Perhaps it started in Alberta with the “fair living wage” movement, but it has now come to Ontario. I am sure, based on what happens in Ontario, this most likely will move across the country over the next four to five years. Coming this January we have a minimum wage increase of 32 per cent, moving the minimum wage from $11.60 to $14.00, then up again in 2019 to $15.00.
Depending on the size of your club and the number of staff members you have, this change is going to cost your club a significant amount of money. The reality of the situation is that like many companies, we will pass a large amount of these costs on to our clients. What it will mean for them is that the $15 burger they order will now be $18, and on top of it the $3 tip that they used to pay will now be $3.60, if they stay consistent with their 20 per cent gratuity.
With the new increase in wages there will be winners and losers – the losers will be the employers and the customers, and the winners will be the servers. The company will lose because they will have to pay more in wages and increase pricing to try and recoup some of the expense, which in turn could cost them business.
The customers will lose because they will have to pay more, and on top of it, as mentioned, if they keep to their standard percentage when tipping, the money they lay out for a tip will increase as well. The big winners here are the servers; they will receive more in pay and if percentages stay consistent, will get more money in tips.
One of the main reasons for the increase in minimum wage is to help ensure that everyone is making enough money to live. As it is, servers are the highest earning workers at the golf course by a fair amount, and in most cases with the new increase in minimum wage for servers moving to $12.20 from $10.10, the gap is only going to widen.
Don’t get me wrong, I am all for everyone making good money, but it seems that the servers make great money and everyone else makes okay money. I guess the question needs to be asked: what makes servers special? Why is there a different wage for servers if the government wants to create a more level playing field?
This is where my theory of eliminating tipping comes in to play. As a club manager, a question to be asked would be: why should a server in the dining room make a gratuity when the person serving guests in the pro shop does not? Do I expect them both to be professional, courteous and tend to our members’ needs? Absolutely. So, why should my lounge server make $100 more than my pro shop attendant on any given day? The answer is: if we are looking for equity, they shouldn’t.
With so many changes happening in the labour market across Canada, it’s time that we revisit the whole notion of tipping and think about whether or not it still has a place in the club environment.
Maybe not everyone knows that the word TIPS is an acronym that stands for To Insure Prompt Service, and although the amount of tip left by patrons is usually determined by the kind of service they receive, in a club setting that is not always the case.
Many clubs have an automatic gratuity percentage regardless of the quality of service provided. This can work in favour of, or against both the member and the server, depending on the individual.
The government is about to increase minimum wage dramatically to help provide equity in pay, but in the case of servers at a club, will this really be the case? This wage change is going to do more than just increase the money the servers take home. It will also increase the gap in pay equity between them and a majority of our other staff.
As mentioned, it is also going to cost us more money, an expense that will be hard to see a return on. So, why not deal with these two problems in tandem? I think we need to look at this change that the government is imposing as an opportunity to make a major change to how we cost menu items, charge for them, and as well, how we pay our service staff.
Now, this is not rocket science and it’s probably not the first time you have heard about this idea, but here it goes anyway. Eliminate gratuities all together and increase the cost of the menu item to “include” the gratuity, and pay the service staff on the same pay scale as the rest of the club.
Now, don’t get me wrong, I don’t think that the entire Food and Beverage industry in Canada should, or can do this and expect the same results. However, I do think it is something that the private club industry should embrace.
I know that one of the biggest concerns with this theory is that the level of service will drop and the staff will not be as engaged. I guess that could be a valid concern depending on how the gratuity system works at your club. Although, when you really think about it, if your club has an automatic gratuity system then you have already eliminated the “service motivation” because the servers get the gratuity regardless of the level of service provided.
On the other hand, if you have a discretionary gratuity system at your club then you know that most of the members always tip the same regardless of the service they receive. Mostly because they want to make sure they maintain a good relationship with the staff. I realize there are always exceptions to the rule, but in my experience this stands true for the vast majority of members.
For the most part, either way the servers are receiving good tips on top of their soon-to-be-even better wages, increasing the pay gap even further and not achieving the pay equity that this wage increase was set up to do. So, let’s see if we can try to close the gap and help ourselves manage this increase.
Let’s just take a moment and do the math to see what it would look like for the member, staff and club. For this exercise we are going to look at just one common item: the hamburger. If you currently sell a hamburger for $15.00 and you were to add in a “gratuity” of 20 per cent, this would push the price of the hamburger to $18.00. To the member, if he or she usually tips 20 per cent, all is equal.
Now, how much do you pay the staff? As of January 1st the minimum wage in Ontario is $12.20 for alcohol serving employees. However, if you were to make the position of your service staff a straight hourly wage, where tips are not seen as part of their wages, they are then entitled to the $14 minimum wage. If you were then to add $2.00 of the $3.00 you have made on the burger with the increase in price, and add it to your server’s minimum wage, they are now making $16 per hour. If you are feeling particularly generous, give them the whole $3.00 and they are now making $17, and come next January, $18.00 per hour.
From the different club managers that I have spoken to, the average money made by servers per hour ranges from $18-23.00. This hourly wage, however, is not every server’s wage every day for every shift.
What about the server who constantly works the breakfast shift, and is only busy two out of six of those hours? Or the server who has to work that rainy day where they see two tables?
Moving to the no tipping format would not make everyone happy, I realize. There will be the servers that consistently get great shifts and they definitely would see this as a negative. However, if you look at the masses and you look at your season’s peak and slow, along with weather – good and bad, you may find this could even be a win for the servers.
Every week when they get their schedule they will know how much money they are going to make; no more wondering whether or not they have to watch what they spend. Their vacation monies will also increase as this is based on a percentage of their wages. Yes, their taxes may increase but that would really depend on how honest they are being with the tax man when they file.
To that point, it would be important to mention that the government has been working on new policies to increase the accuracy of gratuity reporting by individuals. In certain parts of the country, such as Quebec, the government reviews servers’ sales to determine gratuity earnings.
When considering whether or not this is a good idea, it may also be worth noting that in many European countries tipping is not something that is practiced. Yet they have a high percentage of professional servers that see this as a career and are able to earn a wage that is high enough for them to live on.
Could it be that switching to a no tipping scenario would be a win all around? The servers would have a consistent wage, the members would no longer have to worry about tipping – the price they see is the money they pay, and for the clubs – you would be one step closer to everyone receiving a fair living wage.
