Tipping is evidently one significant way through which waiting staff in restaurants get compensated for their services. This is mainly because this strategy helps employers minimize on costs incurred as fixed wages for these staff. Restaurant owners often pay staff a given percentage of the stipulated minimum wage, rather than paying them the actual amount set as the minimum wage(Piazza, 2018). Accordingly, the employers acknowledge that the waiting staffs stand to ultimately make more money than even the minimum wage in form of tips if they render efficient services that impress the patrons. Incidentally, tipping as a model for compensating wait staff is accommodated within the frameworks of labor laws. Additionally, tipping acts as an incentive for waiters and waitresses. As such, the prospect for customer tips enhances their capacity to administer services to their customers to the best of their ability. Attributable to the staff’s quest to optimize on their earnings by form of tips, waiters and waitresses embrace standards that depict a sound degree of diligence. As a result, the reputational stakes of the restaurant in question also get a boost which yields good business results.

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Except in the event whereby patrons to a restaurant constitute a large party, hence prompting the establishment to impose a tariff, the customer usually decides on the amount to issue as a tip. The decision on the tip amount is upon the customer because they are the entity that experiences the service and thus it is upon them to acknowledge the service accordingly. Also, an efficient management is one that acknowledges a sense of diversity amongst their customers. Therefore, since the construct of giving tips has different connotations attached to it depending on each individual customer’s frames of reference, it is prudent to leave that decision with the customer(PBS News Hour, 2016). Tip amount is also relative to the service rendered. Thus, the customer deciding on the tip amount enhances their chances for receiving satisfactory and exceptional services as the wait staff strives to elicit maximum appeal on the customer. Bill size is also a key determinant of the corresponding tip amount. As such, it is only imperative of restaurants’ management to accord customers the liberty to appropriate the total funds that they intend to spend within the establishment according to their preferences.

Restaurants typically require that tips be subjected to a given tariff for large groups. Often, this amountis a 15 percent of the total bill, for groups of eight or more people (Brickley et al., 2016). The premise for this approach is that large groups are evidently deserving of more attention and time. Hence, in the course of a wait staff attending to the varied requests of the large group, they compromise on the opportunity to attend to other potential customers who would need their services. The result is that the waiter or waitress in question ends up making less in form of tips serving a group compared to when they are attending to regular customers. As such, group service actually limits their earning potential. For this reason, imposition of a tip amount on the group is a strategy to cushion wait staff attending to large parties from failure to make the typical amount in tips as they would while attending to patrons on a regular basis.

  • Brickley, J. A., Smith, C. W., & Zimmerman, J. L. (2016).Managerial Economics and Organizational Architecture (6th Ed.). New York, NY: McGraw-Hill.
  • PBS News Hour. (2016, March 26). Why do we tip? Retrieved from https://www.pbs.org/newshour/economy/why-do-we-tip
  • Piazza, L. N. (2018, April 23). Can Employers Pay Tipped Workers Less Than Minimum Wage? Retrieved from https://www.shrm.org/resourcesandtools/legal-and-compliance/employment-law/pages/tipped-workers-minimum-wage.aspx