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Restaurants Tip Customers' Hands

Seeking to retain waiters by boosting their wages, an increasing number of managers are suggesting gratuities or automatically adding them to checks.


Tired of dealing with the high turnover among their waiters, more and more restaurants are adopting an unusual tactic to raise wages: suggesting the proper tip on the check or automatically adding a surcharge to the bill.

Before his restaurant started suggesting the amount to tip, Michael Federici, the manager of Trastevere in Santa Monica, watched waiters leave after two or three weeks on the job. "Our employees were getting stiffed left and right," he said. "In order to keep them, we had to do something." So two years ago, the Italian restaurant started printing on receipts in five languages: "For a quality service a gratuity of 15% to 20% will be highly appreciated."

Tips are crucial to waiters, who depend on them for as much as 80% of their incomes. Most states permit restaurants to pay waiters half the minimum wage as long as tips make up the rest. Base wages in some states are as little as $2.58 an hour.

"A lot of my workers were dissatisfied," said Ravi Kristin, manager at the Chinese restaurant Chin Chin in Marina del Rey. "The 13% average tip they were getting wasn't enough. Even in a great economy, waiters depend on the kindness of people to raise families."

Last year the restaurant started reminding patrons that "quality service is customarily acknowledged by a gratuity of 15% to 20%."

Restaurants suggesting or automatically adding a gratuity say they have the waiters' best interest in mind, but others see the restaurateurs' self-interest in the trend.

A mandatory service charge allows restaurants to pay lower wages, said Orn Bodvarsson, an economist who specializes in tipping.

Others are doing it to fatten their own wallets, said Mike Casey, president of the Hotel Employees and Restaurant Employees Union's Local 2 in San Francisco. "An automatic gratuity does not always mean it goes into a worker's pocket," he said.

And an automatic gratuity rids restaurants of having to monitor tip income, Bodvarsson said. The IRS considers a service charge as part of base wage and not tip income.

The idea of automatic or suggested tips started in metropolitan cities, ranging from expensive restaurants such as the 21 Club in New York to casual dining like Chin Chin in Marina del Rey. But in the last few years, more restaurants have been adopting the practice, said Bodvarsson, who is also a professor at St. Cloud State University in Minnesota.

Based on demand, American Express in 1998 created a feature that allowed restaurants to calculate and print tip suggestions on receipts.

Waiters often complain of being the victims of irritable customers, foreign tourists who just don't know that a 15% tip is normal and patrons who blame the waiter and not the chef for a long-awaited meal. That makes many waiters appreciate suggested tipping.

"It's great," said Jeff Falivene, captain at New York's Tavern on the Green, which recommends a 20% gratuity. "You can predict what income you're going to get, and if you're a married man with two children and a mortgage, you want some stability."

Almost every one of his customers oblige and leave a 20% tip on the table, Falivene said. He pockets $1,000 a week in tips, 10% more than he was making at a classier restaurant that didn't suggest a gratuity.

The bonus has kept Falivene at the restaurant for 10 years, twice as long as any place he's ever worked.

For Scott Reesman, a waiter at Trastevere, the added income means he can afford a better apartment in Santa Monica.

Reesman earns $350 a week in tips, almost $600 more a month than at a previous employer that didn't suggest tips.

Waitress Anna Holzner wishes her customers took hints as well.

"Good tippers will be good tippers and bad tippers will be bad tippers, regardless of a suggested gratuity," said Holzner, who hasn't seen tips rise above the average 13% since the suggested tip was added at Chin Chin.

And then there are waiters like Eric Hakala, who scoff at such a thing. He used to work at a Newport Beach restaurant that suggested 18%.

"I was a better waiter than 18%, so I never put it on there," he said. "I was pretty solid, 20% across the board."

As early as 25 years ago, 21 Club in New York began suggesting a 20% gratuity. Ten years ago, the Hotel Employees and Restaurant Employees Union's Local 6 in New York pushed for recommended tips.

But other cities, such as Los Angeles and San Francisco, have noticed it more recently.

In Los Angeles in the last four years, there's been a drive to lower the size of automatic-gratuity groups to six from the industry norm of eight to 10 people, said Carla Chavez of the restaurant union's Local 11.

Sushi Roku and Bravo Cucina in Santa Monica charge an 18% gratuity for six people. Other restaurants go even lower. Houston's Restaurant, with 42 locations nationwide, tacks on 18% for parties of five; Wasabi in Long Beach adds 17.5% for four people after 4 p.m.

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