Restaurant tipping & service quality.pdf

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14 CORNELL HOTEL AND RESTAURANT ADMINISTRATION QUARTERLY 14 CORNELL HOTEL AND RESTAURANT ADMINISTRATION QUARTERLY T Michael Lynn, Ph.D., is an associate professor of consumer behavior and marketing at the Cornell University School of Hotel Administration ( © 2001, Cornell University Restaurant Tipping and Service Quality A Tenuous Relationship by Michael Lynn Conventional wisdom suggests that table servers can judge how well they’re doing by the size of their tips. As it t
  14 CORNELL HOTEL AND RESTAURANT ADMINISTRATION QUARTERLY   14 CORNELL HOTEL AND RESTAURANT ADMINISTRATION QUARTERLY T Michael Lynn,  Ph.D., is an associate  professor of consumer behavior and marketing at the Cornell UniversitySchool of Hotel Administration(wml3 @ © 2001, Cornell University Restaurant Tippingand Service Quality A Tenuous Relationship by Michael Lynn Conventional wisdom suggests that table servers can judge howwell they’re doing by the size of their tips. As it turns out, however,that may not be true.  ipping is nearly ubiquitous in the U.S. restaurant industry.As a result, many restaurant manag-ers give the custom little thought.However, others see it as a usefulmanagement tool. Consider thefollowing quotations: ã “By eliminating tipping, it[a service-charge system] wouldtake away all incentive to putout that effort at providing goodservice.” —  Bernard Schreiner,who owned Schreiner  ’  s Restau- rants, in Fond du Lac, Wisconsin  1 1 Quoted in: “Waitstaff Compensation: Tips vs.Service Charges,” Current Issues Report   (Wash-ington, DC: National Restaurant Association, June 1988), p. 7.  February 2001ã15 R E S TA U R A N T M A N A G E M E N T ã   “ This program will be monitored byyour charge tip averages. Tip aver-ages are the most effective way tomeasure a server ’ s capabilities andprogress within the restaurant. ”   —  Internal document that an- nounced a servers  ’   contest at Houston  ’  s Guadalajara Restaurant  ã   “ I want to know when someonegets a small tip because the cus-tomer is telling us that he didn ’ t getgood service and we can then rem-edy the situation. ” —  The late Thad Eure, Jr., who was proprietor of Raleigh  ’  s Angus Barn    2 As the above quotations illustrate,some restaurateurs rely on tips to (1) motivate servers to deliver goodservice, (2)  measure server perfor-mance, and (3)  identify dissatisfiedcustomers. All of those uses of tipsassume that service quality has alarge effect on the size of tips thatconsumers leave. This article exam-ines and challenges that assumption.The notion that tips are given inresponse to service quality findssupport in psychologists’ theoriesabout the need for equity in inter-personal relationships and in con-sumers’ self-reports about their tip-ping behavior. Some psychologists,for instance, tell us that people aresocialized to feel anxiety or distresswhen their relationships with othersare inequitable. 3  A relationship isinequitable when the benefits oneperson receives from the relation-ship are not proportionate to thebenefits he or she delivers to therelationship partner. Since inequi-table relationships are distressing, thetheory goes, people strive to main-tain a balance between the benefitsdelivered and received in their rela-tionships. This theory is relevant totipping, because restaurant custom-ers get service and give tips in rela-tionships with servers. To keepthose relationships equitable, cus-tomers should give bigger tipswhen they get better service. 4 Reinforcing the psychologicaltheory are consumers’ self-reports.When asked why they leave tips,consumers most often reply thatthey tip to reward workers for ser-vices rendered. For example, a re-cent national survey found that54.5 percent of respondents re-ported that the best   explanationfor why they do or do not tiprestaurant table servers had to dowith the quality of service received.No other explanation receivedanywhere near this level of endorsement. 5 Despite the aforementionedreasons for believing that customersreward better service with larger tips, there are also good reasons for questioning this belief. First, re-searchers have found that equitymotivations are weak in traditionaleconomic relationships betweenbuyers and sellers. 6  Tipping is aneconomic payment that occurs inthe context of a commercial ex-change, so it is possible that equityconcerns affect tipping less thanthey do purely social actions. Sec-ond, researchers have demonstratedthat people are poor at identifyingthe causes of their own actions. 