The A-B-C's of T-I-P's
     For those who have never worked in the food service industry and are not familiar with the
gratuity process in terms of how it financially affects servers, I would like to offer the following
information.  When it comes to making money in this multi-billion dollar service business, the
ups and downs are pretty consistent.  The state approved base pay or hourly rate for a server is
$2.63 which is currently $5.37 lower than minimum wage.  On Sunday’s and holidays when
employees from other industries are getting paid overtime and time and a half, servers are still
being paid $2.63 an hour.  Of course, servers get tips to supplement their hourly wage, but when
customers are not aware of proper tip etiquette and do not realize the importance of tipping, the
supplements can be disappointing.  Dining out should be a pleasurable experience; not a
stressful one.  Tips should not be problematic for the customer, or the server, which is common
when guilt or lack of knowledge inspire a gratuity.  With that said, allow me to shed some light
on the A-B-C’s of T-I-P’s.

     Most people are not familiar with the technical complexity of a tip.  First, tips are not gifts;
they are supplemental wages which are taxable income.  Restaurants are responsible to report
a percentage of their gross sales for food and beverage to the IRS for each member of their wait
staff.  For servers, a specific portion of the total bill is reported as income and once the IRS is
notified, the server must pay tax on it whether you tip or not.  Also, the employer is required to
withhold and match Social Security and Medicare along with withholding income tax.
Secondly, your server is most likely NOT receiving the entire amount of your tip.  Most
restaurants require servers and bartenders to share their tips by tipping out a portion of their
total intake to other employees such as busboys, barbacks, and hosts.  For example, let’s say
your server is working alone, your total food bill is $50.00 and you decide to tip your server
$5.00 which is 10%.  Keep in mind, each restaurant sets up a different rate of percentage
variables.  One scenario might require your server to tip an additional amount out of that $5.00;
let’s say, 5% to the bartender, 5% to the busboy and food runner, and another 5–10% to the
hostess and kitchen.  Suddenly, the $5.00 tip you left your server has turned into approximately
$4.00.  At $2.63 an hour plus $4.00 your server has just made a total of $6.63 which is 1.37 less
than minimum wage.  If your server happens to be working with another server, that $4.00 is
reduced to $2.00 because it is now shared; thus your server has just yielded a whopping $4.63
for the hour.  Oops, I forgot to calculate the taxes and withholdings which further reduces the
amount of the tip.  Hopefully, I’ve made my point clear.

     The scenario I just described for you was based on a 10% tip which is extremely low and
outdated. Years ago 10% was acceptable, but standards have since changed and today, a
minimum of at least 20% is appropriate.  Sadly, there are people who don’t tip at all.  In regard to
non-tippers, I see no reason why they should not retrieve their own meals from the kitchen and
then carry back and clean their dirty dishes when they dine out.  If these non-conformists don’t
feel the need to tip, gophering their meals shouldn’t be a problem for them.  When it comes to
dining out, a considerable amount of effort goes into preparing and serving meals.  Well before
you even step into a restaurant, an array of employees are working to ensure that your dining
experience is pleasant.  In regard to servers, their job begins long before customers arrive and
doesn’t end until customers leave and all side work is complete.  In fact, a server probably
spends anywhere from 1 to 2 hours on each table they are assigned.  Well before they begin
waiting on tables, servers are rolling utensils into napkins, filling and cleaning salt and
peppershakers, and scooping butter into ramekins.  And let’s not forget, after you’ve finished
your meal, servers clean your tables, brew your coffees and teas, and prepare your desserts.

     As you can now see, even something as simple as dining out can be complex, but don’t let
that discourage you.  Tipping isn’t the only source of bewilderment, when it comes to restaurant
etiquette.  With today’s technology, you could be ordering your meals through an automated
phone service hooked up to your table.  Imagine how confusing that would be… “Press 1 for
rare, 2 for medium, 3 for well done, and stay on the line if you would like to speak to a
representative about Pittsburgh!”  Suddenly tipping doesn’t seem so bad after all.  So maybe
the next time you decide to dine out, you might remember the A-B-C’s of T-I-P’s and pass on
your newfound knowledge to a friend or two.  They might spend a little more money when the
bill arrives, but I guarantee, the information you share with them will be priceless!

Copyright 2015
By Lisa DeFelice