Should Restaurants Increase Their Price instead of Tipping?
Tipping refers to the generous act of optional kindness that a customer sometimes provides to the server. The act usually involves the payment of some money to the waiter for the warm services received. Even though the habit is voluntary, many restaurants are on the move to increase the prices of the products to improve their profits and client wages (Ferro, 2013). The restaurant management’s main plan is to compensate their team for the loss of the tips that are not provided by the perceived ungenerous consumers. Nevertheless, research studies have continued to prove several negative effects of the escalated prices based on the lost tipping despite the move. This paper aims to argue whether restaurants should increase their prices instead of tipping. The paper will explore the effects of tipping on the overall performance of hotels as well as provide the right recommendations on the best strategies to adopt.
Increasing prices based on tipping always makes most of the eateries to reduce the wages of the serves. According to the research studies, it was noted that most business managers often feel that waiters gain a lot of money through tipping (Dunn, 2013). Consequently, they often feel that the best way to compensate for the undeserved wages is through giving the service providers minimum wages. This trend usually makes most members, such as cooks, dishwashers, and supervisors, to end up earning very little compared to their serving colleagues. Especially since it is illegal for the managers to pools these tips and distribute them among the employees. If not monitored, the trend is most likely to result in a high level of employee turnover and a reduced level of production among the key members of the institution. Hence, no single institution should work to encourage the move in their setup.
Research studies indicate that tipping lacks the price value of the services or goods provided in an institution. For a long time, most customers have continued to complain when they cannot substantiate the prices of the amenities and the value (Dunn, 2013). In most cases, these customers often feel that the institution is extorting their funds, yet they do not receive the best social amenities. For example, a 20% increase in the products’ prices is most likely to result in many customers withdrawing from using the hotel’s services (Lee et al., 2018). In most cases, it is not easy to prove to the customers that the price increase had been made due to the tip. Furthermore, the unnecessary increase in charges often makes most institutions fail to adjust to economic demand’s possible margins. Therefore, the ultimate lack of value on the product or services clearly suggests that eateries should not increase the amenities’ prices.
Research studies suggest that increased charges instead of tipping have a powerful effect in promoting racism and sexism. According to the analysis, it has been noted that female servers are more likely to gain larger tips as compared with their male counterparts (Dunn, 2013). Subsequently, sexy and white servers usually earn more tips as compared to their black people. This trend is most likely to contribute to a high level of sexism and discrimination among society members. Therefore, if managers encourage tipping act in their institutions, they will be directly propagating the idea of gender, sex, and race stereotypes in their organization. The above trend may further result in other negative effects, such as a lack of coordination and trust among the firm’s members. Thus, the tipping system may result in discrimination and a reduction in the overall production rate in the firm.
Despite the above negative effects, it has been noted with a lot of concern that tipping is a powerful motivator among the workers. According to the most recent research studies, it was noted that employees who often receive tips in their service or product delivery are highly motivated to continue working (Ferro, 2013). These members are enthusiastic about their jobs and are more likely to improve their production. Therefore, the servers should be encouraged to share the collected tips and use them appropriately to subsidize their wages. The mechanism will promote the overall operation of every employee in the institution.
Consequently, in case one of the acts is accepted, the restaurant managers should evaluate the nature of the tipping and stop the possible move to increase the products’ prices based on the tips. They should understand that human beings are social agents that sometimes require favors, such as tips to encourage them to continue operating (lee et al., 2018). Therefore, the practice should be provided an opportunity without connecting it to the prices and the wages of the products. This decision will promote every member, including the customers and the service providers, to continue operating to promote the firm’s overall production.
In conclusion, based on the presented facts, it is clear that cafes should neither increase the products’ prices nor promote tipping in their firms. All these actions have relatively long negative impact on the overall performance of the cafeterias. In most cases, promoting the two activities may result in loss of a number of reliable employees as well as customers. Further, tipping and increased prices may result in high level of discrimination in the firm.
References
Dunn, E (2013). Why tipping should be outlawed. Esquire. 1(1). Web.
Ferro, S. (2013). Why people love tipping waiters. Popular Science. 1(2). Web.
Lee, N. Y., Noble, S. M., & Biswas, D. (2018). Hey big spender! A golden (color) atmospheric effect on tipping behavior. Journal of the Academy of Marketing Science, 46(2), 317-337. Web.