Per Se ends tipping in favor of service charge

[rich]

I want to be a fly on the wall the first time that $500 wine becomes an automatic $600 or that special bottle of champagne goes from $400 to $480; and then when the bill arrives and right there in black and white for the person to read is that $723.47 service charge.

Apparently this has been a huge problem for Keller at The French Laundry -- what with the waitstaff and customers leaving in droves.

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Oh, I didn't mean the restaurant will lose customers. I actually think it will be tougher to get a table - the more you charge at the high end, the more people will come, if for nothing else, then just to say they've been. It's the build it, they will come theory of evolution.

If Keller wanted to guarantee a full house for years, he should have made it a 30-35% surcharge. People would flock, just to see what it was all about.

My meaning was, just to see the reaction when someone (maybe slightly less affluent) saw that service charge in print - the look could be priceless. Could possibly use it for one of those MasterCard commercials.

Wow, I'm glad I ate there when it was cheap - hey, I got out of there spending under $700 for two and that included two bottles of wine and a 25% tip, gratuity, surcharge, tariff, levy, bribe or whatever. I feel blessed and honored. Now when I walk by the Time-Warner Center I just bow, respectfully genuflect and fight back the urge to kiss someone's ring...

Edited August 12, 2005 by rich (log)

[rich]

So, after eight pages of discussions and numerous opinions, some arguing, some joking, some insights, some sarcasm, it may come down to this.

At the end of the year, with all the surcharges in place, will it cost more to dine at Per Se or fill up your car?

[Carrot Top]

So, after eight pages of discussions and numerous opinions, some arguing, some joking, some insights, some sarcasm, it may come down to this.

At the end of the year, with all the surcharges in place, will it cost more to dine at Per Se or fill up your car?

If a person lives in Manhattan, they don't need a car, do they?

[Carrot Top]

If that's truly the case, wine drinkers might become upset knowing they are subsidizing the food costs for non wine drinkers - and then paying an additional 20% on top the already inflated wines prices.

What can I say, rich.

It's a jungle out there.

[sammy]

I might as well also mention that people who think they know "when the markup is out of control" usually have very little real understanding of the costs involved in acquiring wines and maintaining a wine program, and also have very little real understanding of the extent to which everything else they pay for in restaurants is marked up. You want to talk about a markup? How about Lupa's twelve dollar plate of spaghetti aglio a olio? That's about a 1200% markup.

Sam this may be true except markup percentages are even a bigger red herring. People (at least the smart ones) think in real dollars. If I can purchase the exact same bottle of wine that Per Se is selling for $200 at my local wine shop for $75, I'm paying Per Se $125 for the priviledge. That is a lot out of pocket for an identical item. Sure, they are pouring it and serving it in their glasses but at the end of the day, the wine in the glass is exactly the same.

What amount extra am I paying at Lupa for the pasta, $11? Big deal. Plus I don't have to cook it and clean the pots plus no matter how hard most people try, it won't taste the same at home.

[Fat Guy]

300% (also known as approx 33% wine cost) is the standard markup in fine dining restaurants, as I learned when I spoke to quite a few beverage directors while researching a story for Food Arts a couple of years ago. If you add a 20% service charge to a 300% markup you get, for example, $100 = true cost of wine, $300 = marked up cost of wine, $360 = cost of wine after markup and service charge. Now assume you might have tipped 10% on that bottle, at $30. That makes the final pretax difference $330 versus $360 on a $100 bottle of wine.

Who cares?

Whether or not wine markups are justified is beyond the scope of the topic I'm sure, but it's worth noting that they're lower than the markups on bottled water, cocktails, coffee, desserts . . . and food (food costs typically run in the 20-30% range while wine costs are more like 33%).

I'd call the view that "it's just the same stuff in the bottle" the reductionist view of restaurant wine buying. If you make an intelligent choice from an intelligent list, you're paying for a lot more than just what's in the bottle. The wine may be aged, in which case it doesn't exist in wine shops. It may have been aged in a temperature controlled facility and subject to the carrying cost of the inventory. You're paying for the restaurant to have hundreds of wines available immediately at the right temperature so you can select the one you want right then. There is no trip to the wine shop for you, you don't have to acquire stemware and you don't have to pay if you break the restaurant's stemware, you can have your wine decanted by someone else, you can send back a corked bottle. You can get the advice of an expert sommelier who knows the wine and food inside out. Someone has to pay that person's salary, and that person is often a manager outside the tip pool so you have to pay through the cost of the wine.

