Increasing servers' Tips: What managers can do and why they should do it

The best thing executives and managers can do to improve their servers’ tips is
to inform the servers about the actions that have been shown to increase tips.
This information is likely to be taken more seriously if:
(1) servers are also told about the evidence that demonstrates that
these actions actually work and
(2) the information comes from a credible third party. I have developed a booklet, titled Mega Tips, that is designed to meet those two criteria (see page 15). The booklet describes in more detail the techniques described above, along with the theorybased explanations for their effectiveness and the evidence supporting that effectiveness.
Given the work that I have done on tipping, I believe that servers should perceive my recommendations as credible.
Even if some servers remain unpersuaded and resist trying the advocated behavior, they will eventually be won over once their more open-minded colleagues who tried the actions start making more money. This dynamic
is nicely illustrated in a testimonial sent to me by Joshua Ogle—a restaurant
server who read and shared with coworkers one of my earlier articles on
ways to increase tips. He wrote:
Here’s how it all happened: I was browsing around the Cornell website, Hotel School section, and came across your article. I read it, acknowledged it as a nice piece,
and continued reading through the site. When I went to work (I work at a restaurant, by the way, called Texas Roadhouse), I started to notice, after reading your paper, that people kept on and kept on complaining about not making lots of tips. I remembered some of the tips that you had in the paper, and I looked around to see if I saw people doing what you said worked: writing messages on
the back of checks, using checkholders with credit card symbols on them, etc. I told a few people about the ideas, and two said that they would try some stuff out,
because they were tired of making no tips. The other couple said that they were fine how they were and that the information in the article was “bull crap.”

So, Bailey and John (their names, naturally) proceeded to follow your
teachings, and at the end of the night, both came out between 8 and 10 percent higher in tips. I’d say that’s very impressive, and they thought the same, but theothers who did not believe me said it must just be a coincidence.
Bailey and John, again the following night, brought in more tips than they had been before. Then the others started talking to each other, and giving hints to each other, and telling about how I’d told them about it, etc. So, I went to the site, printed it off, and hung it up on our nightly news board, for everyone to see. Of course, I gave complete credit to you (I printed it with full “Cornell” symbols at the top, as well as your name on it and whatnot), and people have thanked me about once a week since then, about three months ago. Overall, everyone was happy and definitely saw an increase, thanks to you.

Like Joshua, restaurant executives and managers can help their servers earn bigger tips by distributing copies of Mega Tips in their restaurants. (Mega Tips is available from The Center for Hospitality Research at Cornell University free of charge. It can be found online at www.chr.cornell.edu.) Restaurant executives and managers can download it, print it out, copy it, and either post it on employee bulletin boards or distribute copies directly to each of their servers. They are not asked to pay for the booklet in any way;their only expense for using Mega Tips comes from making paper copies to be distributed.

Managers distributing copies of Mega Tips to their servers need to be clear
about which of the techniques for increasing tips they are willing to let servers
try and which ones they are not. I believe that all of the techniques are appropriate for and should be permitted in casual or family dining restaurants. However, some executives and managers may disagree with me. For example, some managers may not want servers to wear something unusual with their uniforms. Fortunately, Mega Tips describes enough tactics that forbidding one or two of them will not make it impossible for servers to boost their tips.
A touchy matter. Along that line, of all the techniques described in Mega Tips, the issue of touching customers seems to draw the most concern.14 Restaurant executives and managers with whom I have spoken about touching customers often voice either of two objections to permitting this behavior. First, these critics argue that they do not personally want to be touched by restaurant servers and that neither do other people whom they have asked about this matter. In other words, people’s self-insights and self-reports are inconsistent with the experimental data on touch’s effects, and the critics of touching give greater credence to the insights over experimental data. In response to that concern, a substantial body of research in psychology indicates that people are often unable to accurately predict or explain theirown attitudes and behavior.15 Like the character in Dr. Suess’s Green Eggs and Ham, people often assume without a trial that they will dislike things that, in fact, they would enjoy. The data suggest that being touched by hospitality workers is one of those things. In fact, researchers have found that touching customers increases perceptions of service quality as well as tips, so fears that customers might react negatively to being touched are misplaced.16 Second, critics argue that encouraging employees to touch customers opens a company to potential lawsuits from customers who would take offense at being touched. Since it takes only one such customer to file a lawsuit, the critics contend that permitting employees to touch customers is just too risky to be recommended. Examining that issue, I asked David Sherwyn, a law professor at the Cornell Hotel School, to do some research to evaluate the validity of this argument. He found nothing to support it.17 Briefly, touching does not satisfy the legal definition of harmful or offensive battery. Furthermore, encouraging employees to touch customers cannot open a company up to sexual harassment suits from customers, because the sexual harassment statutes apply only to employee–employer relationships. Supporting these interpretations of the law, Sherwyn found no case in which a customer sued a restaurant because a server touched the customer. Thus, there are no valid legal reasons to forbid employees from touching customers.

Finally, executives and managers can help their servers earn larger tips by supplying the resources needed to try two of the actions in Mega Tips. Specifically, executives and managers should provide servers with tip trays or check folders embossed with credit card insignia and candies or mints to be given to customers at the end of the meal. The tip trays can usually be obtained at no cost from credit card companies. The candy will have to be purchased, but the expense need not be great. Even inexpensive assorted chocolate miniatures have been shown to increase tips. If managers do decide to supply candies to be given to
customers, they should probably vary the type of candy from time to time to avoid diminishing customers’ response due to habituation.

Restaurant executives and managers who distribute Mega Tips to their servers should be rewarded with: (1) increased sales, (2) greater customer satisfaction, and (3) lower labor costs due to reduced server turnover. Each of these benefits is
discussed further below.

