Even if these restaurants succeed, one risk is that 'no tipping' is just something that upscale restaurants in rich areas adopt because only they can afford to.
Waiters in those restaurants are already compensated much better than your average waiter on a roadway diner -- this would literally only be helping the already better off.
In a lot of European countries restaurant tips are completely superficial and not expected, because wait stuff is already properly salaried. This includes all restaurant and cafe sizes.
Yeah, but switching from a tipping to no-tipping equilibrium is probably hard.
It's hard for a no-tipping restaurant to compete because the advertised menu prices will simply be higher, and you'd need consumers to mentally adjust all prices ~13% downward.
"But some restaurants that adopted a no-tipping policy in 2016 have already revoked it: The New York restaurateurs David Chang, Tom Colicchio and Gabe Stulman all found it unworkable in the small-scale experiments they tried. “We continue to be supportive of the no-tipping movement,” Mr. Colicchio said, “but we’ve heard from our customers and team that they just aren’t ready for it yet.”"
EDIT: It looks like just tacking on a service charge doesn't necessarily work either [1]. Probably diners hate being 'forced' to tip?
These high-end restaurants are able to counteract that with their 'we're helping our waiters' newspaper PR blitz, by banding together, and because rich consumers are probably a bit less price-conscious. But I don't think that approach scales well at the lower end, where most wait staff actually work.
When I was in the US, I also had to mentally adjust for the incomplete, tax-less, pricing at places.
At the airport, I thought I could buy one last thing from my last few coins and bills of change. Quite a bummer at the register when it turned out it was actually more expensive.
In Europe, sometimes prices even list both the VAT included and excluded prices.
What's the point of even having a price sticker if what's charged is more than what it says? Are some people exempt from the sales tax added? Is it dynamic depdending on the total amount charged?
> What's the point of even having a price sticker if what's charged is more than what it says?
It's because cities can have local sales tax, but advertising campaigns are national, or at last wider than a single city. So it's impossible to advertise the final price unless you micro-target a single area.
Because of this it became the custom not to include tax on any prices.
Unlike Europe there is no sales tax on a national level in the US (except for gasoline), so there is no tax that could be listed that applies to everyone.
(And gasoline, it should be noted, is always advertised with all taxes included.)
> Are some people exempt from the sales tax added?
Yes, certain non profits do not pay sales tax. You can show the sales person a document with your tax free status and it won't be added. (You'll have to sign something attesting you will not use it for personal use, but only for the purposes of the non-profit.)
> Is it dynamic depdending on the total amount charged?
Only for some luxury items, where below a certain amount it's not considered a luxury and the tax is lower.
> It's because cities can have local sales tax, but advertising campaigns are national, or at last wider than a single city. So it's impossible to advertise the final price unless you micro-target a single area.
Yeah I was thinking about actual price tags on products or store shelves. Not billboards or tv ads etc. Doesn't explain why something would be marked $1.00 and charged $1.10 at the register (for example). I see how it could be advertised as $1.00 (+VAT) in a national ad though.
> Yes, certain non profits do not pay sales tax.
If 99% of the customers do pay the tax, wouldn't it help the customers most to mark the products and store shelves with what they will be charged?
With a receipt from the same chain, yes. And on the receipt you always have both the with/without VAT prices listed. So when returning there should be no confusion.
Still doesn't explain what the point would be to display $1.00 on a shelf, if I will be charged $1.10 at the register with VAT.
> It's because cities can have local sales tax, but advertising campaigns are national, or at last wider than a single city. So it's impossible to advertise the final price unless you micro-target a single area.
Yeah, but even bodegas and NYC-only restaurants do this.
Then don't print the price on at manufacture time.
In any case, why is it any more reasonable to presume or mandate that the price be the same everywhere before tax and different after tax, than it would be to presume or mandate that the price before tax be adjusted to be the same after tax? Surely sales tax is not the only cost that varies between sales channels.
Why is this useful? You can argue for both, but to argue for only showing the tax free price is just hiding the price; It's not like you can ask for the tax to be taken off.
In the UK we have a default all included price on items for example in supermarkets, but in wholesale shops targeting businesses prices will be shown as with and without VAT as businesses can reclaim it. Makes perfect sense, reduces cognitive load, makes comparison of prices easier, means the consumer doesn't need to understand the implications of the tax system on every purchase.
When I buy groceries here in Norway, there is VAT: 15% on most food, 25% on most other items, and none on newspapers, magazines, and books. It is common for me to buy a mix of items at the store.
All of the prices listed on the shelf include this VAT tax, which is similar to the sales tax in the US. I can always figure out what I'm going to pay, save for guessing some prices for weighed goods.
On the reciept, there is a line telling me how much of the total bill was taxes. Therefore I can always know how much goes to the tax man.
Even if I was living in the states, it isn't so hard to figure out so long as you have calculator access and know the local sales tax amount.
The way we do it here in Brazil is better for that: the price includes the taxes, but the receipt has a field which shows how much of the total was for the municipal, state, and federal taxes.
Yeah, I can see how it would be useful just like the regular price is informative if you have a sale. But still - if I want to see one price I want to see what I'm being charged at the register.
Unfortunately, in a lot of states in the US, there is a huge gap in minimum wages. $7.25 per hour for normal jobs, yet it is only $2.13 for tipped workers. For the lower end, this usually means that their paycheck goes mostly to taxes and their entire living money comes from tips.
Legally, the employer is supposed to ensure that the wages plus tips equal out to the $7.25 per hour. Legally, they are paying minimum wage. We need the laws changed to fix this issue, but the government doesn't seem primed to make these sorts of changes.
As far as why some jobs attract a tip and others don't, I think it has to do with a combination of custom and what sort of work one does: On top of this, some service sector employers prohibit employees from taking gifts or tips from customers (retail, for example, generally prohibits this and you can get fired for accepting). This obviously has an impact on the norms.
Presumably it A) benefits the worker, since they make extra if they provide good service, B) benefits the employer, because the worker is motivated to provide good service, and C) the service level is highly visible to the customer, who they interact closely with.
I tip my hair cutter, but not my car mechanic, mostly due to C, I guess.
> Presumably it A) benefits the worker, since they make extra if they provide good service, B) benefits the employer, because the worker is motivated to provide good service, and C) the service level is highly visible to the customer, who they interact closely with.
I tip my hair cutter, but not my car mechanic, mostly due to C, I guess.
Interesting you should mention. I've seen evidence where this was tested in a local consumer right program. Someone would disconnect their spark plug, and then act as if they're an innocent driver who's car is broken. Or a piece of rubber of < 5 EUR was removed. Some car technicians were honest (mostly those who were part of trade organisation BOVAG), don't get me wrong. But some also deceived/lied about the problem, and made the customer pay insane prices to fix a simple problem. They also tested if technicians would fix an additional, obvious problem. One even fixed the problem, but made something else worse. In short, I'm not going to assume anymore that car technicians are honestly going to fix all the problems my car has.
If they earn less than minimum wage, the restaurant has to actually compensate them up to the minimum wage. They only earn a lower nominal wage because it's expected they get more from tips.
In some states. Washington and a lot of the west coast states require all wages to be paid the same minimum. Not sure why the other states aren't pressured into doing the same.
Waiters and waitreses? That's one hell of a way to slice the pie. Where does this kind if thinking end? Do we start to divide up the upper and lower classes of homeless people because of the area they choose to be homeless in?
Waiters in those restaurants are already compensated much better than your average waiter on a roadway diner -- this would literally only be helping the already better off.