Minimum Wage, American vs. European Restaurants

In reading reviews of European restaurants to try to find places to dine, I saw a lot of criticisms of their service.  There seems to be a meme among travelers that Austrian restaurants in particular often have bad service.

I am not sure I can agree with this -- we had a lot of good wait-staff in Austria  But I can say that they had to service a LOT more tables than a typical American waiter.  I don't know what the standard is today, but it used to be that 4-6 tables was the max American restaurants considered that a waitperson could cover and still provide acceptable service.  In Austria, the number was often double that.  I watched one gentleman memorably service almost 20 tables during the busy lunch hour at a museum cafe in Vienna.  I can tell you he was working his butt off but we still had to wait for basic service like ordering or paying our bill or getting our food delivered.

I pair this information with a second factoid from a travel book we read when trying to figure out what tipping policy was over there.  The book, as well as most other sources we consulted, said that tips for waiters in Austria and Germany could be less generous because waiters were paid much more than in the US -- a fact that the source considered a point of superiority over the US for the Europeans.

That may or may not be -- personally, I have never like the US tradition of restaurants outsourcing the paying of their staff to the customers.  But it may well be that these higher wages have their cost in the form of reduced customer service, as restaurants are forced to minimize their higher cost staff to keep prices reasonable.


  1. Fred_Z:

    In 1970 and forward for 6 years I worked full time in the summer and part time the rest of the year for a restaurant chain as bus boy, then waiter, as well as other odd jobs. I thought tipping was a great idea and still do.

    The level of employee bonus should be determined by the employee's immediate supervisor. I would get decent tips even if the kitchen was slow if I came by frequently to let the guests know that and offer them something - another drink, more water some bread.

    The general manager of 4 of the restaurants located within a block of each other, all operating under different names, kept track of tips by employee. Staff shared tips in some proportion I don't remember but the GM looked very hard at what both the high and low tipees were up to. Tip income was great management information.

    I loved waiting, must be in the blood, both my dad and paternal granddad waited for many years back in Germany, and they loved it too.

  2. Michael Moran:

    I have traveled some in Europe and note far fewer waiters/waitresses per table. I also attributed that to much higher minimum wages. Also, I have noted European restaurants also tend to use more labor saving technology than US restaurants. For example, even the smallest local spots use a wireless pad to take orders. So instead of a paper pad (or a centralized computer terminal) in which order are transmitted fro wait staff to kitchen, they use a wireless notepad. Likewise the McD in Paris use computer kiosks where the customer puts in their order and pays for the meal. Also, in this weeks Economists (pg 47) it had a chart of youth unemployment among native born and immigrants. For US it was very close, for France, Sweden, Belgium, Norway and Netherlands, was a big gap, with much higher youth unemployment among immigrants. Germany, which has a low minimum wage (by European standards) was closer to the US in the gap between unemployment of native born and immigrant. What is funny, these observations (labor saving devices reducing employment and the lowest skilled unable to find jobs) are just what economic theory would predict from an increase in the minimum wage, but one liberals deny will occur.

  3. xtmar:

    How well did tipping track being female and/or attractive?

  4. Q46:

    You overlook an essential difference between Europe and the USA, that is a meal is a social occasion, unhurried... not just a quick refuelling stop to grab a bite and out the door paying the 'check' whilst still chewing on the way.

    People, in Europe, do not want their plates snatched away as soon as they put their cutlery down to be replaced by the next course. Bringing the bill quickly implies they want you out the door... next please; be quick about it! Coffee is NOT served with dessert, it comes later, to be lingered over.

    Good service in Europe is reflected in that 'wait'.

  5. DerKase:

    Wait staff is paid more, but that's not the real reason you tip less in Germany and Austria. The tip (about 18%) is included in the price of the meal that you see on the menu, along with all taxes. So the price you see on the menu is the price you pay. Nothing is added after the Rechnung is totaled up. It is traditional that when the waitress comes around and you pay her, you round up to the next higher Euro. Or you hand her the exact amount you want her to have and say "Stimm so," which means "this is correct" or more colloquially, "keep the change." Leaving money on the table is actually insulting. You give a tip in person so the message that the waiter provided good or bad service is clear and personal.

    I lived 3 years in Bad Aibling, Germany, which is within sight of the Austrian border off the A8 autobahn between Munich and Salzburg.

  6. Another_Brian:

    Sounds like someone's had some bad experiences with restaurants in the US. This doesn't sound like any restaurant I've ever been to, but then we typically avoid big franchises.

