Danny Meyer, the CEO of Union Square Hospitality Group and Shake Shack, announced plans on Wednesday to banish tipping at each of the group’s 13 full-service New York City restaurants, Eater reports.
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You may have heard the big news this morning: One of the top restauranteurs in the world, Danny Meyer, is eliminating tipping at his entire restaurant empire.
This strategy could also help fine-dining restaurants in expensive cities like New York City hold on to cooks who now might find even better opportunities at fast food restaurants, Meyer says. In Alinea, Next and Aviary’s case-the latter two have been tipping-free since they opened-their service charge is in addition to the ticket price.
Meyer said the total cost customers pay to dine won’t differ much from the current cost, but the change will be significant for restaurant employees. “And we think the more of the restaurants we change over, the more courage, hopefully, that will create for other restaurants to join in, which would then turn this into a virtuous cycle”.
Meyer’s decision was applauded by Amanda Cohen, a chef and earlier adopter, who reopened her vegetarian restaurant, Dirt Candy, on the Lower East Side of Manhattan with a no-tipping policy in February.
“I think that restaurant patrons have unwittingly believed that they could, if they wanted to, use their tip to punish bad service and, or to praise great service”, Meyer tells All Things Considered’s Kelly McEvers. Another problem is that state laws often prevent non-tipped employees – like cooks and dishwashers – from sharing in the tip pool.
Back-of-the-house workers will earn at least $11 per hour, while dining room staff will earn at least $9 per hour-New York state’s minimum wage. “We’re going to change that”, he says.
The risks for the business include scaring off customers with higher prices, losing waitstaff opposed to the new policy, and alienating investors and stakeholders.
Bar Marco also offered its employees health benefits, paid vacation, and shares in the company – all with a minimal increase to menu prices that was largely offset by the no-tipping policy.
The no tipping movement is picking up a few momentum in New York City. Without tips, a server with a $five hourly wage would make $10,000 per year.
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“The gap between what the kitchen and dining-room workers make has grown by leaps and bounds”, Mr. Meyer said. “It will definitely take a little while for restaurant owners to calibrate what to pay”.
