“I can tell you that the people that are doing it aren’t the people who are coming here because they’re looking for a sandwich because they’re hungry,” said Ravi Ramberran, “It’s the people who are not afraid of consequences period.”
In the wake of the increase in dine and dashers, Ramberran said his restaurant has ramped up how they deal with it.
“We blast them on Facebook, we hold them, we make them wait for the cops…We do what’s in our power to do.”
The industry decides that profits come before everything else. Large restaurant corporations could easily charge the same amount, pay workers more (with the add on effect of customers saving money by not having to tip), and take a hit to profits. Unfortunately, our legal system doesn’t punish businesses for not paying workers a livable wage or for using tips to deceptively price goods to overcharge consumers. Instead, it’s illegal to not abide by fiduciary duty in the pursuit of infinite profits. Due to this, I can’t see the tipping culture going away anytime soon. It isn’t the consumers who are driving this, it’s the restaurant industry.
The industry decides that profits come before everything else.
Exactly. So why do you think they are happy to let their margins go out the door?
A business is always incentivized to get paid as much as possible. Tips, however, are not paid to the business. They are paid directly to the workers. This means an, often substantial, loss in potential revenue for the business and thus is a huge loss in opportunity for the business.
Again, what business willingly turns revenue away? The answer is no business willingly turns revenue away. Where did you even get the idea otherwise?
Businesses prefer tipping because they don’t need to provide benefits or scheduling for their employees. When they are slow, they aren’t paying for all the staff hanging around. When it is busy, they still aren’t paying their staff, but they have even more because people want to work for tips when it is busy. And when their employees act up, the customers are the ones who deal with it.
Tips let businesses staff for peanuts while punishing their employees with terrible schedules so they quit instead of being fired and getting unemployment.
Businesses love tipping culture.
I agree 100% especially given the behaviors that our current economic system incentivizes. I was simply responding to what you said about consumers preferences driving tipping culture instead of the industry.
Although consumers in North America feel comfortable and good about tipping, this tradition primarily stems from the push to increase profits by underpaying workers and offsetting their deserved pay with the “merit” based tipping system. It’s a clever trick that feeds into the idea that “the harder your work, the more you get paid”.
I don’t think this system will change unless profit is removed as the main factor in driving a business. Not to mention our legal system discourages and even prosecutes those who attempt to undermine the growth of a company against shareholder interests.
The only places this works is in privately owned businesses where the people who run it have the authority to prioritize paying employees over profits. However, this opens the door for businesses to reduce prices by cutting wages which undercuts the private business used in this example and could lead them to go out of business.
This example is basically to state that in order to eliminate the tipping culture and give workers the pay they deserve, the entire industry needs to change. One private company cannot be solely responsible for this change since another can come in and eliminate them. Now do I think this will happen? NO!
I was simply responding to what you said about consumers preferences driving tipping culture instead of the industry.
Yes, that’s right. That’s the topic at hand.
This example is basically to state that in order to eliminate the tipping culture and give workers the pay they deserve, the entire industry needs to change.
The only thing that will eliminate it is customers losing their desire to tip. They are under no obligation to. They do so because they want to! They could literally end it right now. But why should they? They clearly derive enjoyment from it, as found out in that tip rejection experiment.
Like you said, we 100% agree that the business would be better off charging more for the service (more revenue) instead of seeing the transaction split between the business and the workers (less revenue). There is no question that restaurant businesses, if it were up to them, would prefer to charge more for the plate over having tips. That gives them greater cashflow to work with and increased profitability on the margins.
But you can’t get blood from a stone. If the customer wants to split the transaction between the business and the workers, there isn’t much a business can do beyond saying “no soup for you” – but that’s even less profitable than accepting a split transaction. Restaurants are forced to begrudgingly accept (if they want to be profitable).
