The Minimal Tip

I don’t believe in the idea of a “minimum tip.”

There, I said it. It’s a big change from my previous beliefs on tipping.

A few weeks ago, my family and I ate at a restaurant where the service was extremely poor. We sat for twenty five minutes waiting for our server (my wife was literally getting on her coat). Then, we spied our server sitting at a table with other restaurant employees after we had ordered (where the server had also been while we were waiting). We did not get drinks at all until after our meal arrived and we requested them again (to our server’s annoyance). When the plates were being served, mine was bumped on the edge of the table, knocking a portion of my food off of the plate onto the ground. Not only was my plate left there with some of the food missing, the server didn’t bother to clean up any of the dumped food on the floor. At one point, my wife attempted to get the server’s attention, and the server looked at her then pretended that she didn’t see my wife at all and continued to sit at the table with her friends.

Needless to say, we were not impressed. I gave a zero tip.

Afterwards, one of my friends chided me for not at least giving a 10-15% tip. “That money is part of her salary,” he argued. My argument? You deserved to get paid if you actually do your job.

For many years, I did believe that you should give a minimal tip to the service staff at restaurants because, in many cases, that tip is part of their expected salary from the restaurant. However, a few things soured me on this.

First, it seems really unfair to give a 15% tip to someone who isn’t even providing minimal service and then giving a 20 or 25% tip to someone busting it and doing five times the work to make your meal enjoyable. I don’t think it’s reasonable to hand out 40-50% tips to people who are really striving to do a good job so you can amply reward them in comparison to people not doing their job at all.

Second, some businesses collect the tips from the waitstaff, skim some percentage off the top, then redistribute the tips to all employees. A small tip to an individual person doesn’t matter in this situation, as it will all be redistributed equally to everyone there. In fact, if I have received great service, I actually ask my server what the restaurant’s tipping policy is – who gets to keep the tip? (In this situation, I’ll usually tip at the very low end of normal, then hand a small amount of cash directly to the server if the service was good.)

Third, a “standardized” tipping policy ignores how the real world workds. If you tip identically no matter how good the service, the people who provide poor service will believe such service is acceptable and the people who provide good service have no incentive (beyond internal drive) to keep up the great work. A “standard” policy rewards the bad equally with the good – and that’s a situation that doesn’t benefit either side.

In fact, I’d argue that over the long term, a “standardized” tipping policy makes overall service in restaurants worse over time. It tells the self-motivated people who are really good at their job that they won’t be rewarded for their self-motivation, so they’ll seek a new channel for it. Meanwhile, the people who do a poor job are quite happy to collect nice tips for their minimal effort and will stay put.

My current tipping policy is pretty simple. When I go into a restaurant, I don’t plan on giving any tip at all. Waiters earn the tip through good service. If I don’t notice the service at all, that means it was good and I tip a solid amount – 15% to 20%. If I notice outstanding service, I go higher – I tipped almost 40% recently. If the service is poor enough that it begins to detract from the experience, I’m simply not going to tip the waitstaff well at all – 5% to 10%. If the service is poor enough that it makes the meal miserable, I will not give a penny. Obviously, I’ll make some exceptions to this, particularly if the server is new.

Honestly, I don’t care whether the tip is part of the person’s salary or not. In fact, if it is a part of that person’s salary, I view it as a strong argument for my tipping policy, as it rewards extra effort and doesn’t reward poor effort at all.

Just like real life.

What’s your tipping policy? Why?

Trent Hamm
Trent Hamm
Founder of The Simple Dollar

Trent Hamm founded The Simple Dollar in 2006 after developing innovative financial strategies to get out of debt. Since then, he’s written three books (published by Simon & Schuster and Financial Times Press), contributed to Business Insider, US News & World Report, Yahoo Finance, and Lifehacker, and been featured in The New York Times, TIME, Forbes, The Guardian, and elsewhere.

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