In any event, there is still no less or more service involved in pouring a $150 bottle of wine versus a $1,500 bottle.

[Carrot Top]

If I can purchase the exact same bottle of wine that Per Se is selling for $200 at my local wine shop for $75, I'm paying Per Se $125 for the priviledge.

The thing is. . .that indeed it is a sort of privilege. A privilege one pays for, certainly. But at the level of the "Per Se's" of the world, it truly is not supposed to be about expense. It is supposed to be about the best of what is available at the highest of quality levels. And sometimes it is about art. . .in a way. You do not find the Per Se's on every street corner, and these sorts of restaurants have been created by people that hold very high creative talents in a variety of areas.

If one's home looked and felt like Per Se. . .and if one could be served the same level of meal, including all ingredients with the same level of technique displayed in the cooking, without doing it oneself. . .and if one could be served with the same pinnacle of unobtrusive service. . .while also enjoying the theatre of people-watching that one would find at Per Se. . .then why go dine at Per Se?

The bottle of wine is part of the overall experience. It is in a context of many other things that have been created and tweaked and managed and perfected. . .just to allow the diner a wonderful, care-free enjoyable meal.

Yes, it's a privilege. But nobody has to buy that bottle of wine if they don't want to.

And nobody has to appreciate the act of pouring a bottle, whether it cost ten dollars or a hundred dollars, either.

But really. . .they are missing out on something if they choose not to.

They are missing out on something that is being done for them, for their appreciation. Not just for their money. Usually. In the best of places.

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What makes me curious about some posts in this thread is that there have been comments made that the idea of having a service charge as opposed to "tips" is somehow being used at Per Se for the purpose of somehow supplementing the kitchen staff's salaries. . .so that their compensation can be raised without it coming from the owner's pocket.

I don't think that this can be said with any surety without looking at the overall concept of how their cash flow "runs". . .there are many different ways of setting up things on any given budget that has a number of line items, as Per Se's obviously must. And really, I don't consider that part of my business to know. All I want to know is whether I trust the place or not. That should be enough.

Per Se is an expensive place to dine. It is an expensive place to operate, too.

But they seem to be doing well. Why must one assume that there is "finagling" going on. . .rather than assuming that this is being done out of the desire to make things work even better?

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The reason that comes to me in answer to this is that somehow it might seem "wrong" to some people that there is the amount of money to be made in this field by some few top runners that there is, to be made.

"It's only food", one might say. . .and "It's only service".

But there has to be something about it that will make people pay for it, no?

The same way they will pay for other luxury items if they have the money?

Dining at this level is a luxury item. Generally these things are not open for a lot of negotiation in terms of allowing customers to set their prices or define how to best run their businesses. They don't need to. . .because their judgement has been proved to work quite well for them (as is proved by their successes) and their judgement has provided their customers with a great deal of happiness all along the way, or it just plain would not have "worked". . .the "whatever it is they are doing" at "whatever price tag".

And although it may be unfortunate that not everyone has the financial ability to dine at the Per Se's of the world, not everyone can afford many other luxury items in day to day life. This has always been true. If anyone knows a way around this, please let me know. I have a Lamborghini and some fine art pieces on my wish list, and I'd like to take a look at buying Ron Perelman's house he's getting rid of for $70 million dollars. Heh. But in the meantime, I'll be happy with whatever "luxury" I can afford, even if it happens to be a fine cheese from the Farmer's Market.

Finally, it does not worry me whether someone doles out an extra hundred dollars or so on a meal at Per Se or if they are worried about how their extra "service charge" dollars are being spent within the context of this fact:

If they can walk afford to walk in there in the first place, and they make the choice to do so, then they can afford to pay for it somehow. Hopefully they will do so without the idea of critique in their minds, but instead with the idea of enjoyment.

It is the relativity of taking the time to consider places like Somalia (or others) where enormous numbers of human beings on any given day are not getting enough food to eat to stay alive. . . that places this "problem" into a very different category of "problems", in my mind.

