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CHAPTER I THE PROBLEM AND ITS BACKGROUND

INTRODUCTION Some says the term tip may have come from English pubs during the 17th century in which urns or buckets are labelled with to insure promptitude, making a way for patrons to place their money for better service in the forthcoming visits. And thus, giving money to servants for better service rapidly spread across the country. (Rivers, 2010, The history of tips)

Many visitors of America showed astonishment when they found some waiters and coachmen thought of themselves as employees, not as servants and not accepting tips from the travellers. This displayed that not all Americans embraced the customs of tipping. It wasnt till the late 1890s when a movement against tipping began, it was believed that tipping went against the ideals of the country and allowed the inferior class be dependent on the higher class men.

Tipping slowly has been accepted by the society and by 1910, about 5 million workers in the United States, more than 10% of the labour workforce, had tip-taking occupation. (Rivers, 2010, The history of tips)

Nowadays, tipping in western countries is not only customary but rather it is essentially mandatory. Patrons mostly decide the amount of the tip being given in accordance on how they have appreciated the service that was rendered to them. As not everybody knows, according to Michael Lind, professor at Cornell University, tips account for nearly a hundred percent of a servers take home pay (as cited in Stein, 2012). But still in some cases, others might leave a very low tip or even no tip at all. In no less a figure than Benjamin Franklin had observed, "To over tip is to appear an ass: To under tip is to appear an even greater ass.

[2] In a universal perspective tipping is not a worldwide custom. For example China, when tip is given it would only create confusion or become an offensive act towards the locals. Also in Japan, tipping is considered as something rude. Some countries restrict tipping like in Singapore. And when it comes to Australia and New Zealand, tipping is controversial for it is seen as an unwelcomed imported custom. This also includes Spain even though it is a European country, tipping there has apparently been a fraught issue becoming not that common especially in bars and in cafeterias.

For countries that have embraced and adopted the customs of tipping, the establishments generally include service charge (S.C.) in the receipt. Yet still, some establishments that do not contain S.C. in the receipt leaves the decision on the patron on how much gratuity will be given. Commonly in Northern American countries, tipping cost is expected to be from 15% - 20% of the total bill. In contrast Latin American countries, tipping cost is expected to be about 10%. In Europe, it differs on which area the patron is, the cost of tipping varies from 5%, 6%, or 10% - 20%. In Africa, the restaurants expect a 10% 15% tipping rate. In Asia, the rate of tipping is at roughly 10% - 15%.

Whether tipping is in a form of service charge , in a form of tip box or even given straightforwardly to the exemplary employee, establishments commonly practices a centralized tipping policy in which received tips are evenly and fairly distributed to all staff and employees even to those that does not render service directly to the customers.

[3] BACKGROUND OF THE STUDY

Tip is money given for a service over and above what is due. But, in legal terms, it is never required, and the amount of it is determined solely by its patron being served. (Manalo& Ramos, 2010) Modern Filipinos are aware and expectant to the certain peculiarity of giving a tip. The countrys tipping rules suggest a 15% gratuity for basic service. However, not all follows this rule and those that do have a variety of understanding for their definition of what is a basic service. And in addition, if service charge is included in their bill or receipt Filipinos usually do not give tips after service was rendered. But nonetheless, giving a tip to employees is not compulsory in the Philippines.

The obvious reason to tip a barista in any coffee shop is a reward for a quality drink, but there are several flaws seen in this logic according to Grier ( 2007 ): One, tipping in coffee houses generally happens at a jar or tip box near the cash register, before the drink is made. Second, tipping could be considered as insulting since baristas generally are paid a significant wage, so it's arguable that they already receive due compensation for their skills. Lastly, research shows quality of service has very little to do with how much patrons tip, at least in restaurants. ( para. 4 6)

Still, there are the reasons why a coffee patron should tip their baristas. Some of these reasons are: 1) Tipping serves as a form of voluntary price discrimination for customers who care about good coffee without raising prices for those who don't. 2) Rapport with one's coffee shop staff is a good reason to show gratuity. 3) Tipping is a form of encouragement for better service in the in the next visit. And 4) baristas are better off getting tips than getting a higher wage, receiving part of their income through tips gives baristas greater liquidity.

[4] STATEMENT OF THE PROBLEM This research aims to answer the problem, What are the impacts of tip centralization to employees in 2 coffee shops in Las Pias City?

The following sub-questions would help us answer the problem:

1. What are the advantage and disadvantages of centralizing tips to employees of coffee shops in terms of: A. Performance B. Financial Status C. Self-esteem

2. What are the policies and procedures related to the tip centralization and its impacts to the employees?

RESEARCH OBJECTIVES

1. Profile of the respondents.

2. Determine the advantage and disadvantages of centralizing tips to employees of coffee shops in terms of: A. Performance B. Financial Status C. Self-esteem

3. Identify the policies and procedures related to tip centralization and its impacts to employees.

[5] SIGNIFICANCE OF THE STUDY

This study may aid the following:

To BSIHM students and to future researchers, this study would be able to assist them in settling some issues and have a clear idea what centralized tipping in workplace is and to be a future reference for students that will tackle the same topic.

To the academe, this study would be able to give them the opportunity to know what factual information needs to be disseminated through seminars to their students for their future careers.

To the hospitality industry and to the society, this study will raise awareness on where the service charge goes and how it is handled in this type of establishments.

SCOPE AND LIMITATION

This study involves 2 coffee shops in Las Pias City namely: Starbucks (SM Las Pias City), and Black Canyon Coffee (SM Las Pias City). There are 50 respondents that is composed of 20 employees from Starbucks and 30 employees from Black Canyon Coffee, this is based on the Slovins formula n = N / ( 1 + Ne2 ). This study is limited only to front of the house employees and back of the house employees.

[6] DEFINITION OF TERMS BACK OF THE HOUSE the area of a restaurant that guests are not allowed. The kitchen, dishwashing area and wait station are all located in the back of the house. BARISTA a person who makes and serves coffee to the public. CENTRALIZATION theact or process of combining or reducing several parts into a whole. COFFEE SHOP small restaurant that serves coffee and other drinks are served as well as other light meals. FRONT OF THE HOUSE the area of a restaurant where guests are allowed. The dining room and bar are all in the front of the house. PATRON one who buys the goods or uses the services offered especially by an establishment. PUB (public house) an establishment where alcoholic beverages are sold and consumed. SERVICE CHARGE (S.C.) a fee charged for a particular service often in addition to a standard or basic fee. TIP (gratuity) a gift or a sum of money tendered for a service performed or anticipated.

