Hiding Fees & Tips in the Transparent Age is Just Bad Business

“Clients don’t expect perfection from the service providers they hire, but they do expect honesty and transparency. There is no better way to demonstrate this than by acknowledging when a mistake has been made and humbly apologizing for it.” – Patrick Lencioni

I have a confession: I love to tip. I know the practice is problematic in many ways – from increasing racial inequity in compensation to making sexual harassment from customers more difficult to root out, to allowing the service economy to skirt our already inadequate minimum wage laws even further. I know both customers and businesses often hate it and feel trapped in a kind of prisoner’s dilemma where they can’t opt out of the system individually without depriving servers of a living wage or losing a competitive edge but would love for it to just disappear and for the US to Europeanize its approach to tipping. Nevertheless, just like the committed atheist Tim Minchin really likes Christmas, I’m a progressive who loves to tip. Yet not 15% for the privilege of taking out food from Gjusta and not 20% if I sit outside, of which almost none goes to the humble servers. Hiding fees behind service charges or vague fees is dishonest and misleading. Let’s make this illegal. Ask your server how much of this automated service change goes to them. Make the restaurant post it.

I Love Giving Freely

Why? The first reason is the same reason that I love Burning Man and go every year: giving freely is the most personally satisfying use of your resources. Tipping 25%-50% in cash to bring a smile to the face of someone who’s done a great job and was expecting a lot less from will give me more joy than upgrading from a $50 bottle of wine to a $100 one. And it’s specifically cash, so I know it goes directly to the hard workers I’ve made a personal connection with and not to some amorphous pool that the restaurant owner and everyone else has their hands in.

Secondly, that human connection matters now more than ever. As the director of the Harvard longitudinal study that gave us some of the best insight on health and happiness says: “Loneliness kills. It’s as powerful as smoking or alcoholism.” But as rich as we are in material goods, more and more of our human contact is replaced by screens. We live in an age of commoditization, automation and resulting alienation. Friendly shopkeepers of years past are replaced by faceless online retailers delivering packages to our door. Your banker is an ATM and soon enough your Uber / Lyft driver will be a robot. So in places where it still exists, the human touch and the extra effort is worth paying for. Doubly so when in this COVID-driven moment of social distancing people are now literally risking their lives to serve us.

There is a confession worth making: tipping is one of the great remaining pleasures of commerce. The moment after a meal when you can, with a number written on a receipt, communicate directly to another human being: I saw you. You were excellent. This is my thank you, denominated in dollars.

The pen hovers over the tip line at a restaurant in Santa Monica. The bill is $180. The service charge — already included — is 20%. The suggested tip on top of the service charge starts at 22%. The math: you're being asked to pay 42% above the food cost for the privilege of having someone bring it to your table. The server didn't set this price. The owner did. And the server will receive a fraction of what you think you're giving them.

The structural problem is that the tipping economy has been captured by platforms and owners who use the language of generosity to extract margin. DoorDash's tip-baiting scandal. Restaurants that pool tips and skim. Service charges that sound like tips but flow to ownership. The entire system is designed to make the customer feel generous while redirecting the generosity to the wrong recipient.

The transparency age was supposed to fix this. Instead, it created a new opacity: the hidden fee. The "service charge" that isn't a tip. The "platform fee" that isn't explained. The "regulatory recovery fee" that recovers nothing the customer caused. Every line item on a modern receipt is a small act of misdirection.

Honesty in pricing is not a competitive disadvantage. It's the only sustainable advantage left.