The 3% Solution

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You would’ve thought someone had put Rice Krispies in the Nam Khao Tod.

But this brouhaha had nothing to do with food.

What it concerned was this little cost dollop added to the bill, at Lotus of Siam, which hit the presses last week:

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THANK YOU. The 3% employee health insurance added to you bill help our team members afford health insurance for them and their families that is provided by the restaurant. Thank you for supporting a healthier Las Vegas. If you would like the charge removed, please let your server know and the charge will be removed.

The haters had a field day:

“Greedy owners!”

“I’ll never eat there again!”

“Obnoxious.”

“Tacky.”

“I hope this place closes.”

The dummies were out in force:

“We won’t be eating there. Customers should not have to pay for employees insurance/medical”

“The food is terrible and too expensive. Now I’ll never go back.” (A 3% surcharge apparently being more of a deal-breaker than terrible, overpriced food. Ed. note: the food at Lotus is some of the best Thai food in America.)

“This is what happens when California socialism destroys America.”

“I dont pay junk fees, so Avoid places like this. You fee me to death, you never get my business again. I dont CARE about your financial problems, don’t fee me to pay for your inability to make money,”

The slightly more rational objectors pointed out:

“It’s not our job to pay your employee’s healthcare! It doesn’t matter if the fee is optional the fact you put that on customers is ridiculous. Just spend the money and reprint menus and build it into your cost and not go the cheap route on the register receipt!”

So, you don’t want to supply your employee’s any benefits – but you think your customers should pay for it on top of your profit? Yeah, that’s going to go over like a lead balloon!

And a few intelligent folks chimed in along the lines of:

“I don’t mind paying an additional 3% for their healthcare. The restaurant should increase menu prices 3% instead of adding it to the bill separately; that way people can quit complaining. You guys are complaining about 30 cents for every $10.”

So it went on for hundreds and hundreds of comments, most of them by turns negative, incensed and disgusted.

Here’s the official statement, by Nay Chua, daughter of LOS founders Bill and Saipin Chutima:

 I do my best as a person to be able to provide, help and encourage my employees. I try to help by leveraging their cost so they can enjoy their way of life. I am able to provide my employees with a livable wage, with work hours that don’t impact their mental health or physical. I help my staff and their families. I try to save my staff on their deductions, their taxes, whatever they need help on, in legal fees and even personal problems.

Chua has also said in social media posts that she doesn’t want to increase prices (because she gets taxed on the revenue), or pay it directly to her employees (because it would then be taxed to them as income).

What’s going on here? Aside from diners generally being cheapskates and ignorant about how restaurants run?

Before we get to the answer(s), however, a few thoughts about what Lotus of Siam (our most famous and decorated restaurant), is trying to do.

By tacking on an additional 3% to the bill (which you see only at the end of your meal), it is asking the patron to subsidize its health insurance cost to employees. (Because it has more than 50 employees, LOS is mandated by law to provide health care coverage.)

But nothing raises a restaurant customer’s ire more than being told (asked?) to pay a little more for their meal. Especially when it’s a separate charge, specifically earmarked to help the restaurant’s employees.

Keep in mind the no-tipping policy of some restaurants is still under siege.

People love the illusion that they are totally in control of how much waiters get paid to deliver their food. Asking them to pay a little more is seen by many to be a personal affront.

Asking patrons to help a restaurant provide decent health insurance to its workers is something new (and admirable), but from the comments, you’d think the restaurant was asking its paying customers to underwrite a human trafficking operation.

Almost immediately upon showing this surcharge, the social media blowup began.

Image result for Nam khao tod(I would happily pay 36 cents more for this)

My thoughts:

The restaurant industry has created its own hell of unreasonable expectations, and now it’s being burned.

But the blame does not rest solely on its beefy shoulders; there’s plenty of chicken fingers to point at the other participants in this unholy stew of how we pay people to serve us. And now (to keep my metaphors mixed) those putrid birds are coming home to roost.

By depending on diners to directly defer labor costs, all sorts of false expectations get reinforced with each tip paid at almost every restaurant in America.

Thus does a culture of obliviousness remain here about the true cost of eating out.

This surcharge represents another in a long list of creative ways the hospitality industry has tried to boost its bottom line (or minimize expenses) by tacking on fees rather than incorporating them into the price being charged for what is actually being bought: be it a hotel bed, a meal, or a plane ticket to Timbuktu.

Nobody wants to actually raise prices (THAT WOULD DRIVE AWAY CUSTOMERS!) so instead they prefer to nibble their patrons to death with minnow-sized fees.