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CHAPTER II REVIEW OF RELATED LITERTURE AND STUDIES

FOREIGN LITERATURE

TIPPING AROUND THE GLOBE According to Independent travelers (Tips for tipping abroad) Tipping in Asia largely depends on the luxury level of the hotel or restaurant. Tips are never expected in hostels, backpacker guesthouses, street food stalls or local eateries. Four and five star restaurants and hotels are another story. A constant stream of Western, tourists with higher budget has created an expectation for gratuity. If you are staying for a week or longer, a generous tip early in the stay will land you better service and treatment for the remainder of your tip. Tipping requires more than cash and generosity; a modicum of research is essential for travelers to know exactly who deserves a tip and how much to give. Generous travelers shouldnt hand out gratuities like Halloween candy to cover their bases.

In some countries like Japan, where giving someone a wad cash is considered rude, tipping can be an insult. Tipping is generally not expected in Japan.

British travelers may be renowned as the worst tippers, especially when it comes to foreign travel. A trip advisor survey found that 60% of Britons did not know how much to tip in foreign countries compared with European average of 45%. They also found that 16% of UK travelers had been confronted by angry workers after failing to tip. According to Emma OBoyle by Torney (2011, Tipping etiquette around the world), in the UK tipping is relatively straightforward but that seems to have resulted in some British travelers taking other countrys tipping rules for granted.

[8] Even in the United Kingdom, as what is written in Discovery Channel (How does tipping vary among different cultures), tipping is common for sit-down meals: we pay an average of 10% to waiting staff, but are unlikely to leave gratuities in bars or pubs, even when were being served food. Some countries such as Italy and France may include service charges in the bill, but they would still expect a smaller tip of 5% to 10% on top of that, especially if service has been good. In some countries, such as Mexico and South Africa, youre expected to tip virtually everyone who helps you. In Australia, a 10% tip is only expected at finer dining establishments. In New Zealand, on the other hand, restaurant patrons almost never leave tips. In some countries, such as Argentina and Vietnam, it is actually illegal to tip servers in restaurants. If youre planning an international vacation or business trip, be sure to spend some time researching the tipping customs of the place youll be visiting.

Tipping standard tends to vary based on country or region. For example, in many European countries, the gratuity (usually around 10 to 15 percent) has often been included in the bill you receive from a restaurant. As such, its possible to leave a tip for excellent service, but its not considered necessary. If patrons of these restaurants do tip, the tip often takes form of a currency round-up, meaning that, for example, a patron might leave an even 20 Euros if the bill was for 19 Euros. This approach to tipping can be confusing to Americans who have been taught that its always necessary to leave ones a server a tip.

TIPS IN EVERY ESTABLISHMENT According to another article by Discovery Channel (What is the origin of the word tip, with the reference to gratuity?), one theory about the origin of the English word tip maintains that the word at one time was a verb that meant to give or to hand over. This explanation has some historical basis, since its believed that during feudal times, lords, when travelling, sought to guarantee safe trips by throwing gold

[9] tips at peasants they encountered along the way. Some believe the word came about during the 16th century Roman Empire, and tip was an acronym to insure promptitude, however, this is disputed by those who claim that acronyms werent used until the 20th century. Another theory holds that tip derived from ancient thieves slang in which the word meant to give; pass along

Sometimes it seems like tips are required everywhere we go, from restaurants to hair salons to parking lots. The practice of tipping varies around the world and sometimes its hard to know when and how much youre supposed to give. Weve all heard the joke when someone brings up leaving a tip-instead of leaving money, the jokester will offer to leave a tip in a form of a tidbit of advice, playing with the double meaning of the word. So, if it means leaving money instead of leaving wise words, why do we use the word tip when referring to gratuity? As said in Essortment (2012, Proper Tipping Etiquette), Tipping is gesture of appreciation for services rendered. But figuring how much to tip can be very complex. While standard tip amounts may read on those handy tipping-guidelines plastic cards may tell you to offer 10% for a specific service, good patronage may tell you to offer another amount.

For salon, the standard amount for salon gratuity is 15% to 20% depending on the service given depending on the skill of the stylist. If the stylist rendered a full service, you can offer them a tip in the 20% range.

For restaurant, tipping offers from 15% to 20% of your total bill. Keep in mind that the amount you tip reflects the total price before any coupons or gift certificates. If you are a part of a party of more than 8 people, you should offer an amount closer to 20% marker, if not more, depending on the needs of the guests in your party.

For bar, bartenders can receive a tip between 10% and 15% depending on complication of your drink order. If you just order a beer in a bottle, theres not too much

[10] effort involved in providing the service, but if you order a mixed drink that takes time and includes a lot of ingredients, then offer up a more sizable tip, somewhere closer to the 15% range. For hotel, it is standard to leave the maid a few bucks for tidying your room. If you need anything such as towels, soaps, or toothbrush. When checking in and out of a hotel, remember the bellhop with a gratuity of a dollar per bag, unless, once again, you have particularly large or heavy bags. Overall, think before you tip. You dont want to regret the decision to be stingy at a later date. Like when youre hairs a mess and you really need the stylist squeeze you in for an appointment , but you left such a small tip last time, that she wont make time to make you look amazing this time.

Tipping is generally expected by the waiting staff in restaurants, cafes and bars. Taxi drivers expect the fare to be rounded up and hairdressers also accept tips. At petrol stations the attendants who fill your tank and clean you windows will hope for some small gratuity. Although tipping is expected it is also recognized as a means of expressing ones satisfaction and you are in no way obliged to tip if you feel the service did not merit it. Some restaurants automatically add a service charge.

Good service deserves a good tip. Tipping is welcome all over the world and tipping has become more popular and actually expected especially in the resorts and larger cities. For this reason a small plate was put on each table with sign T.I.P.S on it which stood for To Insure Prompt Service. This is how the tip born. Tipping has spread across Europe and then all over the world.

