The Reason You Don't Need To Tip At McAlister's Deli

If you're a fan of dining out, you likely ask your friends the same question at the end of every meal: "How much should we tip?" Opinions may vary depending on who joined your lunch or dinner, the quality of service, or how expensive the bill was. The question of how much to tip your server can get complicated, so that's why one American chain decided to simplify things.

While McAlister's Deli has continued to expand and now offers 500 restaurants in 29 states, the first McAlister's had a unique beginning. According to The Oxford Eagle, in 1989, retired dentist Don Newcomb opened what he initially called Chequer's on the remains of an old movie-set diner in Oxford, Mississippi. Changing the name to McAlister's to honor his wife's parents, the chain is now known for its large variety of sandwiches and sweet tea. Soups, salads, and sides like potato salad or fresh fruit are also on the menu. But its history and classic staples are not all McAlister's offers its customers. Some customers who are unfamiliar with McAlister's may be in for a pleasant surprise when paying at the counter and they are told not to tip.

But why does McAlister's Deli encourage customers to ditch the tip, especially when other franchises are catching heat for trying to avoid paying their employees? And what does the chain do when customers try to tip their servers?

According to Restaurant Hospitality, both employees and customers have welcomed the chain's no-tipping policy and there are even signs at each location reminding customers that they do not have to tip. Philip Friedman, former president and CEO of McAlister's Corp., wrote for Restaurant Hospitality, "We try to make our restaurants a place where hospitality is simply part of our concept ... by delivering our customers' orders, we're offering more than people expect. It's a small difference for us, but a big difference for customers."

In fact, Friedman says the chain is not hurting in terms of attracting quality employees because of this policy (per Restaurant Hospitality). Although Friedman says the policy appears to be working well, in March of 2010 three New Orleans McAlister's employees filed a suit because they did not receive their tips and instead, the tips went to "unspecified charitable donations" without their permission (per Nola.com). McAlister's chose not to comment. However, according to Restaurant Hospitality, it is company policy that any tips customers do leave behind are given to charities like the Make-A-Wish Foundation or other foundations.

According to Indeed, on average, McAlister's employees make a little more than $14 per hour. This salary is more than the minimum wage in most states (per Paycor). Their average salary suggests that what employees lose in tips may be made up for with an above minimum wage salary. 

McAlister's is not alone. According to Reddit, as of 2019 there have been just under 200 restaurants in the U.S. that have implemented a no-tip policy. In contrast to these locations, other fast-food restaurants have introduced check-out screens and mobile apps suggesting that customers leave a tip, causing some customers to wonder whether tipping at fast-food restaurants will become more common. 

American customers appear to be on board when it comes to tipping less. A 2022 survey from CreditCards.com found that in the U.S., 73% of people who dine out reported that they "always tip," compared to 77% in 2019. In addition, 57% of Americans said they never fail to tip food delivery drivers, a decrease from 63% four years ago. Just 43% of participants said they "always tip" their rideshare and taxi drivers versus 49% in 2019. The trend suggests that spots like McAlister's may appeal to diners who are trying to save money post-pandemic, or more likely to want a quick bite to eat while working remotely.

According to Friedman, other restaurants that want to set themselves apart from competitors should consider a no-tip policy in order to appeal to customers (per Restaurant Hospitality). Overall, the policy seems to be working well for McAlister's. One example? McAlister's franchisee Guillermo Perales, CEO of Sun Holdings, planned in 2021 to open 51 McAlister's locations over six years (per Nation's Restaurant News).