Tipping Point: Here Are the Facts of Life in the Restaurant Industry

You may have followed the controversy last week when a minister in St. Louis objected to a restaurant tacking on an 18 percent tip for a large dinner party. The bill had the tip crossed off and the minister customer wrote "I give God 10 percent, why do you get 18?" A server put a photo of the bill on Reddit, then it jumped to Facebook and it went viral. The server got fired. The restaurant chain got hammered.

It got me thinking about a huge subculture of mostly young people in our town, a vital cog in the economic success of downtown and Knoxville nightlife in general. If you worked your way through college (or if your children have), chances are you've had some experience with the food service industry. There is also a large contingent of single mothers.

But if you are like the St. Louis pastor who doesn't get it, let me share a few things about how it works. To answer the pastor's question, Jesus (your church) doesn't pay taxes.

Do you know that the minimum wage for waiters in Tennessee is $2.13 per hour? (Some states set a higher rate, but that's the federal minimum and you can bet Tennessee isn't going to make it any higher.) Social Security taxes and income taxes come out of that wage and the tips the waiter receives. Very often the server is lucky if the amount of money the restaurant pays covers the taxes. Servers take home pay is essentially tips.

If a restaurant is having a slow night, the servers spend the time wrapping silverware in napkins, cleaning up, and filling salt shakers. For two bucks an hour. If things are really slow you may get sent home early. Depending on where you work, if you get sent home early you may have to pay for parking along with your commuting expenses—so you can actually lose money.

Why do restaurants tack on an 18 percent gratuity for large parties?

It is more difficult for a server to handle 10 people at a table than five tables of two. Drink orders are a nightmare, each course requires two trips, people in a large group are talking and not paying attention. They also tend to sit for two or three hours talking—it's usually a celebration or a meeting.

A server's income depends on turnover. They have a certain number of tables assigned them. The more tables, the more guests, the more tips the more income. If three tables are shoved together and taken up by a large party for a couple of hours, the income is much less than three tables of two people that get turned over three times during the same period.

One bill on a large party often gives the person paying heart palpitations. Five bills at five tables each with a 20 percent tip is manageable. But when you get to the cash register and the bill for your large party is $200, you may get sticker shock looking at a $40 tip. The temptation is to halve it.

So the server works harder, loses income on the tables, and then gets shorted on the tip. Restaurants suggest or require 18 percent for large parties because if they didn't the servers couldn't make a living.

And if you don't like the way the chef prepared your steak, do you punish the server?

You may not like the way the restaurant industry works. You may resent having to pay the salaries of the people who serve your table. But that's the way it is. You can support changing the law and require restaurants to pay a higher minimum wage, like any other business. But the present system is what we have. And more and more of our young people find themselves working these jobs—after all, these jobs can't be outsourced to China.

Eat hearty but remember it's up to you whether that nice young person bringing you your steak eats hearty as well. Twenty percent is the least you should do.