TO TIP OR NOT TO TIP? According to ONeill ( 2011, To Tip or not to Tip? An Exploratory Study of the Motivations Driving Consumer Tipping Behaviour), an English poet and academic, The

[11] paper attempts to shed light on the key drivers of consumer tipping behaviour and reports the findings from an exploratory study aimed at addressing consumer motivations and their influence on consumers willingness to tip. When approaching the research issue, the phenomenon presents an interesting subject for study. In the United States alone, such occupations as servers, bartenders, matres, concierges, hair stylists, bus boys, and bellhops all depend on tips as a primary source of income. As mentioned by Azar, considering that many occupations derive the majority of compensation from tips, estimated tips in US restaurants alone are about $27 billion annually According to Michael Lewis (2008, Starbucks Hilarity: Tipping at Coffee shops), tipping has grown to be a kind of standard in many places. Although coffee shops dont consider tipping to be customary, they leave cups by the cash registers to encourage it. The cups dont really suggest that the employees have done or will do anything special, but just in case, they are there. Most of the time, employees merely hand over a 2 dollars muffin and a cup of coffee and ring them up on the register. He also thinks of tips as being a motivator for employees to work hard.

LOCAL LITERATURE

PHILIPPINES AND THE CUSTOMS OF TIPPING

Modern Filipinos are aware and has adopted the customs of the Western culture when it comes to tipping. Well in fact, according to a post by a local writer, Patria (2012, Pinoys among Asia Pacific's top 'tip' givers) in ph.news.yahoo.com, the Philippines was ranked second in a list dubbed as "Asia-Pacific's Most Consistent Tippers" released by MasterCard Worldwide.

[12] About 75 percent of Filipinos who are frequent in restaurants and bars regularly give gratuities. PH bested 12 other countries in the survey, which asked around 7,000 people about their tipping behaviour. And that the Philippines' tipping frequency was well above the regional average of 41 percent. But most locals and foreigners in the country still struggle to define how tipping is dealt with. Here in the Philippines, tipping is customary and mostly applies in urban areas that are frequently visited by the tourists. While in provinces, most pinoys there will often help you without expecting anything in return.

In most food and beverage establishments, service charge or S.C. is already incorporated or the guest tips independently. Though, some restaurants and bars does not incorporate service charge and does state No Service Charge Included clearly on the bill.

There are a lot of restaurants that engage in including a mandatory service charge to the gross sales tally of each bill have seemed to adopt a 10% to 15% service charge range. For clarification matters, as said by Martin (2009, "Tips, gratuities and service charges"), a web writer in liveinthephilippines.com, the reason for introducing the

additional charge have nothing to do with tax collectors trying to stamp out the underreporting of tips but instead, many are adding service charge for the sake of just having service charge and nothing more.

In some cases where in there is no imposed tipping standard, Coson( 2012, Tips), a columnist in lifestyle.inquirer.net, says most people adopts a 10% rule plus coins or the next round-up. Coson, in addition, presented that in Art. 96 of the Labour Code, service charges in the service industry are distributed at the rate of 85% for all covered employees and 15% for managementbut according to the Service Charge Regulation Act of 2010 led by Rep. MagtanggolGunigundo, a menu that hints at service charges only in fine print may be illegal, and that customers have a right not to pay if there is no black-on-white 4 x 8 signage in both English and Filipino that they should expect one.

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These days, a tip does not make anyone different from an average person, but with low minimum wages, the hospitality industry has formed wages around tips. Making tips become necessary, unless companies could accommodate the discrepancy of wages of the employees.

All in all, tipping is expected but nonetheless if the service was not up to par, not leaving a tip is well understood. As well as the other countries across the globe, the wait staffs appreciate a reasonable tip. As mentioned by Coson (2012, Tips), Tips are not the winking judge of your moral character, tips are a guessing game and sometimes you get it wrong. Following the advice of many a punning tip jar, if you fear change, then leave it here. Written by Reyes (2009, Comments about tips in the Philippines and outside the country) In accordance to the employees perspective in handling tips, they would rather not have it pooled or centralized it for some reasons: 1) What is good for the server is good for the house, 2) the possibility that some servers may not be putting all their cash tips into the pool as they should, and 3) the most-feared scenario from any servers perspective is when all is said and done at the end of the night, the servers share of the tips falls short of his/her expectations.

COFFEE HISTORY IN THE PHILIPPINES According to Cafe Lipa (2008, Coffees rich in the Philippines), the Philippines is one of the few countries that produces the four varieties of commercially-viable coffee: Arabica, Liberica (Barako), Excelsa and Robusta. Climatic and soil conditions in the Philippines - from the lowland to mountain regions - make the country suitable for all four varieties.

[14] In the Philippines, coffee has a history as rich as its flavour. The first coffee tree was introduced in Lipa, Batangas in 1740 by a Spanish Franciscan monk. From there, coffee growing spread to other parts of Batangas like Ibaan, Lemery, San Jose, Taal, and Tanauan. Batangas owed much of its wealth to the coffee plantations in these areas and Lipa eventually became the coffee capital of the Philippines. (2012, Coffee origins) In the 1800s, Coffee was brought to the Philippines; the seedlings were planted by the first settlers of the area, the Macasaet clan.

The volcanic soil, low temperature and cultivation practices of the Lipenos brought about a unique coffee, KAPENG BARAKO, an aromatic, full bodied, and strong flavoured coffee. The Macasaets continued on growing and making this magical brew. Perfecting their craft with years of experience passed on from generation to generation. Coffee became a way of life for them, living and breathing coffee. They gave their own heart and soul to this bean and in the process making coffee something that is distinctively Filipino.

By the 1860s, Batangas was exporting coffee to America through San Francisco. When the Suez Canal was opened, a new market started in Europe as well. Seeing the success of the Batangeos, Cavite followed suit by growing the first coffee seedlings in 1876 in Amadeo. In spite of this, Lipa still reigned as the center for coffee production in the Philippines and Batangasbarako was commanding five times the price of other Asian coffee beans. In 1880, the Philippines was the fourth largest exporter of coffee beans, and when the coffee rust hit Brazil, Africa, and Java, it became the only source of coffee beans worldwide.

The glory days of the Philippine coffee industry lasted until 1889 when coffee rust hit the Philippine shores. That, coupled with an insect infestation, destroyed virtually all the coffee trees in Batangas. Since Batangas was a major producer of coffee, this greatly affected national coffee production. In two years, coffee production was reduced

[15] to 1/6th its original amount. By then, Brazil had regained its position as the world's leading producer of coffee. A few of the surviving coffee seedlings were transferred from Batangas to Cavite, where they flourished. This was not the end of the Philippines' coffee growing days, but there was less area allotted to coffee because many farmers had shifted to other crops.

