u/KeyLimePsyOp

Hey there, I've been in the industry for about 20 years give or take, and I've been the general manager of places that have an average tip percent of 4% for service to places where the average tip percent is 25%. Based off of my experiences what will actually happen - we first need to segment restaurants into the corresponding styles of businesses

1. Service Counter Top: Order at cash register, sit down and food and drink is brought out to you; cafe's, Omakase's

2. No Service Counter Top: Fast food chains, mom and pop ethnic shops, food trucks

3. Low Service, Low Cost Businesses: buffets, acye, cafeteria's

4. High Service, High Cost Businesses: High end dining, , Hibachi, wine bars, Chili's, Olive Garden, mom & pop diner

I'm not including bar's since I'm unfamiliar with operations for a dive bars, wine bars, or other high end bars but I'm guessing they fall into the high service, high cost category. But the listed + bar's are effectively encompass 98% of all restaurant businesses. Depending on the business style, its going to impact them differently.

1. Service Counter Top - will likely transition to no service based businesses. Service counter tops tends to lean smaller businesses and will be moderately impacted. These styles of businesses are fairly cost efficient with labor, with the staff doing dual roles of actually making the food, and also serving. These types of positions are already paid at minimum $15/hr, usually up to $25/hr w/ tips bumping them to $17-$35/hr depending on the location. With these numbers in mind, removal of tips will result in likely a 3-5% increase in prices to support the additional costs.

2. No Service Counter Tops - will be unaffected by the removal of tip culture. Vast majority of the employees also do dual role, but with very limited customer interactions. Customers are expected to bus their own tables w/ staff cleaning tables in rotations of roughly 20 minutes to 30 minutes. Employees tend to be paid between $14-$20/hr with no tip as these locations are culturally a no-tip business. As such, the removal of tips will have little to no impact on the price.

3. Low Service, Low Cost - Server's in this restaurant sector rely on volume to generate the tips they use as their paycheck. Server's in this sector, unlike counter top, are specialized roles and focus solely on the minimum service - drink refills, collecting dirty plates, and bussing tables. the typical tip rate is between 4-9% due to the lower income of customers and general assumptions that less fancy = less tip. Removal of tips from this sector will be impactful, as income in this area tends to be between $20-$25/hr with high hours w/ expected overtime - 50-60/week. This will mean the reduction of hours to 40, and likely cut hourly wages by about 20%, with overall income dropping by 33% on basis of what happened to Californian restaurants with the minimum wage increase. You'll likely see an decrease in the number of employees as service will be cut even further, and cuts in other aspects may come as the low service, low cost, high volume industry has been continually struggling since the 2010's.

4. High/medium Service, High/medium Cost Businesses: tends to be the businesses that are in the brink of bankruptcy. Their overheads are expensive, their food costs are expensive, and they rely on tips to subsidize a significant amount of their labor costs. Incomes for servers in these places tend higher, between $30-$50/hr is standard. With the removal of tips, I'd say probably about 50% of high end places will go out of business if they were to pay that rate out their own pockets. What will realistically happen is the base rate pay will drop to around $25/hr, service is significantly reduced, and costs will dramatically shoot up between 15-30% of already high prices.

However, if the business is a high service, high cost business that also tends to be smaller physical space (omakase's), they'll be able to absorb the costs fairly effectively because of the extremely low labor needs that they already have. Most of the cost for these businesses is similar to a service counter top (which they are), so you'll likely see a similar bump of 3-5% at most for these types of businesses while maintaining the same quality service.

Side Note: QR codes, I think will become significantly more dominant as you see in existing no tip countries (China, Europe, etc).

Currently looking to transition into a food truck industry from a brick and mortar place and am struggling to find out about the financials of a "successful" food truck. I know for a highly successful brick and mortar shop, profits run about 30-40% w/ an ROI about 6 months to a year (lines out the door, busy Monday-thursday nights). These are probably top 5% of restaurants finance wise

Curious what the equivalent "top 5%" equivalent of food trucks look financially as well

Heyo, short story is I’m late twenties person with about 20 years of industry experience and have successfully opened, managed, and exited several ultra high volume restaurants. I have an equal amount of experience in the back of house and front of house.

Feel like I advanced way too quickly, and while I have a decent and deep foundation, the foundation is narrow since I’ve only been in buffet industry. Looking to expand my horizons but I also am trying to figure out the best way to do so. I’m thinking about hopping town since I’m well known amongst the restaurant owners in town and staying in NYC or central California for half a year and try staging at as many restaurants as I can.

Main goal is to learn how other restaurants operate financially, front of house, back of house, and what some of their trade secrets are. I probably have to obfuscate my resume, and curtail it to the hiring position but is this a genuine concern when it comes to hiring experienced staff at well known restaurants? What should I expect or should I be more open about my experiences?