Balkinization  

Wednesday, September 19, 2007

Do Restaurants Blacklist Low-Spending Customers?

Ian Ayres

Stephen Dubner has an interesting post on Super Crunchers over at the Freakonomics blog. He ask:
do restaurants turn down reservations for customers who have proven themselves to spend too little money?
Dubner is clear that this is likely to be mostly an issue for high-end restaurants that are slot constrained.

But the 50 comments to the post are really interesting. They mention that the real action may not be in reservation discrimination based on profit predictions, but in service discrimination based on tipping predictions.

Several servers are confident in their ability to make tipping predictions:
I know how to stereotype pretty well the non-regulars and tourists that come in. I don’t always do it intentionally, but when I am busy tables that have been good to me in the past or that I think will tip me well are the ones that I devote my time to.
One of the big risks here is that stereotyping will be used as excuse to provide poorer service to African Americans.

Fred Vars, Nasser Zakariya and I did a study of taxi-cab tipping
that found among other things that African-American passengers left tips that were about 50% less than those left by white passengers.

Database analysis might actually be able to help. Programs like Open Table and even slight tweaks to credit card data could provide feed backing on tipping histories. Restaurants run the bill first (so they know the price of the food without the tip) and then servers have to send them the tip amount once the customer fills it in. So it would be possible for Visa to figure out who are the good and bad tippers.

If patrons let restaurants run their cards at the beginning of meals or at the time they make a reservation, it would be possible for servers to make much more accurate assessments of likely tips. I've spoken with several African-Americans who feel that it is very difficult for them to signal that they are good tippers (and don't feel free to leave a low tip even when the service is bad). But statistical tipping histories would allow servers not to rely on crude sterotypes which may all too often devolve to questions of race and sex.

But allowing customers to signal their tipping tendencies may not be such a good thing. Another commentator proudly suggested the following strategy:
If you know you are going to be frequenting a place I would highly advise getting to know at least one or two servers and throwing an extra 5% on the table. It normally isn’t much money, but being known as someone who is nice and tips better then average will mean you get treated wonderfully even if you only come in for a quick dessert or always split entrees.
But I worry that such a tipping arms race is imposing costs on fellow patrons. It's a bit like the joke of the two hikers who are being chased by the bear. One puts on running shoes -- not to be faster than the bear, but to be faster than the other hiker.

A larger issue is the extent to which Super Crunching aids or hinders racial equality. In finance, the move toward less discretionary pricing has disabled some of the most blatant forms of race discriination. But there is also the possibility that firms will use data mining to engage in a kind of virtual redlining -- where they discriminate on a bundle of non-racial factors that correlate very closely with race.

Comments:

Blacks who wish to signal that they tip well could wear buttons with "15%" written on them to indicate that they generally tip 15%.
 

How many blacks tip poorly b/c they receive poorer service?
 

"A larger issue is the extent to which Super Crunching aids or hinders racial equality. ... where they discriminate on a bundle of non-racial factors that correlate very closely with race."

But this isn't inconsistent with racial equality, on the contrary. Racial equality implies that similarly situated members of different races be treated the same. If you're treating differently situated members of the same race differently, then it would actually be a violation of racial equality to not apply the same differentials to members of another race.
 

I used to work at a semi-posh hotel. Its true. Here are the stereotypes. Europeans and Japanese are horrible tippers. They get crappy service. Blacks are good tippers if they are gay. Otherwise, the straight ones like lots of service and tip like crap. Italians tip great, but then you are indebted to them forever because of one good tip. If a person drives up in Nevada plates, they get good treatment because they are likely in the hotel/casino business and those folks operate on tips. Anyone in the service industry gets good treatment because they know how to tip. Regulars who tip well always get the best treatment.

In general, gays were awesome tippers, but could be dramatic if something goes wrong. Businessmen and conference folks sucked no matter what the ethnicity. Regulars who were old folks with lots of money and who look lonely were prime because they get drunk a lot and need rides home and will hit you 50 bucks just for the ride and the company. And in general, where there is a booze, money and girls, there will be high tips. The slutty girls are always a good indicator.