During the 1950s, the Philippine government, with the help of the Americans, brought in a more resistant variety of coffee. It was also then that instant coffee was being produced commercially, thus increasing the demand for beans. Because of favorable market conditions, many farmers went back to growing coffee in the 1960s. But the sudden proliferation of coffee farms resulted in a surplus of beans around the world, and for a while importation of coffee was banned in order to protect local coffee producers. When Brazil was hit by a frost in the 1970's, world market coffee prices soared. The Philippines became a member of the International Coffee Organization (ICO) in 1980.

Today, the Philippines produces 30,000 metric tons of coffee a year, up from 23,000 metric tons just three years ago. Philippine coffee traces its roots from the Highlands of Lipa City.

STARBUCKS PHILIPPINES

December 4, 1997, the Philippines had its first taste of the Starbucks Experience with its very first branch at the 6750 Ayala Building in Makati City. Starbucks has since won the hearts of the Filipinos. The opening of the 6750 Ayala store marked an important milestone in Starbucks history the Philippines became the third market to open outside North America.

The tradition of warm hospitality, constant need for connection, and love for coffee these are the qualities that make Starbucks Coffee and the Filipino people a great

[16] culture fit. Rustan Coffee Corporation, a member of the Rustan Group of Companies is the sole authorized licensee of Starbucks Coffee International in the Philippines. Starbucks Philippines opened its first retail store on December 4, 1997 at 6750 Ayala Avenue, Makati City. To date there are 195 Starbucks stores across the country.

History of Starbucks Starbucks (1999, Starbucks in the Philippines)has always been a place where you can find the worlds best coffees.

In 1970's, the first Starbucks opens. The name comes from Herman Melville's Moby Dick, a classic American novel about the 19th century whaling century. The seafaring name seems appropriate for a store that imports the world's finest coffees to the cold, thirsty people of Seattle.

In 1980's, Howard Schultz joins Starbucks in 1982. While on a business trip in Italy, he visits Milans famous espresso bars. Impressed with their popularity and culture, he sees their potential in Seattle. Hes right after trying lattes and mochas, Seattle quickly becomes coffee-crazy.

In 1990's, Starbucks expands beyond Seattle, first to the rest of the United States, then the entire world. After becoming one of the first companies to offer stock options to its part-time employees, Starbucks becomes a publicly traded company.

In 2000's, The Starbucks phenomenon continues. As of this writing, Starbucks has more than 15,000 locations in over 40 countries. In addition to our excellent coffees and espresso drinks, people now enjoy for tea and frappuccino blended beverages.

[17] BLACK CANYON COFFEE PHILIPPINES

Black Canyon Coffee is the largest and most well-known operator of franchised coffee houses in Thailand, it has now more than 200 branches all around Thailand and with 40 international locations in Malaysia, Singapore, Myanmar, Dubai, Cambodia, China, Laos and Indonesia. BCC serves not only coffee but also Thai International Cuisine.

History of Black Canyon Coffee According to Black Canyon (2001, The coffee story), man began to drink coffee in the 13th century in Africa. Legend says that coffee was first discovered by a shepherd named Kaldi in the high plateaus of Ethiopia. He noticed that his goats jump merrily after they ate a red fruit. He tried the berries himself and was suddenly filled with energy and alertness excited with his discoveries, he took the cherries to some local monks.

The cherries were not greeted with elation, but with disdain, one monk even called the cherries the "devils work" and throw it into a fire to cleanse them. However, as they beans began to give off a pleasant aroma, so they removed it from the fire, crushed them and covered them with hot water. All the monks smelled the aroma of the coffee and came out to try it, hence they drank their first cup of coffee. And the rest is history.

In 1993, "Black Canyon (Thailand) Company Limited" formed and first branch opened at Central Plaza Ram Intra. In 1994, first franchises offered. In 1996, introduced new method of distributing coffee to branches using foil vacuum packs containing single servings of fresh coffee beans, to retain freshness of the coffee.In 1998, the opening of the first branch at Bangkok International Airport (Don Muang). In 1999, branch opened at Queen Sirikit National Convention Center. In 2001, Introduced new menus featuring a unique "fusion food" concept combining the tastes of East and West. In 2002, First

[18] branch outside of Thailand opened in Singapore. First branch opened in Malaysia. In 2003, opened the 100th branch in Thailand. First grand opened in Indonesia. In 2004, First branch in Myanmar opened. In 2005, opened the first three branches in the United Arab Emirates.In 2006, opened the first branch in Cambodia, in Phnom Penh. Black Canyon barista wins second Thailand National Barista Contest. The company launched new Caf Nero by Black Canyon concept at three branches in Bangkok's new international airport. In 2007, Black Canyon barista takes first place in the Thailand Latte Art Championship. The establishment received the Prime Minister's Export award in the category of "Best Service Provider." In 2008, Gelatoni - "The healthy Italian ice cream" brand launched. Black Canyon gets the Gold Award from the SME Best Brand Awards. Again, Black Canyon Coffee is awarded "Super brands" status for 2007 2009. In 2009, Black Canyon's Pad Thai takes first place for "authentic taste" in Thailand's first Pad Thai world championship. Black Canyon barista win three national competitions: the Grand Barista Championship Thailand 2009; the National Thailand Barista 2009; and the Thailand Barista Championship. In 2010, First branch in China (Shanghai) opened.

SYNTHESIS Tipping means to give or to hand over. It is a gesture of appreciation for service rendered.

The custom of tipping started from Western countries because of western tourists that have higher budget, the custom and expectation for gratuity spread throughout the world. In Asia, tipping depends on the luxury level of hotels and restaurants. In the European countries, namely Italy and France, there is a 5%-10% service charge but still the wait servers expects for an additional tip. In South Africa and Mexico, tips are always expected for everyone who offers help or service. Many of the occupations around the world derives majority of compensation from tips.