The bottom line is the bottom line: the restaurant industry has relied on customers underwriting their employment costs for so long, it can’t break the cycle of dependence. Foisting a significant part of its expenses on customers on an ad hoc, piecemeal basis has become a habit they can’t break.

For waiters, getting paid by customers as a different line item on the bill has been a sweet deal for years.

Customers get to see a lower check cost (while retaining the illusion that they somehow “control” or “reward” how good the service is); the waitstaff retains a deluded sense of independence (and the ability to cheat on their taxes); and the owner gets to pawn off part of his/her labor costs. (Wouldn’t my dry cleaner and lawn guys love it if they could tell their employees to look to me directly to help them make their paycheck.)

The trouble is, of course, that with all that freedom (from all points of the 3-legged stool) comes an in-bred lack of responsibility.

Customers aren’t paying the true cost of the meal (they’re chopping it up into segments so they can fool themselves about only paying $40 for dinner, even though they left a 22% tip and the actual cost was closer to fifty bucks.)

Waiters can make out like bandits — although with cash become scarcer, the (tax free) wad in your pocket at the end of the night is becoming rarer. And benefits? FUCK benefits. “Gimme the $$$ and I’ll benefit myself,” has been the mantra of restaurant workers for about a hundred years.

As for the owners….well, they’ve let these twin delusions keep them in tall cotton for a long time.

But things they be-a changing.

Whether it’s our booming economy, health-care politics, Millennial-inspired advocacy, or a mini-revolution how we eat out, a sea change in how restaurants operate is underway.

As governments have gotten more aggressive with labor laws, minimum wages, health care, etc., creative accountants have come up with all kinds of ways to defer expenses without raising prices.

In California, an entire cottage industry has sprung up advising restaurants how to increase the bill without actually having to pay more to the help, or in taxes.

It’s all a big exhausting game pitting the restaurant versus its employees and customers, in a new sort of 3-way contest.

And the big losers are you, the diner. The person who only wants some good, clean, tasty food delivered to him at a fair price.

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My thoughts Part II:

There’s nothing inherently wrong with the LOS gambit — it’s clearly a fair way for them to enlist the customer’s help in underwriting health care costs.

But the optics are all wrong.

The 3% charge may be optional, but not really. You have to take pains to have it removed. And as soon as it hits the table, the diner feels they’ve been had. And no one, in a restaurant like to feel like the restaurant has pulled a “gotcha!”

The moment the tariff is presented, the appearance is one of an entire dishonest exchange from the get-go. (People don’t read signs, let’s face it.)  By surprising the client, with a charge that has nothing to do with the food or service (see above), the restaurant is ensuring awkwardness all around.

The surcharge also inserts two things into people’s meals most would prefer to avoid: economics and politics — both of which leave a bad taste in the mouth.

And let’s face it: People are petty. If tacking a $1.50 fee onto a $50 bill (for an admittedly good cause) will keep them from a night on the town, then they shouldn’t be eating out in the first place. But the very act of asking them triggers something supremely small-minded in some folks (makes them think, perhaps?), and they will take their pettiness out on you.

The owners of Lotus of Siam are to be commended for their transparency in instituting this measure. Their intentions are honorable, but their methodology is flawed. As much as segregating an employee benefit and asking your patrons to help you finance it would seem to be the “right thing” to do, people, lots of them, won’t see it that way.

This 3% addendum creates a whole new dynamic between restaurant and customer far beyond the “you pay me, I’ll give you food” formula that has been in place for 200 years.

In a perfect world, we’d all be paying more for our food. Americans have become fat, stupid and lazy relying on cheap restaurant food (and labor) to sustain them. We eat so shitty because we eat so cheap. It’s high time we paid more for good food and paid restaurant employees like every other job.

Such a paradigm shift may be on the horizon, but in this town, at this time, if you want to bestow employees with more benefits (and not endure the blow-back), the best thing to do is add a buck to the price of your burrito.

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Tipping – An American Idiocy

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Dining out in restaurants allows one to enjoy the sensation of being condescended to by their inferiors. – Oscar Wilde

Eating Las Vegas reader Louis writes:

I couldn’t help but notice that ELV’s tip for this meal was more than 30 percent, which caused me to wonder what your philosophy is concerning the gratuity when dining out. Thanks.

ELV responds (with a long answer to a short question):

Our philosophy about tipping is as follows:

1) Restaurant tipping is ridiculous (America is the only country in the world that practices it to such a wide extent, i.e., to where it is customary to tip in almost all restaurants.)

2) If we really tipped “to insure promptitude” we would leave the gratuity at the beginning of the meal.

3) One of the prime motivating factors in how much money we leave for a tip is how we want the recipient to perceive us after they have performed us a service — nonsensical but true.

Continue reading “Tipping – An American Idiocy”