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Auto Gratuity, a Growing Trend at Bars and Restaurants

  • Spence Cooper
  • October 18, 2011

From New York to California, the practice of adding “auto gratuities” to bar and restaurant checks appears to be gaining momentum. The Wall Street Journal reports that a 20 percent tip is added to the bar tab for even one drink at New York’s Dream Downtown’s rooftop lounge PH-D.

“I’ve never heard of auto gratuity at a bar when you’re a party of two,” said Sarah Riley, a 29-year-old free-lance web designer who was at PH-D, Dream’s rooftop lounge. “It was only when I went up to close my tab that the bartender said gratuity was included. I won’t be coming back to pay $18 for a $15 glass of wine where I have no discretion on how much to tip.”

The Mondrian SoHo’s Mister H, a late-night spot, automatically tacks on a 20 percent tip for table service and 18 percent at the bar. And an auto gratuity is also applied at the two bars at the Paramount Hotel in Times Square.

At New York’s Ace Hotel’s Lobby Bar, an 18 percent suggested gratuity is included, stamped on the receipt and printed on the menu. Amy Cole, the hotel’s general manager of food and beverage says the reason is simple: No one is leaving tips.

“We started adding a suggested gratuity so we could keep our awesome staff,” she said. “No one appreciates getting stiffed.” If a guest objects or wants to tip a different amount, they take it right off, she said.

According to a spokeswoman for New York City’s Department of Consumer Affairs, restaurants and bars in the city are allowed to include gratuity so long as they “conspicuously post” any mandatory policy prior to the consumer ordering.

After visiting the Gansevoort Park Avenue Hotel, a thirty-two year old student and Brooklyn resident complained the hotel’s auto gratuity was outrageous. “We had a few drinks and didn’t see the policy posted anywhere and then we get the check with the built-in gratuity.”

“Gansevoort Park Avenue caters to an upscale, international clientele and, in order to keep a highly professional, skilled bar and service staff, we have a suggested added gratuity of 20%,” said Elon Kenchington, chief operating officer of the Gansevoort Hotel Group in an emailed statement to the Journal. Customers can ask to have the tip modified.

West Coast

In San Francisco, restaurant workers want to implement a 25% standard tip onto food bills. Jeffrey Pollack, a spokesperson for the Fisherman’s Wharf Restaurant Association, told CBS San Francisco that most restaurant owners “would not support mandatory tips”and certainly not 25%. He said such a move would be bad for business by discouraging locals from dining out and would harm tourism to the city as well.

California resident Mike Alexander told Mercury News: “They have to be kidding. The whole purpose of a tip is to reward service. If the price is dictated it’s not a tip. If they’re serious they’ll meet a lot of resistance. It seems like everyone is trying to squeeze another buck out of us.”

Valerie Green of Oakley, California disagrees. “Given the terrible state of our economy, I think 25 percent is not unreasonable,” she said. “I usually do 20 percent, but everyone needs some extra money now and I’m all for it. I’m going to go with 25 percent starting with my next meal out.”

Poor Economy

Indeed, restaurants across the country are experiencing a decline in traffic and many are even closing. Additionally, alcohol sales have also slumped at both restaurants and bars.

The decline in traffic and sales has resulted in restaurants and bars downsizing staff and restaurant hours. And with fewer total customers and some diners ordering less expensive entrees, servers end up with a significant shortfall of income from tips.

Customers have come to expect restaurants to add a gratuity at banquets and for large parties with groups of six or more. But for regular service tips have always been at the discretion of the customer.

Tipping Psychology

While some may dispute that the word “TIP” is an acronym meaning “to insure prompt service”, tipping has historically been associated with the discretionary compensation to servers by patrons as a reward for service.

Although tipping is supposedly optional, leaving a tip has become an expected payment for services rendered by bartenders and wait staff who perceive themselves as independent contractors, a view shared by the bar or restaurant that employs them.

These establishments expect customers to supplement their minimum wage (or less than minimum wage) servers with tips.

As a result, many people tip even though they’ve received bad service because they are guilt-prone, and don’t want to be accused of being cheap or stupid.

William Michael Lynn, a professor of marketing and tourism at Cornell University, whose area of interest is consumer tipping says the major reason people tip is to avoid social disapproval.

“Tipping is an interesting behavior because tips are voluntary payments given after services have been rendered,”says Lynn. “Consumers rarely pay more than necessary for goods and services. Tipping represents a multibillion-dollar exception to this general rule. It is an exception that raises questions about why people tip”

Recommended Tipping Protocols
Auto Gratuity, a Growing Trend at Bars and Restaurants[Hat tip Susan]
Lunch Counter Service Wait Staff
10% for adequate service
15% for exceptional service
5-8% for unsatisfactory service

Full Service Restaurant Wait Staff
15% for adequate service
20% for exceptional service
8-10% for unsatisfactory service

Four Star Restaurant or Better
Maître d ” $20 and up
Wine Steward ” 15% ” 20% of the bottle price
Server ” 20% for adequate service

Poor food or service should be brought to the attention of management immediately and if not rectified, should be reflected in a tip that is reduced by at least half.

Bartender
50¢ minimum for soft drinks
$1 minimum for beer, wine and cocktails
15% ” 18% of a running tab

In major cities, such as New York, Chicago and Los Angeles, average tips tend to be higher, between 18 and 20 percent.

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