  7. bdaabt:

    Just an observation from a recent trip to Iceland. There was no tipping. However, the food service and other services provided by staff (e.g., a staff member at a local museum took time from their brief meal break to help us locate a particular restaurant; a tour guide on the retired Coast Guard ship, the Odenn, provided an amazing tour of the ship) was excellent during the entire trip. Being ugly Americans, we tried to tip anyway and were unsuccessful.

  8. David Zetland:

    Indeed. I vastly prefer the Dutch model of not hassling you "can I help you with that" and bring the check to turn the table. The lack of tipping also avoids an awkward "evaluation" phase (let alone lots of counting) required in the US (due to miserable base wages). As for "better service," I am much happier to NOT see a waiter constantly smiling and asking me how I'm doing...

  9. Joe:

    xtmar - you raise an interesting question. I have several restaurant clients and have discussed the guy / girl watress/waiter issue with the owners. The general comment is that guy waiters do a better/faster job due to the physical requirements of the job. (that is not to insult the good female waitresses), just that as a general rule, I have commented to the various owners that they need more cute female waitresses, but the reply is always to the effect that they would like to hire more female wait staff but there a lot fewer females that can do the job as well as guys. - of course there are exceptions. FWIW, this partly explains why men are heavily employed in a sector that was previously dominated by females.

  10. Jim Collins:

    "personally, I have never like the US tradition of restaurants outsourcing the paying of their staff to the customers."

    I've never been too fond of it myself. Several years ago I dated a girl who got excited because she got a waitressing job at a popular restaurant. Things were going well for her until she got her first paycheck. She owed them $175. They assessed her 15% of the total of her customer's bills, so unless her tip was greater that 15% she lost money on that bill.

  11. sean2829:

    This sounds very much like how ordering pizza has changed here in the US. It used to be you'd call the pizza place, ask what the specials were, then, while tying up the pizza employee on the phone you'd try to get a consensus from 3 or 4 people about what should go on the pizzas, how many to get, etc., etc. Now, you go on line and bring up a web page, check the specials, negotiate with the people who are going to eat the pizza what goes on it, you build each one, go to check out and pay for the pizza without ever involving a single worker. You go to the store, pick up the pizza in about 30 seconds and head home. It's no wonder pizza can be discounted as much as it is. The workers now just cook and box the pizzas.

    I see the same thing happening in restaurants. You'll bring up a restaurant on a cell phone, check to make certain you can get seated (or have a reserved table at the same time your meal will be ready) order the meal before leaving or on the way there, arrive, get seated and your food follows you to the table unless of course it's take-out. Makes sense for family restaurants where the establishment is not pushing drinks and kids don't want to wait. No or very few waiters and waitresses, mostly just food runners and cooks.

  12. Max:

    One thing that was not mentioned. Tips are tax free meaning that tipping more actually means more money after taxes. Just an observation.

  13. gr8econ:

    Unreported tips are tax free just like any other unreported income.

  14. Matthew Slyfield:

    No, you are wrong. Someone who is receiving tip income is legally required to report the tip income on their tax return and pay taxes on it. Getting caught not reporting tip income can get you in a lot of legal trouble.

  15. marque2:

    The IRS requires the owner of the restaurant to report information which allows the IRS to guess at a tip. One example if you don't tip on the credit card, the IRS assumes you left a cash tip = to the average credit card tip for those that don't have a zero'ed value. this mean stiffing wait staff on the CC card creates a double whammy for them, in that they will be taxed on income not received. I sometimes leave a 5% tip on the CC and the rest in cash.

  16. marque2:

    The IRS also makes assumptions about the cash tips on full cash pay, on the average amount of the CC tip, for CC's which left a tip.

  17. Me too:

    I love our tipping system. Tipping increases the quality of service. It lets motivated servers earn more and it weeds out the bad ones. The Austrian server had no incentive to produce beyond the minimum required to not get fired. As a result you get shitty service.

  18. Me too:

    Hang on. You would call before you knew what you wanted to eat. That's rude and a waist of time. This is a big reason they push to order online.

  19. sean2829:

    We did have a pretty good idea of what we wanted but if you have a large group of teenagers or young adults, you'll likely get the specials that are on sale. Then you start making compromises for the number toppings and sizes of pizzas that get the discount. Online, it's all in from of you.

  20. Fred_Z:

    Good question, but I just don't remember.

