you to post something heinous about how you don't ever tip, but you completely destroyed that expectation. good on you, and i'm sorry for selling you short on this particular topic*


*THAT is what a brinstar apology looks like. also realize how easy it would've been to simply not mention it at all

Heh, now worries man. But I always tip. One time though, I went to a burger-n-fries type diner, and there was a sign inside that said "Tipping is not a city in China" so I didn't leave a tip for them posting that smartass sign.