Incessant Fee’s, tip pandering, and Shrinkflation

[Doug Garson]

Interesting, having learned from this thread that maybe the delivery services take away from the restaurant margins, (and one of our favorite restaurants has been determined to be outside our delivery zone for Skip the Dishes even though we have ordered from them thru Skip the Dishes over a dozen times in the last two years,), I ordered directly from the restaurant and guess what? They sublet the delivery to Doordash, another delivery service. Maybe my original thinking was not far off, outsourcing the delivery service makes sense for the restaurant. In this case there was a small fee for delivery but no option to tip the delivery driver so I don't know if he was as well compensated as a Skip driver.

[Jim Becker]

Doug, my understanding is that if one ordered through the delivery service site, the restaurant gets dinged heavily for the service. By ordering direct with the restaurant, they don't have that fee. They, of course, can choose how to handle delivery, either with their own folks or by contracting like you mention. It's not just restaurants that do the latter...PetSmart uses DoorDash for delivery, with or without a fee depending on the specific order, but they do have provision for tipping the driver.

[Jason Roehl]

I can’t say I know what the answer is, but I at least like the idea of tipping. It’s one area where pay is based on merit, not just presence. And I see a lot of people now who are absolutely incompetent at their jobs, making a decent wage to do little more than breathe air at their place of employment.

I recall one parts-packaging warehouse at which I worked as a student almost 30 years ago. When I left, everybody made, at most, $6.25/hour ($0.25 of that was a quality certification bonus, pretty much a requirement, and minimum wage was $4.25/hr). About a year or so later, they switched to a piece-rate compensation. Suddenly, many people’s output jumped dramatically, and they were making $12/hour on average. I was in the quality/shipping department when I left, and those folks only got a bonus based on the overall output of the warehouse. They couldn’t get or keep workers in the department after that.

[Doug Garson]

Doug, my understanding is that if one ordered through the delivery service site, the restaurant gets dinged heavily for the service. By ordering direct with the restaurant, they don't have that fee. They, of course, can choose how to handle delivery, either with their own folks or by contracting like you mention. It's not just restaurants that do the latter...PetSmart uses DoorDash for delivery, with or without a fee depending on the specific order, but they do have provision for tipping the driver.

I doubt that was true in the case I described. The delivery fee I paid was under $5 so the restaurant must have paid an additional fee to the delivery service.

[Jim Becker]

I doubt that was true in the case I described. The delivery fee I paid was under $5 so the restaurant must have paid an additional fee to the delivery service.

We are not in conflict here. The fee I was speaking about is that automatic one for the order to be placed via the delivery service website rather than direct to the restaurant. According to one local place here, that was as much as 30% of the value of the order and they stopped taking orders that way. Now if the business contracts with the delivery service "just for delivery", the metrics are likely different. I do agree with you that the nominal fee charged to the customer isn't likely the cost of actual delivery but it's likely much less than when the order also flows through the third party system. I'll guess that order volume comes into play, too...if a place can keep a local driver or two busy exclusively, there could be financial benefits to that for the actual cost. Subcontracting this may be less expensive than having employees to do the delivery, too, and it's can be more flexible.

[Doug Garson]

We are not in conflict here. The fee I was speaking about is that automatic one for the order to be placed via the delivery service website rather than direct to the restaurant. According to one local place here, that was as much as 30% of the value of the order and they stopped taking orders that way. Now if the business contracts with the delivery service "just for delivery", the metrics are likely different. I do agree with you that the nominal fee charged to the customer isn't likely the cost of actual delivery but it's likely much less than when the order also flows through the third party system. I'll guess that order volume comes into play, too...if a place can keep a local driver or two busy exclusively, there could be financial benefits to that for the actual cost. Subcontracting this may be less expensive than having employees to do the delivery, too, and it's can be more flexible.

