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- <text id=89TT0547>
- <title>
- Feb. 27, 1989: Leaving Tips
- </title>
- <history>
- TIME--The Weekly Newsmagazine--1989
- Feb. 27, 1989 The Ayatullah Orders A Hit
- </history>
- <article>
- <source>Time Magazine</source>
- <hdr>
- BUSINESS, Page 54
- Leaving Tips
- </hdr><body>
- <p>Here comes the service charge
- </p>
- <p> If customers walk out of Del Frisco's Steak House in New
- Orleans without leaving a tip, none of the waiters even raise an
- eyebrow. Nor do they at Cafe Provencal in Evanston, Ill., or
- Michael's in Santa Monica, Calif. Tipping is no longer expected
- at these establishments, but that does not mean the service is
- free. They are among a small but growing number of U.S.
- restaurants that are replacing the tipping system with a
- service charge, typically 15% to 18%.
- </p>
- <p> The mandatory charge, which is widely used in Europe, is
- appealing to American restaurateurs, partly because it
- simplifies their bookkeeping for income tax purposes. Yet some
- customers have turned up their noses at the idea. "The quarrel I
- have with fixed charges is that when you go to a restaurant
- where the service is bad, you don't have a choice," said Los
- Angeles lawyer Maynard Davis, who frequently conducts business
- at restaurants.
- </p>
- <p> In a survey conducted for TIME last week by Yankelovich
- Clancy Shulman, 77% of those polled said they oppose a
- mandatory service charge. One reason may be that the typical
- service charge is larger than the tip that most customers
- generally leave. When diners were asked how much they usually
- tip, the average came to 14%. Even so, some customers welcome
- the change. Says Michael Fawcett, manager of the Rattlesnake
- Club in Denver: "People really like it, because they don't have
- to figure out the check anymore."
- </p>
- <p> The nascent service-charge movement began with Congress,
- which started in 1982 to clamp down on one of the country's
- biggest tax dodges: the failure to report billions of dollars in
- tips. Laws now require restaurateurs to monitor waiters' tips
- for the Internal Revenue Service, as well as pay federal
- unemployment and Social Security taxes on such income. "It's a
- lot of extra work. We have to spend time keeping records because
- the Government doesn't want to," said Don O'Neill, the owner of
- the Spring House restaurant in Pittsford, N.Y.
- </p>
- <p> Under a tipping system, waiters receive a minimum of $2.01
- an hour plus their individual gratuities. A service charge, by
- contrast, is collected as part of restaurant revenue and is then
- paid out to waiters on an hourly basis or under an incentive
- plan based on how much food they sell. At Del Frisco's in New
- Orleans, waiters receive $8 an hour or 10% of weekly total
- sales, whichever is greater.
- </p>
- <p> While many waiters complain that the service charge robs
- them of the performance-based pay they deserve, supporters of
- the policy feel that a salary elevates servers to a more
- professional status. "Our waiters have higher self-esteem,
- since they are no longer dependent on handouts from persons to
- whom they must be obsequious," says Barry Wine, owner of
- Manhattan's ultrapricey Quilted Giraffe, where there is a
- service charge. But in the competitive restaurant business, few
- owners are likely to pick up a hot potato like the service
- charge until they are sure their rivals are going to go along.
- </p>
-
- </body></article>
- </text>
-
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