In A Tipless Country

In A Tipless Country

Why Australia is a harbinger for America’s restaurant industry.

I just returned from two weeks in Australia. As someone who chronicles the hospitality industry, Australia is an excellent template for the changes that are likely coming to America as states and cities raise minimum wages and chip away at the sub-minimum wage (“tip credit”) for tip-based employees.

Australia is a typical western social welfare state. Taxes are higher than in the U.S., as are wages. Service workers do not rely on tips for the bulk of their income because tipping is basically non-existent.

In the U.S., eating out is ingrained in our social fabric and as an outgrowth of demanding lifestyles. (During the Great Recession, Americans gave up many frills, but they kept eating out.) Australia has similar tendencies. Its coffee/breakfast café culture is ubiquitous. Avocado toast and a flat white in a café are a way of life.

But Australia is also the land of the $20 cheese pizza (factoring in exchange rate), which tends to generate a double take from Americans. America’s tipped, low-wage environment has bought us the most consumer friendly restaurant scene in the world. As tipping comes increasingly under fire and wages rise dramatically in many cases, our eating out culture will evolve to resemble countries like Australia’s.

  • Limited Hours: The most notable way Australia’s restaurants react to high labor costs is by closing when business is slow. Looking for a late lunch at 230? Dinner at 9 after a movie? Good luck. Restaurants close between meal periods, and meal periods are mostly three hours. Only daytime coffee cafes straddle the breakfast/lunch window, but they all shut by 3p. Restaurants frequently don’t open on Sunday or Monday or Tuesday or all three. Some serve lunch only on Fridays. A 7p dinner reservation is tough to come by, because restaurants want two turns of their tables, and offer one around 6p and another around 8p.
  • Scaled Down: Restaurants in Australia are smaller than in the U.S. An 80-seat restaurant, modest by American standards, is sizable Down Under. Fewer square feet means smaller rents. Limited seats mean restaurants want you to make a reservation and secure yours. We walked into a pizzeria in a small town near Adelaide to be told they were “fully committed for the evening.” 
  • Limited Choice: Aussie menus, other than at pubs (where food is subsidized by alcohol sales), are frequently tiny. Five main courses and four starters is common in both casual and more formal restaurants. Small kitchens and staffs make small menus essential to efficiently manage costs.

(I laid over for 36 hours in L.A. on my way back home. Gjusta, the celebrated cafe in Venice where we started the morning offered 19 different prepared dishes and added 20-plus more at 11a. It is open from 7a to 10p seven days a week. Later, at dinner in Westwood, Tuck Room Tavern offered eight starters, four salads, ten main courses, and five sides. That’s 27 different offerings not including dessert. Such complexity requires more labor, creates more waste, and requires added kitchen and storage space.)

  • Higher Prices: Even factoring in the lack of a tip, restaurant prices in Australia were higher than in the U.S. by 20 percent or so, in my estimation. (Though wine was substantially cheaper, at least by the glass.)
  • Limited Service: I was surprised how many all-day restaurants operated with table service only at dinner, requiring guests to order at a counter during breakfast and lunch. Food was delivered, then there was little follow through from staff. Drinks and water were not refilled, and condiments came from a self serve area.
  • No Upside: In Australia I was surprised at how often a server could not describe a dish or professed to never having tasted it. Special requests that are usually accommodated in the U.S. were frequently declined. The tip culture in the U.S. drives this flexibility, I believe.
  • Unbundled Dining: Things like free drink refills, bottomless bread baskets, and meals with side dishes don’t exist in Australian restaurants, at least not the ones I went to. You want those extras? Pay for them. You want salad instead of fries? Not an option. Restaurants deliver one slice of bread and after its eaten they take the bread plate away.

My point here isn’t to advocate for one system or another. But as the U.S. moves to a model where substantially higher wages and benefits expand into the restaurant universe, as is currently in process in Minneapolis, San Francisco, Seattle, and other large cities, the industry will inevitably move to reduce labor and costs in a way more typical of the rest of the world.

Prices will go up, and choice and convenience will inevitably retract in the face of efficiencies. We are already seeing this in the Twin Cities as new restaurants open with limited service models.

Maybe we don’t need 40-item menus, restaurants that serve from dawn to bar close, and loss-leader happy hours. Maybe we don’t need iced tea refills and the ability to get salad for no additional cost instead of fries, and a gluten-free bun to boot, and could I get a couple slices of tomato on the burger as well.

Maybe we can fill our own water glasses. Welcome to the future.

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