Leaving Tips

By Wendy Cole

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%.

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.

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."

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.

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.

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.

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CREDIT: TIME Chart by Joe Lertola

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With reporting by Laura Claverie/New Orleans and Elaine Lafferty/Los Angeles