Tipping – Reality and Dilemma
Photo: Caroline Prange
It’s a debate that comes up every few months: those pesky little card readers that nudge you to add 10, 15 or 20 percent before you pay. Whether it’s just a takeaway coffee or a multi-course menu with wine pairing – many guests feel pressured by the machine’s invitation to tip. Some even call it manipulation. And yes, we get the reflex. Perhaps it does feel a little different when the machine pushes it on you, rather than when you follow your own impulse to leave something extra, in recognition of great service.
However, as we know the other side of the counter (and the numbers), we want to add another perspective. Not so much about the devices per se, as about tipping itself. Cultural norms around tipping are wildly different from place to place, sure – but we suspect even many Germans outside the industry don’t really know how central tipping is in Germany.
The reality is quite simply:
Your tip isn’t just a kind gesture – it’s a subsidy for restaurant pricing.
Even if you feel that eating out has become expensive: the prices you see are only possible because tips are part of the calculation. If we employers were to pay staff that same amount “officially,” with full taxes and social security, both the corner café and the starred menu would suddenly be much more expensive.
And without tips? Most likely, no staff. Hospitality is a low-wage sector when it comes to base pay. It’s only with an extra 25–50 percent in tips that the job becomes remotely even attractive. Every single salary negotiation runs on these assumptions: What’s the base salary – and what tips can realistically be expected?
At Nobelhart, we pay above-average wages and offer extra benefits. Even so, tips are what make the work competitive, especially compared to other industries. You might now be thinking: “But lots of jobs in hospitality are entry-level, surely minimum wage is enough.” To that we say: not true. Of course there are starter roles for which you need little skill or experience. But beyond a certain level, the job really has nothing to do with “unskilled help.” To find and retain really great staff – people who bring head, hand and heart to an extremely demanding, physically taxing job – we need to be able to offer a fair total income. And that’s presently made up of both salary and tips.
So why isn’t the rate of base pay higher, you ask?
That comes down to the price architecture the industry has grown up with. Traditionally, calculations assumed minimal labor costs – in the past, because family members or servants worked for little or nothing. And even today, places that push people to work 12–14 hour shifts will always come out cheaper than businesses that stick to proper 40-hour weeks. (As we do.)
Be that as it may: without tips, the numbers don’t work out – at least not under current conditions. At the same time, we’re well aware of the downsides for staff. A low official salary also drags down pension and unemployment benefits in Germany. It’s also a problem when you’re applying for an apartment or a loan.
That’s why at Nobelhart we even considered scrapping tips altogether and putting everything through payroll. What stopped us? Simple: if we priced tips into net wages, our menus would be prized so much higher than other, comparable restaurants that we might have well-paid staff – but far too few guests.
Everyone in this industry appreciates the recognition a tip communicates. But it’s not just that. As things are, it is also a subsidy that keeps restaurant prices where they are.
PS: And of course, if the service wasn’t good, you don’t have to (and shouldn’t) tip.
Tipping – Reality and Dilemma
Photo: Caroline Prange
However, as we know the other side of the counter (and the numbers), we want to add another perspective. Not so much about the devices per se, as about tipping itself. Cultural norms around tipping are wildly different from place to place, sure – but we suspect even many Germans outside the industry don’t really know how central tipping is in Germany.
The reality is quite simply:
Your tip isn’t just a kind gesture – it’s a subsidy for restaurant pricing.
Even if you feel that eating out has become expensive: the prices you see are only possible because tips are part of the calculation. If we employers were to pay staff that same amount “officially,” with full taxes and social security, both the corner café and the starred menu would suddenly be much more expensive.
And without tips? Most likely, no staff. Hospitality is a low-wage sector when it comes to base pay. It’s only with an extra 25–50 percent in tips that the job becomes remotely even attractive. Every single salary negotiation runs on these assumptions: What’s the base salary – and what tips can realistically be expected?
At Nobelhart, we pay above-average wages and offer extra benefits. Even so, tips are what make the work competitive, especially compared to other industries. You might now be thinking: “But lots of jobs in hospitality are entry-level, surely minimum wage is enough.” To that we say: not true. Of course there are starter roles for which you need little skill or experience. But beyond a certain level, the job really has nothing to do with “unskilled help.” To find and retain really great staff – people who bring head, hand and heart to an extremely demanding, physically taxing job – we need to be able to offer a fair total income. And that’s presently made up of both salary and tips.
So why isn’t the rate of base pay higher, you ask?
That comes down to the price architecture the industry has grown up with. Traditionally, calculations assumed minimal labor costs – in the past, because family members or servants worked for little or nothing. And even today, places that push people to work 12–14 hour shifts will always come out cheaper than businesses that stick to proper 40-hour weeks. (As we do.)
Be that as it may: without tips, the numbers don’t work out – at least not under current conditions. At the same time, we’re well aware of the downsides for staff. A low official salary also drags down pension and unemployment benefits in Germany. It’s also a problem when you’re applying for an apartment or a loan.
That’s why at Nobelhart we even considered scrapping tips altogether and putting everything through payroll. What stopped us? Simple: if we priced tips into net wages, our menus would be prized so much higher than other, comparable restaurants that we might have well-paid staff – but far too few guests.
Everyone in this industry appreciates the recognition a tip communicates. But it’s not just that. As things are, it is also a subsidy that keeps restaurant prices where they are.
PS: And of course, if the service wasn’t good, you don’t have to (and shouldn’t) tip.