Edited August 13, 2005 by Carrot Top (log)

[Stagiaire]

I'm coming in really late into this thread, but I did read all 8 pages of it first. Having said that, here goes....

On the idea that tipping allows one the flexibility of rewarding or punishing the waitstaff for good service....that really doesn't work in places like Per Se that implement a more European style of service where a team is in charge of tables. Even if, for argument's sake, tips weren't pooled, you are tipping the team that served you. You can not penalize a single server or busboy without having to speak to management or resort to tipping each member of your team (captain, maitre d', server, busser, server, sommelier, etc.) individually. Shifting to a service charge system doesn't affect that in this case. On the flip side, it does not prevent you from giving more than 20% if you wanted to for exceptionally good service.

With regard to the kitchen staff at Per Se…with the probable exception of the Chef de Cuisine, most of the kitchen staff at restaurants at the 4 star level are not paid much. The reality is that supply (of qualified commis and chefs de partie) far outstrip demand. And they even have a seeming endless supply of people who would work their for free for 3 months (sometimes even 6) just for the privilege and the experience...and not all of them are straight out of culinary school either. Of course a bigger pay check would make them happier but I seriously doubt if they're really there for the money as they've never made it seem like it. Money is not their prime motivator. A lot of them are still in debt from chef school/working in france/accumulated debts etc. but still choose to work in such establishments because of the love of their craft and investing in their future.

[Fat Guy]

And that system has worked well enough, in places, to get American restaurants to where they are today. American restaurants have, indeed, made remarkable progress over the past few decades. But there is room for advancement: the level of excellence routinely achieved by Michelin two- and three-star restaurants in Europe remains elusive for all but a very few American restaurants. Thomas Keller's restaurants do excellent food, but I'm sure Thomas Keller knows they could do better food. And viewed from the standpoint of systems, the Europeans know how to do that better than anyone else.

In all this talk of how tips can be used to reward good service, there doesn't seem to be any acknowledgment of the fact that we don't actually know how our "reward" fits into the big picture. We leave a $250 tip. It seems generous to us. But in a vacuum it means nothing. Do we know how many ways it gets split, in other words how many waitstaff there are total? Do we know how many covers the restaurant does per night? Two different restaurants each present a $1,000 check. We tip $250 at each. At one of the restaurants, they do 80 covers a night and have 40 front-of-house staff and they only serve dinner. At the other restaurant they do 120 covers a night and have 30 front of the house staff who work lunch and dinner. For all we know, the servers at the first of those restaurants may be taking home half as much per shift as at the second. It could be the difference between earning $50,000 a year and earning $100,000 a year. Meanwhile, in both restaurants the servers are excellent. And the cooks are making $20,000 a year.

Thomas Keller knows you don't have to let captains earn $100,000 a year to attract great ones. And I bet he thinks he can get a little extra out of his kitchen if he pays his cooks a little better. With pooling and a service charge, maybe he thinks he can push his cooks to $40,000 and his captains to $70,000. I don't know the exact numbers and ratios, but I suspect he does. I hope it makes Per Se a better restaurant. Someone like Thomas Keller shouldn't let four New York Times stars be his crowning achievement. He's not playing locally; he's playing on the world stage, where four New York Times stars are only as good as one or two Michelin stars.

[Boris_A]

On the idea that tipping allows one the flexibility of rewarding or punishing the waitstaff for good service....

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Which is - when seriously done - a work (per se, I'm tempted to say) and I dont' see why this should be done by me, the customer. As in any other service business (airlines, retailers, etc ..) this should be done by a competent management. Customer appreciation can be done by the same "voting" system as anywhere else: by returning ot non returning to the restaurant.

Another aspect maybe that a lot of gastro industry in Europe is linked to (international) tourism and it's a bit a stretch to expect every foreign tourist to know how and what a good service in a peculiar country has to be. To give an example: an attempt of "table turning" would be almost an offense for me. Under such aspects, "competent tipping" is close to nonsense.

[Bux]

I've just reread the subject title of the thread and I'm guilty of making off topic posts, arguing against the presumed premise or something. I've held and continue to believe that tipping, per se, will not end at Per Se with the establishment of a 20% surcharge, unless, of course, there's a note on the bill that says tipping is not permitted (or perhaps even if there is such a note).