[19] Philippines also adopted the custom of tipping from the Western culture. Tipping most of the times, is applied in urban areas that are frequently visited by tourists. In most food and beverage establishments, service charge is already included or guests tip independently incorporating a 10% rules. Each establishment has its own way in handling tips. Some centralizes their tips, but I accordance to employees perspectives they would not rather have it centralized or pooled for some reasons. Currently, Philippines is ranked second as Asia Pacifics Most Consistent Tippers according to MasterCard worldwide. Starbucks began in Seattle during the 1970s. Starbucks Philippines opened their first branch on December 1997 at Makati City. Now in the 20th century, Starbucks has 15,000 locations in 40 countries worldwide offering not only coffees and espresso drinks but tea based drinks and frappuccino blended beverages.

Black Canyon Coffee started in Thailand in year 1993. Currently Black Canyon Coffee has 200 branches in 40 international locations. They offer not only coffee but also Thai International Cuisine.

[20] CONCEPTUAL FRAMEWORK

DEPENDENT VARIABLE Effects of tip centralizationin terms of: - performance - financial status - self-esteem

Comparative study on effects of tip centralization

INTERVENING VARIABLE - policies and procedures of Starbucks and Black Canyon - years of experience of each employees

INDEPENDENT VARIABLE - located in Las Pias City - Starbucks and Black Canyon Coffee employees

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CHAPTER III METHODOLOGY


This chapter presents the ways and means in which the study was conducted and will help in giving its purpose and strength as it will then be scientific and analytical. All these will help in the processing of the data and the formulation of conclusions.

RESEARCH DESIGN

This study entitled "Impacts of tip centralization to employees of two coffee shops in Las Pias City is a quantitative research that attempts to accumul ate information and data regarding the tip centralization that is being implemented on Starbucks SM Southmall branch and Black Canyon Coffee SM Southmall branch.

This research utilizes the descriptive kind of research. Descriptive research is a method used to obtain information relating to the current status of an issue to describe what exist within the condition of the situation. One of the common types of descriptive research is survey. The researcher could make use of questionnaire to gather data about the research.

PARTICIPANTS OF THE STUDY

The participants of the study are the 20 employees of Starbucks and 30 employees of Black Canyon Coffee which includes baristas, managers, cooks, servers and supervisors. The researchers believe that the information that would be gathered from the employees is almost enough to support our topic, because if analysed the employees are the one who would not have fear to tell the truth about what they have observed and experienced with the tipping customs.

[22] The researchers also have a brief interview with Mr. Michael Angelo Guillarte (Starbucks Store Manager), Ms. Lara Caliwan (Starbucks Regular Employee), Mr.Jeric Sanchez (Black Canyon Regular Employee) and Ms.Russledel Rosario (Black Canyon Store Manager) in relation to the companys policies and procedures in tip centralization.

In determining the total number of respondents of the study, the researchers used Slovins formula to know the sample size to be extracted from the given population. The sample size from Starbucks is 20 out of all the 20 employees and the sample size from Black Canyon Coffee is 30 out of all 30 employees, both computed with a margin of error of 2%.

Slovins Formula: n = N / ( 1 + Ne2 ) Whereas: n = sample size N = population e = margin of error (2%)

INSTRUMENTATION

INSTRUMENTS USED

The researchers use survey questionnaires, interviews and direct observation to answer the problem What are the impacts of tip centralization to employees in two coffee shops in Las Pias City? Survey questionnaires that are distributed to the employees of Starbucks and Black Canyon Coffee are developed by the researchers. The researchers also interviewed selected employees of Starbucks and Black Canyon Coffee to determine the establishments tipping policies and procedures. The researchers took time to observe on how the employees reacted to tips.

[23] VALIDATION OF INSTRUMENTS

The researchers use survey questionnaire to collect information from employees. The survey questionnaire are prepared by the researchers and was checked, reviewed and validated by the research adviser before the survey questionnaires are released to the respondents.

DATA GATHERING PROCEDURE

The researchers used purposive sampling to gather the data. The research problem specifically indicated that the eligible participants that would be surveyed and interviewed are the employees. The researchers chose Starbucks and Black Canyon Coffee in SM Southmall branch having being both coffee shops and having centralized tipping system. Using the Slovins formula, computed with a two percent margin of error, it determined that all of the 20 employees of Starbucks and all of the 30 employees of Black Canyon Coffee are to be the participants of the study.

STATISTICAL TREATEMENT OF DATA

Data collected was tallied and arranged for statistical treatment by constructing a table frequency and percentage, wherein both results was obtained to determine the demographic profile of the respondents as to company and job positions. Frequency was obtained by tallying the respective responses of the respondents in every category of demographic profile variables.

Slovins Formula: n = N / ( 1 + Ne2 ) Whereas: n = sample size N = population e = margin of error (2%)

Percentage Formula: P = ( f / n ) x 100 Whereas: f = frequency p = percentage (%) n = number of samples

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CHAPTER IV PRESENTATION, ANALYSIS AND INTERPRETATION OF DATA


I. PROFILE II. Table 1 Profile of Respondents Starbucks Variables FREQ No. Of Employees Position Years of Experience Barista 1 year 20 19 12 % 40% (95%) (60%) Barista 2 years and up Black Canyon Variables FREQ 30 18 21 % 60% (60%) (70%)

Figures 1 Position of Respondents STARBUCKS


5% 17% 13% 3% 7% 95% 60% 74%

BLACK CANYON

BOTH
10% 8% 2% 6%

Barista
Store Manager Superviser Cook Server

Fig. 1.1

Fig. 1.2 Figures 2 Years of Experience

Fig. 1.3

STARBUCKS 5% 5% 5% 10% 10% 5% 60%

BLACK CANYON 3% 7% 3% 3% 3% 7% 13% 17%

3 BOTH 2% 6% 4% 2% 2% 6% 12%
1 Year 2 Years 3 Years 4 Years 5 Years 6 Years 7 Years 8 Years 10 Years 16 Years

30%

42%

13%

14%

10%

Fig. 2.1

Fig. 2.2

Fig. 2.3

[25] In both coffee shops, the employees are mainly baristas. In terms of years of experience, most of Starbucks employees have only a year of experience unlike in Black Canyon Coffee, where most of its employees usually have two years and up experience I which 17% of their employees have 3 years experience.