Most restaurant customers tip a percentage of the bill, so the best way for servers
to increase their tip income is to increase their sales. Mega Tips reminds servers of this simple fact and presents them with evidence that suggestive selling really does increase sales, so it should motivate more attempts at suggestive selling. More important, Mega Tips informs servers of when they should and should not practice suggestive selling. Specifically, it recommends suggestive selling when the restaurant is slow. When the restaurant is busy and customers are waiting to be seated, however, Mega Tips recommends that servers avoid suggestive selling ofappetizers and desserts in favor of turningthe table quickly and selling more entrées,which tend to be more expensiveand have a bigger contribution margin than appetizers and desserts. This adviceis based on studies of yield management in restaurants by Cornell professor SherylKimes.18  Servers following this advice should increase their own sales andtips as well as the sales of the restaurant
where they work.

Encouraging servers to practice the tipenhancing actions described in Mega Tips should increase customer satisfaction. Indeed, as I mentioned above, one of the tip-enhancing actions—touching customers—has been shown to increase customers’ ratings of service.19 The effects of the other actions on customers’ perceptions of service have not been tested. However, the vast majority of these actions are believed to work because they improve customers’ moods, increase servers’ rapport with customers, or both. For example, smiling enhances others’ moods via emotional contagion and increases rapport by communicating
affinity.20 It is reasonable to assume that people who are in a good mood or who feel some rapport with the server will perceive the service to be better than do others. Thus, getting servers to use the techniques described in Mega Tips can be expected to improve perceptions of service and consumer satisfaction as well
as tips.18 See: Sheryl Kimes, Many readers will regard the effects of the tip-enhancing actions on customer satisfaction as obvious. After all, it stands to reason that these actions would not enhance tips if they did not improve customers’ perceptions of service. 

I wish I could agree with these readers and present the effects of tip-enhancing behavior on tips as evidence that those actions improve service. Unfortunately, I cannot do so. Researchers have found that tip levels are only weakly related to customers’ ratings of service, and so tip percentages are not a good indicator of perceived service quality or customer satisfaction.21 The point is that the actions advocated in Mega Tips do increase tips and they should also enhance customer satisfaction, but these are largely independent effects.

Encouraging servers to practice the tipenhancing actions described in Mega Tips should also lower labor costs by improving servers’ morale and reducing turnover. Turnover imposes numerous costs on businesses—including the expense of recruiting and training new workers and reduced productivity and service during the time that new hires are learning the job. Researchers have estimated the total costs of losing a roomservice waiter in a hotel at $1,332.05, and it seems likely that the costs of losing a restaurant server are similar.22 Thus, reducing turnover is a major factor in controlling labor costs. Evidence that larger tips can reduce turnover is provided by the studies described below.

In a recently published study I examined the relationship between the turnover rate and the average tip percentage for 59 restaurants in a casual-dining restaurant chain.23 Across all 59 restaurants and in the 30 restaurants with the highest sales volume, that relationship was weak and not statistically significant. However, across the 29 restaurants with the lowest sales volume, the average tip percentage was significantly and negatively correlated with the turnover rate (r = -.36, one-tailed p < .03). This suggests that server turnover is sensitive to tip income, but that servers can acquire the tip income they need from high volume or from high tip percentages. At low volume restaurants, however, high tip percentages
are necessary to retain waiters and waitresses.
Further supporting this conclusion are the results of an unpublished study. Professor Bruce Tracey and Michael Tews, both of Cornell University, collected data on turnover along with a measure of the average tip percentage at 96 units of a restaurant chain. Across all 96 restaurants, turnover correlated at -.29 (p < .01) with average tip percentage. Moreover, as occurred in my study, this relationship was stronger among the 48 restaurants with the lowest sales volume  (r = -.36, p < .02) than among the 48 restaurants with the
highest sales volume (r = -.23, p = .12). If tip percentages affect turnover, then servers with low average tip percentages should think about quitting more than do servers with high average tip percentages. An unpublished survey of 130 servers at eight different units of a restaurant chain conducted by Cornell professor Alex Susskind provides a means of testing this expectation because it included a measure of how often the servers thought about quitting together with a measure of their average tip percentages.24 An analysis of the data indicated that servers’ average tip percentages correlated  at -.24 (p < .005) with how often they thought about quitting their jobs. Although not conclusive, this finding combines with those described above to support the idea that increasing servers’ tips will reduce server turnover,
especially at low volume restaurants.

The managerial benefits of encouraging the tip-enhancing behavior advocated in Mega Tips are largely theoretical. It makes sense that increasing the strategic use of suggestive selling will increase restaurant sales. It also seems reasonable to believe that increasing rapport-enhancing actions like smiling, touching, and
thanking customers will improve consumers’ perceptions of service quality. Finally, it seems obvious that increasing servers’ tips will reduce turnover. However, there is no direct evidence that distributing Mega Tips among your waitstaff will produce these benefits. Thus, I would like to conclude by encouraging restaurant
executives to participate in such a study. Participating in the study would require two things. First, Mega Tips needs to be distributed to the servers in some of the units of a restaurant chain and not others. Second, servers’ charge card sales and tips, unit sales and turnover, and customers’ or mystery shoppers’ service
ratings have to be measured before and after distribution of the booklet. Since Mega Tips is available free of charge and since most restaurant chains record the needed information anyway, such a study should be inexpensive to conduct. I will further reduce the cost by agreeing to provide the needed copies of Mega
Tips to any executive of a restaurant chain that agrees to participate in such a study with me (that is, I pay for printing). Interested executives should e-mail me at WML3@Cornell.edu. Even if executives and managers do not want to participate in a controlled study, I encourage them to distribute Mega Tips to their servers. Doing so will cost little and will definitely increase their servers’ tips. It should also increase their sales, improve their customers’ satisfaction, and reduce turnover among their servers.