[Fat Guy]

What Per Se says on its website is: "Beginning September 1st, in lieu of gratuity, per se will be adding a 20% service charge to all guest checks." Customers may still be allowed to leave more -- I don't know -- but if they do it will be much more akin to a real gratuity, as opposed to wages disguised as a gratuity.

[Fat Guy]

There's some more information today in the New York Times regarding Keller's plan for Per Se, which indicates that he is moving much closer to a true wage system than I had previously imagined. To wit:

Instead of worrying about how much they take home on a particular night, the waiters and all the other employees will earn steady wages, even for weeks when the restaurant is closed, Mr. Keller said. He said the system worked well for more than seven years at French Laundry, his restaurant in Yountville, Calif., which charges 19 percent for service.

http://www.nytimes.com/2005/08/15/nyregion/15tips.html

[rich]

The article sheds some light on the situation, but leaves one point hanging. According to the article the waitstaff at Chez Panisse are allowed to keep whatever they make beyond the 17% and split it as they please. Keller doesn't state what will be done with the "extra" money.

The article confirms that the 20% service charge is subject to tax, bringing the real charge to almost 23%, which is identical to the average tip at Per Se before the change.

But I commend Keller for taking a major step toward salaried restaurant employees - today's explanation goes much further then previously thought (especially since all employees will be paid during any restaurant closure). I salute Ms. Waters even more, for providing health insurance after she raised the service charge 2% last year.

[Bux]

What Rich said.

I thought it was a fascinating article and rather illuminating especially after all we've thought we've said here. No surprise that anyone believes tipping is all about power from the diner's side, in my mind. If there's one thing I don't like about dining out in the US it's the sense I have of all the wrong baggage some diners bring to the table. I still recall the NY Times article about the guy who dined with someone who simply returned perfectly good dishes to prove he could and let everyone know who's boss. It's always been clear to me that the customer is not always right in the ethical, moral or legal sense, although I don't argue that it's not good sense for the restaurant to treat him as if he is.

That it's the waiters who are complaining here is no surprise either, nor does a comment from Keller that a cook "had asked to become a waiter temporarily so that he could pay some bills" sound surprising. Professional waiters may take as much pride in a job well done as a cook, but on the whole, my guess is that they take the best paying job they can find, while a young cook is more likely to take a job where he can learn from a great chef. Waiters at top places make a good living, although that's relative whatever you might make. The math is to complicated for me. There are too many unknown coefficients. There's a much larger tip left for a meal at Per Se than at most restaurants, but more people are serving that table and the meal takes much longer so the table is occupied by one party instead of two or three as at other restaurants.

From a cook's point of view, the idea of making a better salary while working in a top restaurant has got to have lots of appeal. There are only so many talented people willing to sacrifice themselves and they're only willing to do it for so long. If Keller can pay better salaries, Per Se will served even more consistent food. If that's the case, Boulud, Vongerichten, Ripert, et al. have to watch out. The potential trade off for a place like Per Se is that the power people slack off and the seats are filled with food people. That could make for better and more pleasant working conditions for waiters. I'm stretching a few points, but there are certainly opportunities for a ripple effect in some parts of the restaurant world, though perhaps in a limited part.

I really liked what the GM of Chez Panisse had to say when he was quoted as saying ""If Mr. Big Bucks comes to the restaurant and drops 20 percent and in comes Mr. Non-Big Bucks and leaves 17 percent, I don't want the waiters at Chez Panisse giving Mr. Big Bucks better service." I don't however mean to disparage current service levels at the top. I'm not a Mr. Big-Bux, and I'm treated royally and I've heard nice stories about service from those who have saved a lifetime just for the one big dinner.

[Holly Moore]

He said he had already lost one talented young cook and that another had asked to become a waiter temporarily so that he could pay some bills.

The kitchen staff always sees the grass as greener on the other side of the pass thru. And it usually is. However it has been my limited experience that good cooks don't usually make good servers. Different skills; different mindsets; maybe even different views of the customer as friend or foe.

What surprised me about that article was that Per Se lost one talented cook because of pay. I would hope that at comparable skill levels that Per Se's cooks would be among the highest paid in the city. Assuming the cook stayed in New York, such a departure would only make sense if the cook left Per Se to become a chef or sous chef at a different restuarant. But that is the natural progression and not attibutable to tips or lack there off.

