Restaurant Industry Contraction

A little-recognized benefit of being a waiter is that the job has a sort of built-in protection from inflation.

In a nutshell, when overall prices rise so too do restaurant prices. Tips are more than not calculated on the ‘bottom total’ of the check (the figure that includes food and drink, plus taxes). If a waiter was generally getting $20 tip on a $100 two-top, then when prices rise to $115 for a two-top, he’ll be getting $23 tip. It’s easy to see. Likewise the tax effect. California recently jacked sales tax up an additional 1%. Of course that is reflected in the new bottom total of every restaurant’s checks. So in a way, that’s another raise for us.

Obviously, this is not a cut-and-dried mathematical equation. People are free to tip whatever they want. If things become more expensive they just might take the extra out of the tip, so the previous example of $100 + $20 tip = $120 final outlay, might actually become $115 + $15 tip = $130 final outlay. Consumer’s costs rise less, waiter eats most of it. C’est la vie.

That said, I believe tipping on the bottom total continues to be the most common formula.

In the face of inflation, this makes waiting tables an extremely attractive lower-middle class profession. Most jobs don’t have automatic cost of living adjustments. If you’re an office manager and prices rise 5% in one year but your pay raise schedule only gives you 2.5% annually, you’re either out of luck or else you have to screw up the courage to ask your boss for an additional raise you probably won’t get. For us waiters, it’s just automatic.

Twenty years ago at my first actually good serving job, I was making $70-100 a night. Aside from the incremental increases in minimum wage, I never asked for, nor received, a raise. It just happens as you go along. I wouldn’t say my current night job is any more high end than that job 20 years ago, but now I make $150-200 a shift. When the economy is good, I make $200+.

Now that I’ve explained my take on inflation as it affects the waiter, let me point out another pay benefit people don’t often recognize. Waiters also get automatic (effective) pay raises when the economy contracts (as opposed to an inflationary economy). This is what we’re going through now.

Restaurants close. If you’re lucky enough to still have a job, that means there are fewer competitors taking your money.

Fewer people go out to eat. Restaurants will almost immediately adjust staffing so fewer servers are on the floor. Again, if you’re lucky enough to be in good standing in your job, that means fewer fellow waiters taking a bit of the aggregate tip pool. I hope it’s obvious I don’t mean, necessarily, actual Tip Pooling. Simply, if a restaurant rings $2000 in a night, that would mean $400 in aggregate tips. If there are four waiters on the floor, everyone makes $100; if only two, each makes $200. All things averaging over time, of course.

This is what’s happened at both my jobs. If done properly, contraction takes a while to kick in for you. The immediate effect is usually getting fewer shifts. If done properly, the management will let water seek its own level: As servers leave, they are not replaced; as servers take additional jobs to compensate, they end up stuck with three shifts instead of five permanently because they’re working elsewhere, which leaves those remaining able to nickel-and-dime pickup shifts to get back as close as possible to their usual full schedule.

Here’s how things have contracted at my day and night jobs:

Three years ago at Michael’s I was working 4-5 lunch shifts a week. The floor was routinely staffed with a minimum of four waiters, more if there was a lot of business. Today, the template is 2 shifts a week plus an on-call that’s about 50-50. The floor is staffed with two waiters as default, the third is called in about half the time. So currently I have fewer shifts each week, but at the same time, the smaller floor plan has propped up my daily take to a slightly better average than I used to make. With time (and assuming we remain open for lunch) I hope to get back to 4 shifts a week, as staff attrition has its effect.

Three years ago at Carney’s I was working three shifts a week. Today I still have three shifts, but there is one fewer waiter scheduled each night. And again, my daily take home is about the same as it used to be. I don’t expect to be able to add a shift at Carney’s, but I do expect to make significantly more money as the economy comes back.

It is a hard time. Yes there are significant negatives to a career in food serving (lack of benefits, wear and tear on your body, poor job security, etc.); it is not an ideal profession by any means. But, as detailed above, there are some overlooked positives that make it better than a lot of working-class jobs.

How would you like to be an auto mechanic right now? These 3000 closed dealerships all have a staff of mechanics. I’m sure business was down already. Now it’s totally gone.


7 thoughts on “Restaurant Industry Contraction

  1. waiterextraordinaire Fri, May 15, 2009 / 6:07 am

    Well put waiternotes. There are a lot of positives to this business and everyone has to still eat no matter what happens. I know coming up is a bit slow for myself where I am cause that is what happens every summer but the good thing is I get to play with my kids more when they are off school for 2 months. I can hardly wait! Some nice time off coming up soon.

