Tips: Paying for good service or sharing the server’s salary?

Rashed has been working for nearly two years as a waiter at Khana's, a fast-food chain located in Dhanmondi.

Khana's has branches across Dhaka, where customers pay ahead of enjoying the food they order. Neither is Khana's a self-service restaurant nor does it charge customers an additional service charge. Thus, its employees, who wait tables, all think that their pay-first system deprives them of the tips they could otherwise make waiting tables. 

"I wish I was rather working in a more conventional restaurant where tipping is more prevalent…", said Rashed, and sighed. "Even though we wait tables like in most restaurants, our pay-first custom chokes our chances of getting tipped," he added. 

 Over multiple interviews with many others like Rashed at different eateries around town, The Business Standard has come to learn that waiters can earn anywhere between Tk10,000 to Tk15,000 a month as salary, and an additional Tk5,000 a month in tips and a percentage of the service charge.

The 'service charge' that restaurants, hotels and eateries charge customers does not actually mean tips. It is an additional fee for the establishment's service, and from this amount, waiters and servers may get a certain percentage. 

Ironically, bigger hotels tend to pay even less in salary, between Tk8,000 and Tk10,000, with the understanding that waiters or servers will be making the lion's share of their monthly income from tips. At some hotels, waiters and servers can earn up to Tk40,000 in total - the additional income stemming from tips (that customers pay) and also from the 'service charge' that the hotel charges customers. 

Most servers look forward to making an extra income from tips, although whether one gets tipped or not depends on the type of restaurant, the service and payment system, as well as whether the restaurant charges a 'service charge.'

According to the waiters, customers in Dhaka are slowly embracing the culture of tipping for good food and service. From a paltry Tk5 or Tk10 – which used to be standard practice a decade back, the likes of Rashed now sometimes come across customers who are willing to part with a Tk500 note, provided they have spent an exorbitant amount on the food they ate.

Still, their earnings from tips are a far cry from the standard of 20 percent in some of the major cities around the world.

While in Bangladesh, high-end restaurants or coffee shops (such as Woodhouse Grill, North End, etc) nowadays hire undergraduate students to serve as waiters, the bulk of waiters at other restaurants, in general, come from low-income groups with poor educational backgrounds.

Those who work at restaurants where tips are abundant say sometimes they can save up their entire monthly salary when they have had a good month of sales and tips. Such months, however, were extremely rare in the last two years because of the pandemic.

A 'tip'ping landscape

Robiul Islam, a server at Kacchi Bhoj, Dhanmondi, says that he expressly tries to impress the customers with a handful of trade tricks he has picked up through the many years he has worked as a server in different restaurants.

"I smile a lot for the customers and I practice on my smile in the mirror too, so it doesn't look fake. I make small talk with them. Other times, I would mix things up with a complimentary salad even if they don't ask for it, to go with their kacchi.

Some tip me, some don't. But it's all about how at home I make them feel," said Robiul.

Robiul said he has received a tip of Tk5 on some occasions. "I don't mind them because other customers tip handsomely… say Tk200. That's the highest I've made here so far."

Kacchi Bhoj is a Bangla (local) restaurant. "We are glad that the tipping culture is still going strong in Bangla food restaurants," Robiul attested, again, with his customary smile. 

Alam has been working as a server for the past 11 years at YumYum Cafe, Dhanmondi, which is big on tips. He exclaimed, "Your guess is as good as mine! Working here for the past 11 years has brought me very close to regular customers. We like busy days when more of them are here, which automatically makes for more tips!"

Alam says some months they make an excess of Tk4,000 or even Tk5,000, give or take, along with their basic pay (which can be estimated at Tk10,000). 

Bipul Chiran, from KoolCha, Dhanmondi, also reiterated Alam's point of view that regulars are good tippers. "Some customers call us on our personal phones to book a table before they come in. We first need to turn a new customer into a regular and the easiest way to do that is by making them feel at home here," said Bipul.

Bipul said he makes somewhere around Tk150 to Tk200 on some days of the week from tips; on weekends it goes up to approximately Tk300. Only about 20 percent of customers tip.

"We get to keep what we make as tips. However, our practice is to share Tk60, out of each tip [depending if the tip is higher than Tk60 and by how much], with the kitchen staff." 

Like Bipul, most waiters say they share their hard-earned tips among other staff, mostly out of custom rather than any hard and fast rule.

Proma Tasneem, a regular at Woodhouse Grill, Banani, lives for the savoury of delicacies. Tasneem said, over a lovely steak on her table, "There is nothing I don't love about this place. The food is authentic and the ambience complements the food. However, we pay a premium for the food I order from Woodhouse.

I pay an additional service charge on top of the expensive food bill. Tipping after 'service charges included' [policy] sounds pointless to me."

The service charge conundrum

For many waiters and servers, service charges, self-service and tip-boxes are regressive to their prospect of adding on a little extra to their monthly pay.

Most often, according to waiters, they do not get to see the full amount the owner collects as service charges, while, at the same time, the presence of the 'service charge included' stamp on menus often discourages customers from tipping a waiter.

That point was emphatically stressed by one waiter from Woodhouse Grill. He pointed out, "What good is a service charge if we don't make a good sum off it, if not any? Customers expect good service for it. But because they pay a good sum in service charge over their already high mark-up orders, they don't feel obliged to tip us further."

However, restaurant owners' look at it differently from waiters.

Syed Muhammad Andaleeb, Secretary, Restaurant Owners Association, said over a phone call, "We who prefer service charge and tip-boxes over hand-in tips get to distribute the sum among our employees more evenly. The sum is incremental. Managers or the chefs earn a little more than new or relatively less trained employees."

Labib Tarafdar, partner and co-founder to multiple restaurant brand names: Madchef, Yum Cha District, Cheez, Laughing Buddha and Madchef Catering Services, said "Restaurants I look after still don't discourage tips. If the customers tip, they keep it and share it among themselves. But I personally prefer sharing with them a range of 2.5-5 percent of the monthly revenue based on point numbering."

Both entrepreneurs set the average salary of servers at around Tk12,000 to Tk17,000 a month. When asked why tips make up such a large share of a server's actual income when it should have come in the form of a salary, both Andaleeb and Labib said they feel it is gradually improving and is much better than earlier times.

A culture across industries, nations

The concept of tips is not, however, limited to the food business. Service-based businesses, an example is hair-dressing salons, highly regard the prospects of tips. High end or local hair-dressing salons all rely greatly on tips past the basic charge of their services to make an extra living.

How much 'extra money' they make from tips is directly proportional to how affably they converse with customers and/or serve them. An air-conditioned salon along with good amenities as opposed to less decorated ones will not only be able to charge high for their services but also appeal for a higher tip. 

Different parts of the world tend to look at tipping differently.

For example, in the United States, it is frowned upon if tips amount to less than 20 percent of the customer's bill, at diners, restaurants, etc.

Meanwhile, in Japan, tipping is an emblematic insult for servers. They generally think of asking for a tip as next to begging. That is a common ideal shared by a few other Asian countries as well, Hong Kong being a prime example.

In Europe, the service charge is usually included right within the price of the food customers order. On one hand, that keeps the superfluous runaway of the end price in check, but on the other hand, earns waiters/servers a modest sum in tips. 

Does tipping equate to better service? That is debatable. It has more of a psychological impact than a financial one. Surely, servers deem it as a fantastic way to add a little extra to what they earn as is.