II. ADVANTAGES AND DISADVANTAGES A. Performance Table 2 Tipping as a Motivation to Better Performance Starbucks Black Canyon Both

FREQ % FREQ Yes 20 100% 22 No 0 0% 8

% FREQ % 73% 42 84% 27% 8 16%

Figures 3 - Tipping as a Motivation to Better Performance STARBUCKS BLACK CANYON BOTH

27%

16%

Yes No

100%

73%

84%

Fig. 3.1

Fig. 3.2

Fig. 3.3

In both Coffee Shops, majority of the employees agree that tipping motivates them to perform better. In interviews conducted, the researchers found out that the employees perform better to generate a definite plus on their tips and also on their income.

[26] Table 3 Centralized Tipping in Relation to Better Team Performance Starbucks Yes No FREQ % 20 100% 0 0% Black Canyon Coffee FREQ 29 1 % 97% 3% Both FREQ % 49 98% 1 2%

Figure 4 - Centralized Tipping in Relation to Better Team Performance STARBUCKS BLACK CANYON
3%

BOTH
2%

Yes No 100%
97%
98%

Fig. 4.1

Fig. 4.2

Fig. 4.3

Almost all employees of Starbucks and Black Canyon Coffee employees agree that centralized tipping creates better team performance. In interviews conducted by researchers to the employees, they say that because of centralized tipping they perform better together to generate more of the tips.

[27] Table 4 Equal Division of Tips Results to Involvement for Better Quality Service Starbucks Yes No FREQ % 20 100% 0 0% Black Canyon Coffee FREQ 27 3 % 90% 10% Both FREQ % 47 94% 3 6%

Figures5 Equal Division of Tips Results to Involvement for Better Quality Service STARBUCKS BLACK CANYON
10%

BOTH
6%

Yes No

100%

90%

94%

Fig. 5.1

Fig. 5.2

Fig. 5.3

All of the Starbucks employees and 90% of Black Canyon Coffee employees say that because of tips they make themselves more involve in giving good quality service. Base on the researchers observations, this is so that the guests will prefer their establishments over other coffee shops within the vicinity.

[28] Table 5 Received Tips are Based on Service Satisfaction Starbucks Yes No FREQ % 20 100% 0 0% Black Canyon Coffee FREQ 26 4 % 87% 13% Both FREQ % 46 92% 4 8%

Figure 6 Received Tips are Based on Service Satisfaction STARBUCKS BLACK CANYON BOTH
8%

13%

Yes No
82%

100%

87%

Fig. 6.1

Fig. 6.2

Fig. 6.3

82% of employees surveyed thinks that guests give tips is in accordance to the level of satisfaction that they get from the services rendered to them.

[29] Table 6 Feelings towards Lower Amount of Tips than Usual Starbucks I exert more effort to perform better My self-esteem declines I feel it's unfair I get disappointed I get angry I'm not motivated to go to work FREQ 10 4 3 2 1 0 Black Canyon Both

% FREQ 50% 18 20% 5 15% 3 10% 2 5% 2 0% 0

% FREQ % 60% 28 56% 17% 9 18% 10% 6 12% 7% 4 8% 7% 3 6% 0% 0 0%

Figure 7 Feelings towards Lower Amount of Tips than Usual


STARBUCKS BLACK CANYON BOTH
I exert more effort to perform better My self-esteem declines I get angry I get disappointed I'm not motivated to go to work

15% 10% 5% 20%

50%

10% 7% 7% 17% 60%

12% 8% 6% 18%

56%

Fig. 7.1

Fig. 7.2

Fig. 7.3

The graph shows the percentages of employees reactions whenever they receive less than the usual tip. In both Starbucks and Black Canyon Coffees employees, the majoritys reaction is to exert more effort to perform better to be able to compensate from their unsatisfactory performance. In all of the choices given Im not motivated to work was not chosen by any of the employees of Starbucks and Black Canyon Coffee cause not only wont they receive tips their salaries will also be deducted.

[30] Table 7 Centralized Tipping as a Cause to Relying on Co-Workers Performance Starbucks Yes No Black Canyon Both

FREQ % FREQ 18 90% 15 2 10% 15

% FREQ % 50% 33 66% 50% 17 34%

Figures 8 Centralized Tipping as a Cause to Relying on Co-Workers Performance


STARBUCKS BLACK CANYON BOTH

10%

34%
50% 50%

Ye s

66%
90% Fig. 8.3

Fig. 8.1

Fig. 8.2

Majority of the employees of Starbucks rely also on the performance of their coworkers rather than relying only on their own performance because they share equal amount of tip all of the employees should also exert equal high level of effort. But for 50% of Black Canyon Coffees employees disagreed because they are only conscious on how they perform individually.

[31] B. Financial Status Table 8 Paid Enough Starbucks FREQ % Yes 20 100% No 0 0% Black Canyon Coffee FREQ 18 12 % 60% 40% Both FREQ % 38 76% 12 24%

Figures 9 Paid Enough


STARBUCKS BLACK CANYON

BOTH

24% 40% 60%

Ye s
76%

100%

Fig. Fig. 9.1 9.1

Fig. 9.2

Fig. 9.3

Starbucks pays an above minimum wage resulting to a 100% of employees saying that they are being paid enough. Unlike Black Canyon Coffee which has 40% of employees that disagree because Black Canyon pays their employees just the minimum wage which is 419.00Php-456.00Php per eight hours of work.

[32] Table 9 Enough Salary for Daily Needs Starbucks Yes No Black Canyon % 37% 63% Both FREQ % 28 56% 22 44%

FREQ % FREQ 11 17 85% 3 15% 19

Figures 10 Enough Salary for Daily Needs


STARBUCKS BLACK CANYON BOTH

15% 37% 63% 44% 56%

Yes No

85%

Fig. 10.1

Fig. 10.2 2

Fig. 10.3

Majority of the employees of Starbucks, as the employees perceive, are being paid enough to satisfy their daily needs. On the other hand, 63% of the employees of Black Canyon Coffeeare said to not be paid enough for their daily needs because as stated in Table 14 Salary, majority of them have wages 5,000Php and less.

[33] Table 10 Tips Gives More Purchasing Power Starbucks Yes No Black Canyon Both

FREQ % FREQ 20 100% 17 0 0% 13

% FREQ % 57% 37 74% 43% 13 26%

Figures 11 Tips Gives More Purchasing Power


STARBUCKS BLACK CANYON

BOTH

43% 57% 100 % Fig. 11.1 Fig. 11.2

26%
74%

Ye s

Fig. 11.3

Overall, 74% of the employees of the coffee shops perceive tips as an extra income allowing them to be able to purchase more than just having their salaries budgeted.