  2. teleburst Fri, May 15, 2009 / 10:22 am

    This is one of the most rational explanations about the self-correcting nature of tips and the self-correcting nature of the floor when business expands or contracts that I have ever read. I would add that the same thing can happen if support staff is cut and tipout is proportionately reduced (as happened in a former restaurant of mine). The tipout drops because you have fewer back waiters, but sections have to contract as well in order to keep the same level of service. Despite the fact that servers lost a table per section on average, the reduction in tipout more than made up for it. And, even though the servers had more tasks to do, they had to do them for less tables, so there was an equilibrium there as well.


    Check out my fairly new blog, “So You Want To Be A Waiter”

  3. foodserviceninja Tue, May 19, 2009 / 10:55 am

    I have had a similar thing happen but we just did away with bussers when ours all quit and left the state for another on the east coast all together. The arguments with the owner over when we got busy enough t5o need them again were pure entertainment thinking back on them. the replacements when hired werent as skilled nor as hard working so esp when slow the waiters grumbled about tipping out.

  4. Will Work For Tips Tue, May 19, 2009 / 10:32 pm

    I work in the movie industry (slash restaurant) and I’ve found that in hard times, recessions, or depresions… people do not cease to watch movies. It’s actually a statistic that’s proven through weekends after weekends of big blockbuster numbers.
    We’re still busy at work, but the tips aren’t the same. Movies sell out and we get 10 or 12%… Go to McDonalds and then Blockbuster please… Let’s all be happy. I’d rather be slow than pay to wait on the sufferers of the economy.

  5. waiternotes Wed, May 20, 2009 / 12:12 am

    Two great comments about the tip-out aspect of our industry’s self-adjustment from dave and foodserviceninja. I’m disappointed I left that idea out of my post, but I’m glad you brought it up. It’s just as true.

    Will Work For Tips – This is always our frustration: Either play the game or don’t. There are other options, after all. At the same time, nothing happens in a vacuum. If enough people stay home or ‘go to McDonalds’ then our own business might no longer be viable. When a restaurant closes, there are no 20% tips, no 15% tips, no 10% tips, not even an hourly wage for us. We all have to be willing to give. I’m sure the discounts my two restaurants are offering to diners are not really making the owners happy in the short term, but they’re trying to make sure they survive.

  6. Jeanie Wed, May 27, 2009 / 3:00 pm

    I liked reading your blog. I have been a food server for 18 years now (I’m 38). In this economy, I’m making MAYBE 100 on a good night. I’ve decided to get into the hospitality associates degree program at the Univ. of Phoenix online so I can get out of this rut and do something else in the industry. Wish me luck. Until then, I’ll be waiting tables for tips here in Modesto, CA.

    • waiternotes Wed, May 27, 2009 / 9:30 pm

      Hi Jeanie. Thanks for reading! Glad you like the blog. Tell your friends. I’m enjoying the growing popularity. Plus, the readers and their comments inspire me more.

      I wish you luck in your journey to move into another strata of the industry. I don’t know anything about U of Phoenix, or anywhere else, for that matter. I can say this though: Every single person I know that is in management (and even in corporate hierarchy) has advanced through the bottom up.

      It seems the recurring theme for getting into the ‘management’ side of restaurants is always: be prepared to do a lot of hard work with a good attitude and do it indefinitely and at the same time keep your eyes trained on who you have to impress to advance to the next level when the opportunity arises.

      Don’t know of any managers, regional manager types who got the job because of a hospitality college degree.

      However, 1) I’m sure it can’t hurt, and 2) I really don’t know regional manager (and on up) types personally, so they might all be hospitality majors.

      I’ve seen many a waiter start by doing odd managerial-type helper tasks, become assistant managers, then become general managers (down the road). Usually, regional managers are chosen from the best general managers. The restaurant industry – my experience in it – is very much a ladder kind of business. At the highest levels – CEO, President, National this-or-that – there can be some headhunting going on, but promotions usually come from within.

      You should estimate what the path to eventual success would be using the college route. In other words, money and time spent, plus how much more time you’d have to spend after college to rise to where you want to be. Then compare that with your best estimate of accomplishing the same thing via the internal ladder that’s already there for you.

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