Yeah, it seems to me that charging a % of the value of the order to process the order is not reasonable, a flat rate per order is more reasonable. Cost to deliver is generally the same regardless of the size of the order unless it's a huge order. Distance between the restaurant and home would affect the cost but as far as I can tell isn't factored in other than limiting the delivery area. Agree, a subcontracted delivery service is more efficient and flexible.

[Bill Dufour]

Our local small grocery chain got bought out by a hedge fund. A few months latter they stopped the robot home deliveries. When our friend visited in his Tesla he liked to play with. the robots. Catch them at a corner and make them jump back on to the side walk etc.
Bill D

[Ole Anderson]

Local restaurant now charges a 3.5% surcharge for using a credit card, not a 3.5% discount for using cash. And they charge $2.50 for carryout (a 10 cent box) when they don't have to deal with bussing the table and doing dishes. Plus the 15/20/25% tip amounts include the carryout portion. Just a money grab.

[Brian Elfert]

Local restaurant now charges a 3.5% surcharge for using a credit card, not a 3.5% discount for using cash. And they charge $2.50 for carryout (a 10 cent box) when they don't have to deal with bussing the table and doing dishes. Plus the 15/20/25% tip amounts include the carryout portion. Just a money grab.

Would you rather they raised prices by 3.5% and then gave a 3.5% discount for cash? Have you asked the owner of the restaurant about the carryout fee?

[Bill Dufour]

When we tip I always do it in cash, not on the credit card. No need for the service staff to loose 2.5% to the cc companies. Or the boss to take a cut.
Now that they take credit cards Arco gasoline adds five cents a gallon extra for credit. When gas was up over $5.00 a gallon premium was still 10 cents higher, super premium 20 cents more. If it costs more to make premium seems like it should cost more when base fuel stock prices are up.

Bill D,

[Edwin Santos]

I must say, one of the many things I miss about living in Japan is the no tipping culture.
It is universally regarded that good service is an expectation and part of what you're paying for in the price of whatever good or service. It is the responsibility of the establishment to pay their employees appropriately and at a level that does not in any way rely on subsidy from tips. Tipping can actually be considered rude, in the sense of insulting the person's dignity, and in Japan they value dignity more than money.

Here in the US it seems like tipping has become an obligation where it was once a voluntary option hence the word gratuity. I think some of this change is generational.

[Sam Force]

I believe if you can afford to eat out, you can afford to tip. I always tip well unless the service is not good. I don't blame the wait staff for bad food but will tip less if service is not good. I have a granddaughter that is a waitress and she does really well most days. She is very pleasant and works hard serving her customers. They respond accordingly.

[Jim Becker]

When we tip I always do it in cash, not on the credit card. No need for the service staff to loose 2.5% to the cc companies. Or the boss to take a cut.

Many restaurants have a pooled tips setup and that includes cash. This is to insure that bus and runner staff get compensated (they do a heck of a lot of work in many restaurants to support the servers) as well as to even out earnings across the wait stations because many have also gone to a team approach. Sometimes the hosts get a cut, too. And while there's a certain amount of honor that comes into play here, it's also monitored in various ways. So don't assume that because you left cash that it will go exclusively to your server. That's not the reality in a very meaningful percentage of restaurants in the US at this point. I personally do not like that restaurant staff even needs to depend upon tips to make their money...a fair wage without tips is what it should be.

[mike stenson]

I must say, one of the many things I miss about living in Japan is the no tipping culture.
It is universally regarded that good service is an expectation and part of what you're paying for in the price of whatever good or service. It is the responsibility of the establishment to pay their employees appropriately and at a level that does not in any way rely on subsidy from tips. Tipping can actually be considered rude, in the sense of insulting the person's dignity, and in Japan they value dignity more than money.

Here in the US it seems like tipping has become an obligation where it was once a voluntary option hence the word gratuity. I think some of this change is generational.

I agree, compared with everyplace else I've lived and travelled, the whole tipping thing is just weird. I guess when it is the income for the employee, it becomes obligatory.

[George Yetka]

DD is quite a bit cheaper if you spend the 10 a month. But if a place offers delivery I will skip DD and go direct.