[34] Table 11 Percentage of Tips in the Employees Gross Pay Starbucks 1% - 5% 6% - 10% 11% - 15% 16% - 20% 21% - 25% Black Canyon Both

FREQ % FREQ 1 5% 15 7 35% 5 6 8 40% 4 20% 2 0 0% 2

% FREQ % 50% 16 32% 17% 12 24% 20% 14 28% 7% 6 12% 7% 2 4%

Figures 12 Percentage of Tips in the Employees Gross Pay STARBUCKS BLACK CANYON BOTH
1% - 5% 20%

5%
35%

7% 7% 20% 17% 50%

4% 12% 28%

32%

6% - 10% 11% - 15% 16% - 20%

40%

24%

21% - 25%

Fig. 12.1

Fig. 12.2

Fig. 12.3

8 out of 20 employees of Starbucks have tips ranging 11%-15% composing their gross pay. And half of the employees of Black Canyon Coffee have tips ranging 1%-5% of their gross pay. This shows how much of an impact tips have on the income of the employees whether it exists or not.

[35] Table 12 No Tips Affects the Way of Living Starbucks Yes No Black Canyon Both

FREQ % FREQ 20 100% 17 0 0% 13

% FREQ % 57% 37 74% 43% 13 26%

Figures 13 No Tips Affects the Way of Living


STARBUCKS

BLACK CANYON

BOTH

26% 43% 57%

Ye s
74%

100 % Fig. 13.1 Fig. 13.2

Fig. 13.3

This shows how many of the employees think that their way of living would be affected if there were no tips, and the result is all of the employees from Starbucks think correspondingly. Compared to Black Canyon Coffee employees who almost half thinks otherwise since they usually receive small amount of tips.

[36] Table 13 Lowest Share of Tip Received Starbucks 100.00Php - 500.00Php 600.00Php - 1,000.00Php 1,100.00Php - 1,500.00Php 1,600.00Php - up Black Canyon Both

FREQ % FREQ 6 30% 18 5 13 65% 1 5% 3 0 0% 4

% FREQ % 60% 24 48% 17% 18 36% 10% 4 8% 13% 4 8%

Figures 14 Lowest Share of Tip Received


STARBUCKS BLACK CANYON BOTH
100.00 500.00 5%

30%
65%

13% 10% 17% 60%

8%

8% 48%

600.00 1,000.00 1,100.00 1,500.00 1,600.00 Up

36%

Fig. 14.1

Fig. 14.2

Fig. 14.3

100.00Php to 500.00Php are the lowest in terms of cost of tips shared but highest in terms of the quantity of employees that is able to receive that amount. This is followed in terms of the number of employees who have received tips ranging from 600.00Php to 1,000.00Php as their lowest tip amount. The distribution of tips is according on how full the tip jar looks like and is also according to the manager with the employees mindfulness on how it would be handled. Distribution of tips for Starbucks happens at no specific time frame but only when the tip box is full, and for Black Canyon Coffee, they distribute tips every 15th and 30th of the month.

[37] Table 14 Salary Starbucks 1,000.00Php - 2,000.00Php 2,100.00Php - 3,000.00Php 3,100.00Php - 4,000.00Php 4,100.00Php - 5,000.00Php 5,100.00Php - up FREQ % 0 0% 0 0% 8 40% 2 10% 10 50% Black Canyon FREQ 3 6 6 2 13 % 10% 20% 20% 7% 43% Both FREQ % 3 6% 6 12% 14 28% 4 8% 23 46%

Figures 15 Salary
STARBUCKS BLACK CANYON BOTH
1,000.00 2,000.00 2,100.00 3,000.00 3,100.00 4,000.00 4,100.00 5,000.00 5,100.00 - Up

10% 50% 10% 40% 43% 20% 7% 20% 46%

6% 12% 28% 8%

Fig. 15.1

Fig. 15.2

Fig. 15.3

Employees, such as baristas and cooks, are usually paid above minimum which is enough for the service that they render. In the interview conducted by the researchers, the salary varies if the person is a regular employee or a part timer and what position the person is in. As seen in figure15, 46% of the total numbers of employees receive salary of 5,100.00Php and above.

[38] A. Self-Esteem Table 15 Tips Help Boost Self-Esteem Starbucks Black Canyon Both

FREQ % FREQ Yes 20 100% 22 No 0 0% 8

% FREQ % 73% 42 84% 27% 8 16%

Figure 16 Tips Help Boost Self-Esteem STARBUCKS BLACK CANYON BOTH


16%

27%

Ye s
84%

100 % Fig. 16.1

73%

Fig. 16.2

Fig. 16.2

In connection to that employees belief that they are being tipped because of customer satisfaction, 84% of the total number of employees have their self-esteem boosted because of tips. The reason is because both coffee shops are service oriented, thus satisfying customers makes employees satisfied as well.

[39] Table 16 Tip as an Offending Act Starbucks Yes No FREQ 1 20 % 5% 95% Black Canyon FREQ 0 30 % 0% 100% Both FREQ 1 49 % 2% 98%

Figures 17 Tip as an Offending Act


STARBUCKS

BLACK CANYON

BOTH

5%

2%

Ye s

95%

100%

98%

Fig. 17.1

Fig. 17.2

Fig. 17.3

Most may think that tipping could not offend the servers, and in this case 98% of the employees confirm this. But there was still an employee of Starbucks that is offended with the gratuity given, based on the employees point of view it is only because it was not enough for the service rendered.

[40] Table 17 Employee Service is worth Receiving Tips Starbucks Yes No Black Canyon Both

FREQ % FREQ 20 100% 22 0 0% 8

% FREQ % 73% 42 84% 27% 8 16%

Figures 18 Employee Service is worth Receiving Tips


STARBUCKS
BLACK CANYON BOTH

27%

16%

Yes No

100 %
Fig. 18.1

73%

84%

Fig. 18.2

Fig. 18.3

Referring back to the coffee shops goal which is to satisfy the customers, the majority of employees, that 84% of all employees, exert the best service they could offer making it worth receiving tips.