  21. Ann_In_Illinois:

    Similarly, if you travel in Asia, wages there are generally lower and staffing is much higher. I remember one of the first times I ate at a US fast food chain (Wendy's or McDonald's) in Hong Kong. When done, I put all my trash on my tray and got up to throw it out. After circling the room for a few times while the locals stared at the strange white woman taking her trash for a walk, I finally figured out the system and sheepishly went back to my table to put down my tray, so that the two waiting people could take it and throw it away for me. They have people for that.

    I wonder if some academic has done a cross-sectional analysis of the relationship between minimum wage and staffing levels at a few big chains (say, McDonald's, Pizza Hut, etc.) around the world. Of course any comparison of just two or three or eight countries would be hard because of the many other differences, but with a wide enough sample, adjusting for enough other factors, we might be able to see the relationship that liberals deny.

  22. Dan:

    I used to always pay waiters 20% tips if I got good service. But as the price of meals has risen substantially in recent years, I've gravitated more toward 15%. The way I see it, if my family (my wife, me and our 15- and 12-year old boys) eat out at a decent restaurant, the bill frequently works out to $80 or $90. A 20% tip on that amount is around $15. That's not so ridiculous. But let's say we splurge and order steak for everyone, and the bill is $200 (we live in a very expensive area - Chicago's North Shore, and my kids eat a lot). The 20% tip then is $40. Has the server really done any more work than if we'd ordered cheaper menu items? Almost certainly not, and even if it is slightly more work for them, it's not $25 more work. They don't really deserve a bigger tip.

    Sometimes, when I tip at fancy restaurants, I wonder whether I should be a waiter. With restaurant bills so high, they're probably making far more in tips each day than I do as a freelance writer. I probably should eat out less, come to think of it!

  23. Physics Bill:

    The typical restaurant in Australia is very minimally staffed., I suspect due to the high minimum wage (Adult with no benefits = AU$20.38). Typically you order and pay a cashier when you enter. A porter delivers your food to your table. You get your own drinks. There are some full service restaurants, but are quite expensive.

  24. markm:

    Being egregiously greedy about reporting tips or other cash income can get you in a lot of legal trouble, but if you just reported 80% of your cash take, how would the IRS prove it?

  25. markm:

    Warren eats in fancier restaurants than me. The restaurant I usually go to (typically $10 a plate, or as low as $5 if you order the special with no drink or dessert) has about 50 tables and has only three waitresses on the payroll, never more than two on duty at a time. It's rarely full, but I have seen the two waitresses scrambling to handle 30 or 40 tables. At an average of two customers per table and 15-20% tips, they're making good money during those periods, but there are more hours when there are only a half-dozen customers in the place.

  26. Matthew Slyfield:

    The same way they got Al Capone on tax evasion. Proving that you are living beyond your visible income.

  27. Daublin:

    I spent over a year living in Switzerland, and several months in Denmark, and in both cases I noticed that waiters and grocery store clerks tended to be middle-aged professionals. It was a stark change from the teenagers you see filling these roles in the U.S.

    Restaurant tips in Switzerland are 0%, at least in the circles of people I hung out with. They seemed to think that tipping your waiter made about as much sense as tipping your tax accountant: a gross display of money that cheapens the whole interaction. They're paid professionals, and if you don't like their service, you do the same thing as if you don't like the food: you still pay for it, but you don't come back.

    As a general way of doing things, I was unimpressed. What's wrong with a teenager working a low-end job, rather than just living off of their parents? Also what about older people that misstep and lose their job, or house-spouses that go through a divorce and end up needing to become self sufficient?

  28. Barak Pearlmutter:

    I am an american expat in Europe. To all the americans reading this .. PLEASE TIP WELL!!!!! Europeans may grouse about the overbearing US government and its fat citizens, but by gum anyone with an american accent gets seriously better service at restaurants here. And nothing is more fun than watching a frenchman fume as an italian waitress ignore him and hovers over the american diner swilling coke and wearing a rude t-shirt.

    Don't break the chain!

  29. Scott:

    HAHA next time I'm in Europe...I'll tip extra. And I'll order a cheeseburger.

    Keep up the good work.

  30. Jackie Brangard:

    Does that mean if you do not work in a field that provides tips you are not good at your job? I have worked many jobs in the service industry (serving, retail, customer service, etc) and I am motivated to do a good job because of my work ethic, weather I get tips or not. You are implying that only tips encourages good service. I disagree with that. And I find it difficult to champion a system that pushes the responsibility of providing wages to the customers instead of the employer.

  31. Me too:

    No. I was simply staying on topic.

  32. Me too:

    But since you brought it up. It has always been the responsibility of the customer to provide wages. The customer pays for every expense a company has. Tipping is simply a more direct way of doing it.