If you hit the valet 5 bucks coming in, you are guaranteed to get your car before everyone else on your way out. So if you are at a wedding, hit the guy 10 bucks and when the rush to leave after the wedding hits, you will get your car before the bride. The "5 in 5 out" rule is like insurance.

Now if you are at a really posh place, kick 20's around the first day and you will be golden the rest of the week and it will only cost you 5's the rest of the week. Always hit the doorman and the concierge. Your room will be better and your car will always be up front. They have all the hookups and control the front of the hotel.

Lastly, a real tipper will tip in cash because a credit card tip gets taxed. A cash tip...uh...doesn't necessarily.

Oh and pro basketball players and pro athletes in general...they tip well if they are doing bad things. Otherwise, if they are with their wives, they are awful tippers.

Those were the rules. Lots of variations, but those were my stereotypes. Sick and wrong, but working the hotel industry put me through college. I didn't have time to care about you unless you helped pay my tuition. That, in general, is true of every person in the service industry. You think they really like schlepping your bags around and listening to your soppy stories for 5 bucks an hour??
 

I think we should cut through the whole problem and abolish the practice of tipping.
 

I know how to stereotype pretty well the non-regulars and tourists that come in. I don’t always do it intentionally, but when I am busy tables that have been good to me in the past or that I think will tip me well are the ones that I devote my time to.

Talk about a self-fulfilling prophecy!
 

Just because I put the tab on a credit card doesn't mean my tip is on the card.

I almost always leave a cash tip if I like the server becuase I let them worry about reporting tips for tipout requirements to the bar and/or tax reporting.

I've been a waiter. Some places won't even pay a credit card tip until some later date, to ensure that the card doesn't get reversed for some reason.
 

Blacks who wish to signal that they tip well could wear buttons with "15%" written on them to indicate that they generally tip 15%.

I bemoan this somewhat, especially at high-end restaurants (I have no problem at all tipping the bejesus out of underpaid waiters at Denny's or IHOP), but actually, that button would single out a poor tipper.

20 percent is standard nowadays, and more is not uncommon.
 

Europeans and Japanese are horrible tippers.

I don't know about Europeans, but Japanese have an excuse: we (I'm an American expat but have lived half my life here) have no tipping system here, so most Japanese feel very uncertain about how to go about it--and further feel some moral justification in resisting it: they've paid an advertised price. They should get the same service as everyone else without having to engage in a bidding war. As an earlier poster said, let's get rid of this relic of medieval noblesse oblige and pay servers a fair wage to begin with.
 

Hokuto: Does the moral system from which you derived your justification also have concepts of moral obligations; e.g., a moral obligation to give the same reward that is customarily given in exchange for a service if one expects that same service as given to everyone else who gives the same reward? To claim that a certain category of people has a justification for being cheap is eyebrow-raising enough, but to attribute such a justification as moral in nature is even more astounding.

As a waiter, I find stereotyping customers is unavoidable. But I also found that trying to give crappy service to poor tippers is not practical either, at least in terms of my work rhythm. Say, if I come out to the dining room with a full water pitcher, I might as well refill everyone's glasses and there is no point in skipping poor tippers if they will end up asking for more water themselves later on and making me do another trip just to refill their glasses when I could have done it on my first refilling round. Little things like this may seem trivial, but they do add up and become significant to work efficiency especially when it's busy.

Besides, decent tippers usually outnumber bad ones by a comfortable margin, and at the end of most nights, an 18% average is about the norm for me. Plus, I only plan to keep waiting tables until I can go to grad school, hopefully not too long from now.

Bad tippers are annoying, but so are insipid customers. I once asked a customer if he wanted more water, and it took him about 15 seconds to answer "maybe". I had to wonder for a moment if he was trying to pull a Jerry Fodor on me. But really, how hard is it to give a yes/no answer to a simple "would you like more water" question within the context of a restaurant setting? Perhaps I missed my once-in-a-lifetime chance to converse with a great metaphysician?
 

I think we should cut through the whole problem and abolish the practice of tipping.

I hear ya, but my inner economist (a tiny, tiny, tiny voice indeed, I assure you) says that if tipping were illegal, it would still go on, at least in some contexts. Tips at meals might move to the beginning of the meal ...
 

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