[41] Table 18 Unfairness in Equal Tip Distribution Starbucks Yes No Black Canyon % 0% 100% Both FREQ % 7 14% 43 86%

FREQ % FREQ 7 35% 0 13 65% 30

Figures 19 Unfairness in Equal Tip Distribution


STARBUCKS BLACK CANYON BOTH

14%

35%
65% 100% 86%

Ye s

Fig. 19.1

Fig. 19.2

Fig. 19.3

Tips are distributed equally in centralized tipping systems whether each employee has different level and type of responsibility and quality of service rendered to customers in the work place. There are 35% of Starbucks employees who think that equal tip distribution in unfair to those who really do a better job than others. But all of Black Canyon Coffee employees believe otherwise.

[42] III. POLICIES AND PROCEDURES

The researchers conducted an interview to determine the policies and procedures that Starbucks and Black Canyon Coffee implements with accordance to their tips.

STARBUCKS

The researchers found out that each branch of Starbucks has its own way in dealing with tips. Usually the manager decides and consults its employees on what to do with the tips. Tips are being used sometimes to buy the employees meals or snacks every time they have their meeting. But when they are distributing the money itself, they treat each employee equally whether they may be a regular employee or a part-time employee, whatever the employees position may be and even if any employee has absences or none.

The researchers also got to know that there are no specific time periods where in the manager collects and record the tips they receive which is only when the tip box looks full that the manager collects and records the amount of tip. The manager records the tip with a witness of a barista then announces it to the rest of the employees.

BLACK CANYON COFFEE

The researchers have gathered information from Black Canyon Coffee on how and when they collect record and distribute their tips. They do all these three steps all in the same day during their paydays every 15th and 30th of the month. They collect and record the amount of tips they have in the tip box witnessed by all of the employees. Tips are then equally, as always, divided and distributed together with the employees salary. This process only differs when an employee has five or more absences then the employee wont receive any share of the tips.

[43]

CHAPTER V SUMMARY, CONCLUSION AND RECOMMENDATION


. This chapter discusses the summary, conclusion and recommendations of the study. The information summarized in this chapter answers the research questions stated in chapter one. In this chapter, conclusions and recommendations are drawn from the result of the study on tip centralization to employees in two coffee shops in Las Pias City.

SUMMARY

Tipping is a form of gratuity in some Western countries and some Asian countries including the Philippines but in some countries like Japan, it is an insult and rude when someone give tip. This is a voluntary additional amount of money given to the server for their service. The researchers objective is to determine the advantages and disadvantages of centralized tipping system in two coffee shops in Las Pias City. It likewise seeks to answer how tip affects workers performance, if tip can add to their purchasing power and standard of living and their self-esteem, to know if their service is worth receiving tip and lastly, to know the policies and procedures that are implemented by the management regarding tip centralization.

Based on the study of the researchers, majority of the respondents are single and are baristas. As seen in table 1, 60% of Starbucks employees have a year experience while Black Canyons employees have two years and up experience in which 17% of all its employees (fig.2) have three years experience.

Tips can motivate employees to give a better quality service rather than the usual rendered service. 98% of the employees (fig.4) think that tipping leads to a better team performance. Majority of the employees for both coffee shops says that tip can result to quality service. 82% of the employees as seen in Table 5 think that if they receive tips,

[44] the customer is satisfied with the service rendered by the employees. As shown in Table 6, 56% of the employees say that they exert more effort to perform better however 6% of the employees get angry if the tip that they receive is less than the usual amount of tip that they are receiving. In Table 7, 90% of the Starbucks employees say that they are relying on the performance of their co-workers because they receive the equal amount of tip while 50% of the Black Canyon employees disagreed because they are only conscious on their individual performance.

Most of the employees feel that they are being paid for the service they rendered and that their salary is not enough for their daily needs but for the majority of the Black Canyon Coffee employees says that their salary is not enough for their daily needs. For the both establishments, tips give them more purchasing power. For the Starbucks employees, the lowest share amount of tip that they have received ranges from 600.00Php 1,000.00Php while the Black Canyon Coffee employees receive the amount of tip ranging from 100.00Php 500.00Php. Currently the minimum wage here in the Philippines is 419.00456.00 and that is how much Black Canyon Coffee gives to their employees every payday unlike Starbucks who gives higher than the minimum wage.

The result of the study conducted by the researchers, in terms of self-esteem, tipping boosts employees self-assurance, especially since the employees believe that tips are the measurement of customer satisfaction thus satisfying the customer satisfies them. But in some cases, where in an employee of Starbucks sees tips as an offending act cause of the employee putting all his or her effort to do a good job but then the tip received is not enough or commensurate. Overall, majority of the employees doesnt see centralized system of tip sharing unfair but still there was 35% of employees from Starbucks (table 18) says that its unfair since each employee have a different level and type of responsibility and quality of service.

For Starbucks Coffee, manager consults the employees on what to do with the tips whether it will be used to buy employees meal or it will be given as in gratuity monetary amount. It will be distributed equally to the employees but there are no specific time

[45] periods when the manager will collect and record the tips. It is usually based on the tip box when it is nearly full. A more systematized procedure is followed by Black Canyon in terms of distributing tips., every 15th and 30th day of the month at the end of the employees shift, the manager collects records and distributes the tip, whether the tip box is full or not, then it is equally divided for the employees together with their salary.

CONCLUSION

The researchers conclude in this study that the advantages of tip centralization to employees of two coffee shops in Las Pias City, in terms of performance is that the employees are motivated more in giving customer satisfaction whether they may receive high or low amount of tips. While its disadvantage is that when the share of tips is lower than usual amount it makes them feel disappointed and even angry which both are not conducive in the workplace.

Financially speaking, the advantage of tips to employees is that it gives them a definite plus in their income. Yet its disadvantage is that employees become more dependent on tips.

Self-esteem wise, tips boost self-assurance of the employees. But its disadvantage is that centralize tipping is somehow perceived as unfair since each employee have a different level and type of responsibility and quality of service.

The advantages in terms of having policies and procedures like in Black Canyon, is that it would be a standardized system. For its disadvantages, the more the employees share tips in the establishment the less amount each employee will receive especially when not all of them generate tips like those back of the house employees. And that having a policy that tips are only distributed whenever the tip box is full might confuse the employees. .

[46] RECOMMENDATIONS

To the Starbucks employees, the researchers recommend that they should perform better to generate more tips to be able to fill up the tip box faster, so that the management could distribute the money quicker.

To the Starbucks management, the researchers recommend that a clearer and more systematic process of collecting, recording and distributing tips to the employees.

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