7 Thus, one should regard with skep-ticism consumers’ reports that theytip as a reward for good service.Finally, people feel strong socialpressure to tip 15 to 20 percent of the bill size. 8  Such social pressuremay prevent consumers from leav-ing a small tip even when they aredissatisfied with the service. Testing the Relationship Several researchers (including thisauthor) have tested the differentexpectations outlined above by em-pirically examining the relationshipbetween tip sizes and evaluations of the service or dining experience.However, many of these studies areunpublished, and those studies thathave been published (including anearlier version of this one) appearedin academic journals that are rarelyread by restaurant managers. Thisarticle summarizes extant researchin a meta-analysis of the service-tipping relationship with the pur-pose of informing restaurant manag-ers about the actual nature of thatrelationship. 9  Meta-analysis is a wayof statistically combining and com-paring the results of different stud-ies. By statistically testing data frommany tipping studies, this meta-analysis permits stronger and moregeneralizable conclusions about thenature of the relationship betweentip size and service quality than canbe obtained from any of the indi-vidual studies alone.A thorough search uncoveredeight published and six unpublishedstudies that have examined the rela-tionship between tipping and evalu- 2 Thad Eure, Jr., “Fixed Service Charges? — No,” Restaurants USA , Vol. 7, No. 2 (February1987), p. 25. 3 See: J.S. Adams, “Inequality in Social Ex-change,” in  Advances in Experimental Social Psy-chology , Vol. 2., ed. L. Berkowitz (New York:Academic Press, 1965); and Elaine Walster, EllenBerscheid, and G. William Walster, “New Direc-tions in Equity Research,”  Journal of Personalityand Social Psychology , Vol. 25 (1973), pp. 151–176. 4 See: Melvin L. Snyder, “The Inverse Relation-ship between Restaurant Party Size and TipPercentage: Diffusion or Equity?,” Personality and Social Psychology Bulletin , Vol. 2 (Summer 1976),p. 308; and Michael Lynn and Andrea Grassman,“Restaurant Tipping: An Examination of ThreeRational Explanations,”  Journal of Economic Psy-chology , Vol. 11 (    June 1990), pp. 169–181. 5 Tibbett L. Speer, “The Give and Take of Tipping,”  American Demographics , February 1997,pp. 51–55. Also see: Susan Adelman, “How Your Customers Decide What to Tip,” NRA News , June–July 1985, pp. 43–44. 6 For example, see: Richard L. Oliver and JohnE. Swan, “Consumer Perceptions of InterpersonalEquity and Satisfaction in Transactions: A FieldSurvey Approach,”  Journal of Marketing  , Vol. 53(1989), pp. 21–35. 7 For example, see: David G. Myers, Social Psychology  (New York: McGraw-Hill, 1990),pp. 103–106. 8 Lynn and Grassman, op. cit. 9 A previous version of this meta-analysisappeared in: Michael Lynn and Michael McCall,“Gratitude and Gratuity: A Meta-Analysis of Research on the Service–Tipping Relationship,”  Journal of Socio-Economics , Vol. 29, No. 2 (    June2000), pp. 203–214.  16 CORNELL HOTEL AND RESTAURANT ADMINISTRATION QUARTERLY ations of the service or dining expe-rience that preceded the tip. Thosestudies are listed in Exhibit 1. Thestudies, which involved 2,645 diningparties at 21 different restaurants,provided 24 independent tests of the tipping–service relationship. Theresults of each of those tests wereused to calculate two statistics— namely, a correlation coefficient, r  ,that reflects the size of the observedtipping–service relationship, and az-score, which reflects the statisticalsignificance of the relationship.I then analyzed the resulting 24correlation coefficients and 24z-scores using meta-analytic for-mulas and procedures advocated inbooks by Brian Mullen and RobertRosenthal. 10  A more detaileddescription of the methods em-ployed in this meta-analysis can befound in a previous version of thisstudy published in the  Journal of Socio-Economics. 11  A more detaileddescription of the studies includedin the meta-analysis is presented inExhibit 2. Tenuous Correlation A graphic depiction of the 24 cor-relations between tip sizes and ser-vice evaluations in this meta-analysisis presented in Exhibit 3 (overleaf    ).The significance test associated withthose correlations combined toproduce an overall z-score of 5.82.The probability of getting a z-scorethis large by chance alone (i.e., if there were no positive relationship)is less than 1 in 10,000. Thus, thedata indicate that tip sizes do in-crease somewhat with ratings of theservice or dining experience. How-ever, the correlation between tipsand evaluations of the service or dining experience had a mean of only .11. Since the absolute value of a correlation can range from 0 to 1,an average correlation of .11 is quitesmall and indicates that tips in thesestudies were only weakly related toevaluations of the service or diningexperience.Realizing that correlation coeffi-cients may not be meaningful torestaurant managers unfamiliar withstatistics, I present