I'm still interested in how Keller will be adjusting the various salaries. Will server wages be raised to that of cooks? Will cooks wages be lowered? Will the 20% be divided equally among all staff? What about floor and kitchen management?

Also I've got to wonder why the staff at Per Se is worth 1 percent more than the staff at the French Laundry, service charge wise.

[rich]

I'm still interested in how Keller will be adjusting the various salaries.  Will server wages be raised to that of cooks?  Will cooks wages be lowered?  Will the 20% be divided equally among all staff?  What about floor and kitchen management?

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That would be interesting to know, but I think Keller will leave that aspect to his personal determination.

What I hope happens is that the people who do get the extra bucks, get to keep it as they do in Chez Panisse. At least it allows for some method of reward for going that extra mile and taking some extra initiative. However, I still think there will be less personal "tipping" than usual because of the service charge and there would be more if the charge was built-in.

There would also be more if the service charge was 17%, but that's for another thread.

The 19% at FL seems like a strange number, while I don't believe the 1% is significant it could pay another salary or two over the course of a year.

Here's a question - what is Keller going to do with the extra CASH, people toss around at Per Se to the host/hostess, bartender, captain, wine steward, etc?. If pooling, I guess he needs to go by the honor system.

[Bux]

. . . .

What surprised me about that article was that Per Se lost one talented cook because of pay.  I would hope that at comparable skill levels that Per Se's cooks would be among the highest paid in the city.  Assuming the cook stayed in New York, such a departure would only make sense if the cook left Per Se to become a chef or sous chef at a different restuarant.  But that is the natural progression and not attibutable to tips or lack there off. 

. . . .

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Talented kids out of school and young cooks on their way up come to NYC and take a pay cut to learn what they can by working in a kitchen that operates as such a high level and they also know the value of the lilne on their resume and the reference given by a chef such as Keller, when they go looking for their next job or backers for their own restaurant. When I had family working in the kitchen at Daniel, it was not unusual to meet young chefs on the move who saw the stint at Daniel as part of their education and understood that if they could do what was asked of them there, they could confidently work anywhere. It's not everyone who can afford to intern in the best places in any profession.

. . . .

Also I've got to wonder why the staff at Per Se is worth 1 percent more than the staff at the French Laundry, service charge wise.

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Just a guess, but maybe the cost of living here, not that I suspect it's cheap to live in Napa Valley.

[Fat Guy]

Percentages don't mean much unless we know what they're percentages of. Nineteen percent of a billion is more than twenty percent of a thousand. I wonder which restaurant has higher check averages, more covers per server, etc.

[Holly Moore]

Also I've got to wonder why the staff at Per Se is worth 1 percent more than the staff at the French Laundry, service charge wise.

The above was offered more in amusement than as fodder for serious discussion. I've got to remember to use s.

But 19 percent is a very wierd number to settle on service charge wise. It's like 20 percent marked down to 19 percent.

[Fat Guy]

Maybe it's like when stores charge $9.99 instead of $10 because they know some customers will fall for it.

[BigboyDan]

Maybe it's like when stores charge $9.99 instead of $10 because they know some customers will fall for it.

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BWAHAHAHA!

You state such without a self-awared hint of irony.

[JohnL]

I am a bit confused.

If a service charge is added to the check, is a customer "expected" to tip in addition?

I can see tipping over and above a service charge only in the very rare case of some service that clearly goes "above and beyond" the standard of good service one expects.

I still see the benefit--from the consumer POV-- as being one of simplifying the dining experience.

[clifford]

Does anyone know whether or not the FL service charge tip pool includes the kitchen?

On it's face, it appears this gives the kitchen staff a raise at the expense of the waitstaff. And I know this may come as a shock to smoeone, but if you have the skills to wait tables at Per Se, you're probably making $100K plus a year.

And this pay dock cannot sit well with them. Maybe making $75K a year waiting tables in Yountville is a great living and unmatched in its surroundings, but I bet there are 100 restaurants in Manhattan where you can make that in your sleep.

[EdS]

$75K a year isn't exactly great living in the Napa Valley. I'd say it's just getting by. A 1,250 sq/ft. 3-bedroom starter home in Yountville on a small lot goes for around $800,000 and anything nice is a lot more.