Money and happiness | I don’t understand the tipping debate

In Money and happiness, our journalist Nicolas Bérubé offers his thoughts on enrichment every Sunday. His texts are sent as a newsletter the next day.

Tipping has often been in the news for some time.

Many deplore that restaurants offer choices on their terminals that range from 18% to 25%, and that leaving a lower tip gives them the impression of being ” cheap “.

Personally, I’m predictable: I always leave 18% when I eat in, and 15% for take-out meals. For what ? It often takes just as long for employees to pack our meals and sides into individual takeout containers as it does to simply place them on a plate for us.

Why this 3% difference? I don’t know. My brain works like this.

That said, I feel like the tipping debate is more a debate about the lifestyle we feel we can live than a debate about exploitation and social justice.

If I went to a restaurant every week, or several times a week, I would probably be irritated to always have to add 15%, 18% or 20% to the price of an order which costs more and more. But since I don’t go to a restaurant every week, it doesn’t affect me.

How much do we spend on tips in a year?

The average household in Quebec spent $2,458 on restaurant meals according to 2019 data (the most up-to-date data is from 2021, but it is artificially reduced by the pandemic). By making the improbable assumption that every meal required a tip, we are at nearly $370 per year in tipping at 15% or $491 for a generous 20%.

To this, we must add tips in bars and at the hairdresser. But it’s a somewhat futile calculation anyway: if the tip was included in the prices, as in France, we would still pay it. And the French often leave 5 to 10% more, even if no one is obliged to do so.

We’re talking there. But perhaps being annoyed by the tip is a sign that you’re living a little beyond your means?

By definition, a tip is used to pay someone who completes a task for us. The best way to not have to do this is to not need this person in the first place.

No one is forcing us to eat out. To take an Uber. To spend an evening in a bar. This is all purely voluntary. All this is… how should I put it? Luxury ?

We sometimes tend to forget, but eating out is not “normal”. Eating out is objectively a mind-boggling experience.

A contractor provides us with a carefully decorated building that probably cost several million dollars, and which warms us in winter and cools us in summer. In rooms we cannot see, employees sort, store, wash and prepare food, some coming from countries where we will probably never set foot. Other employees serve us dishes, make sure we are satisfied, clear our table, wash our dishes, clean the grease that accumulates in the hood in the kitchen, mop the floor several times a day, take out the waste…

And then, who, exactly, gets rich from this? Employees, most of whom have no retirement plan? Or restaurateurs, who benefited from an average profit margin of 3.2% in 2019 in Quebec for a restaurant with service?

You read correctly: buying a guaranteed investment certificate (GIC) pays more than owning a restaurant. And a lot less risky.

I don’t understand the tipping debate.

The Invisible Door by Mohnish Pabrai

Otherwise, I have a tipping story to tell you. She shows how small amounts can yield surprising results.

This is not a story of little brown envelopes. Or $100 cocktails so you can talk to a minister. No illegal action was committed. No elected official was bribed. But, personally, it fascinates me to know that there are invisible doors in our society.

The story, then, was told to me several years ago by American investor and portfolio manager Mohnish Pabrai.

Residing in California at the time, Mohnish Pabrai (rhymes with garlic) often had to travel back and forth from Los Angeles to New York to meet clients. To avoid wasting a day on the plane, he would take a night flight, arriving in Manhattan around 5 or 6 a.m.

In those moments, all he wanted to do was go to the hotel to take a nap and take a shower before his first date. But it was much too early to take possession of the room, which was only accessible from mid-afternoon.

“So I used to book the room for two nights, including the day before I arrived, even though I was actually staying there for only one night,” Pabrai said.

This way of doing things gave him quick access to his room. But since overnight stays are expensive in Manhattan, that also significantly increased the cost of his travel.

One day, Mohnish Pabrai decided not to book the room for two nights, but only for one night, and to see if some greenbacks could help him.

He arrived at the counter around 6am. When he identified himself to the attendant, he gave her two folded $20 bills.

“It’s for you,” he told her, before adding that he would really like to have his room now, rather than in the afternoon.

The attendant took the money and placed it near her keyboard, while continuing to type on the computer in silence.

“I’m sorry,” she finally replied. But the best I can do is get you your room in an hour. In the meantime, you are invited to help yourself to our lunch buffet which has just opened. Would that be okay with you ? »

Mohnish Pabrai couldn’t believe it. He had just moved forward by several hours the time when he could get his room. And he could wait while eating lunch. All this for $40!

But he was not at the end of his surprises.

As he left with his luggage to go to lunch, Mr. Pabrai saw out of the corner of his eye the attendant looking at the tickets he had given her. She then realized she had received $40, not $20.

Mohnish Pabrai was pouring himself a coffee two minutes later when the attendant approached him, smiling.

“Your room is ready, sir,” she told him, handing him a key card.

Mohnish Pabrai says he learned two lessons from this experience.

“Firstly, the most influential person in a hotel is the person who greets you when you arrive. She has the power to give you an incredible room, or put you near the elevator. Behave accordingly. »

The second lesson?

“A tip is magical. »

Write to me! Do you have any examples where a tip opened an invisible door for you?


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