other depictionsof the tipping–service relationshipin Exhibits 4 and 5. Exhibit 4 dis-plays the median-, minimum-, andmaximum-tip percentages left for different levels of rated service at Exhibit 1 Fourteen tipping studies  The studies constituting the basis for the meta-analysis described in the accompanying article are listed below. Charly Baune, “The Economics of Tipping at Waldo’s Pizza” (unpublished paper, St. CloudState University, 1992).Orn Bodvarsson and William Gibson, “Gratuities and Customer Appraisal of Service:Evidence from Minnesota Restaurants,” Journal of Socio-Economics  , Vol. 23, No. 3(1994), pp. 287–302.April H. Crusco and Christopher G. Wetzel, “The Midas Touch: The Effects of InterpersonalTouch on Restaurant Tipping,” Personality and Social Psychology Bulletin  ,Vol. 10 (December 1984), pp. 512–517.Kevin Kilkelly, “An Economic Study on Restaurant Tipping,” (unpublished paper, St. CloudState University, 1992).Michael Lynn, “The Effects of Alcohol Consumption on Restaurant Tipping,” Personality and Social Psychology Bulletin  , Vol. 14 (March 1988), pp. 87–91.Michael Lynn and Andrea Grassman, “Restaurant Tipping: An Examination of ThreeRational Explanations,” Journal of Economic Psychology,  Vol. 11 (June 1988),pp. 169–181.Michael Lynn and Jeffrey Graves, “Tipping: An Incentive/Reward for Service?,” Hospitality Research Journal  , Vol. 20, No. 1 (January 1996), pp. 1–14.Michael Lynn and Bibb Latane, “The Psychology of Restaurant Tipping,” Journal of Applied Social Psychology  , Vol. 14 (November/December 1984), pp. 551–563.Michael Lynn and Gabriella Petrick, “Tipping at Coyote Loco” (unpublished data set, Cor-nell University, 1996).Michael Lynn and Paul Strong, “Tipping at Anti Pasto” (unpublished data set, University ofHouston, 1992).Joanne M. May, “Tip or Treat: A Study of Factors Affecting Tipping Behavior” (unpublishedmaster’s thesis, Loyola University, 1978).Connie Mok and Sebastian Hansen, “A Study of Factors Affecting Tip Size in Restaurants,” Journal of Foodservice Marketing  , Vol. 3, No. 3/4 (1999), pp. 49–64.Mustafa Olia, “Restaurant Tipping” (unpublished paper, St. Cloud State University, 1991). 10 Brian Mullen,  Advanced Basic Meta-Analysis ,(Hillsdale, NJ: Lawrence Erlbaum Associates,1989); and Robert Rosenthal, Meta-Analytic Procedures for Social Research , (Newbury Park, CA:Sage Publications, 1991). See also: Michael Lynnand Brian Mullen, “The Quantitative Integrationof Research: An Introduction to Meta-Analysis,”  Journal of Hospitality and Tourism Research , Vol. 21,No. 3 (1997), pp. 121–139. 11 Lynn and McCall, 2000.  February 2001 ã 17 R E S TA U R A N T M A N A G E M E N T Method Exit interviewsExit interviewsServer recordsand customersurveyExit interviewsServer recordsExit interviewsExit interviewsServer recordsExit interviewsRestaurantrecords andcustomer surveyServer recordsServer, restau-rant, and ob-server recordsExit interviewsExit interviews Exhibit 2 Descriptive summary of tipping  –  service studies  1  Restaurants with a common superscript (a, b, or c) are the same restaurant. 2  Correlations between bill-adjusted tips and evaluations of the service or dining experience. Study andsource Baune (1992);unpublishedBodvarsson andGibson (1994); journalCrusco and Wetzel(1984); journalKilkelly (1992);unpublishedLynn (1988); journalLynn andGrassman (1990); journalLynn and Graves(1996: Study 1); journalLynn and Graves(1996: Study 2); journalLynn and Latane(1984: Study 1); journalLynn and Petrick(1996);unpublishedLynn and Strong(1992);unpublishedMay (1978);thesisMok and Hansen(1999); journalOlia (1991);unpublished Dataaavailable? NoYesNoNoYesYesYesYesYesYesYesNoYesNo Type of serviceevaluation Customer rating ofserviceCustomer rating ofserviceCustomer rating ofdining experienceCustomer rating ofserviceNoncustomer ratingof serviceCustomer rating ofserviceCustomer rating ofserviceCustomer rating ofdining experienceCustomer rating ofserviceCustomer rating ofserviceNoncustomer ratingof serviceNoncustomer ratingof serviceCustomer rating ofserviceCustomer rating ofdining experience Restaurantname 1 Waldo’sPizzaEmbersChi-Chi’sBaker’s SquareAlvies a Red Lobster b Pirate’s CovePersianUnknownPerkinsMother’sRed Lobster c Bennigan’sOlive GardenRed Lobster c IHOPCoyote LocoAnti PastoUnknownChili’sAlvies a La CasitaRed Lobster b Ember’s Restaurantlocation St Cloud, MNSt. Paul, MNSt. Paul, MNSt. Cloud, MNSt. Cloud, MNSt. Cloud, MNSt. Cloud, MNSt. Cloud, MNOxford, MSSauk Rapids,MNColumbus,OHColumbia,MOHouston, TXHouston, TXColumbia,MOColumbus,OHIthaca, NYHouston, TXChicago, ILHouston, TXSt. Cloud, MNSt. Cloud, MNSt. Cloud, MNSt. Cloud, MN Samplesize 949899100100100100100114100207103106671741691302021849850505050 Correlationcoefficient 2 Z-score .
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