Reaction to No-Tipping Policy at Union Square Hospitality Group Restaurants | Food Newsfeed
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Reaction to No-Tipping Policy at Union Square Hospitality Group Restaurants

October 16, 2015 Industry News

FSR readers continue to share impassioned opinions about the announcement from Danny Meyer that he plans to eliminate tipping in his restaurants and increase menu prices to support higher wages:

“We operate three very high-volume full-serve units (total of 1,500 seats), and with Seattle going to a staggered minimum pay increase we decided to take everyone to $15.00, and we allocate 8 percent of sales as the tip pool and it goes to all employees evenly based on hours. We raised our prices 21 percent to make this happen. It has been in place for 5 months and is working. We have found some guests will tip additionally. I think Danny will do just fine, and it is about time we stopped tipping in this country…the key is balance between the front and back of the house; it has never been fair.”

Harry Roberts, Ivar’s Seafood, Seattle

“Brilliant move by a brilliant guy. It directly addresses the industry’s most pressing issue—retaining great kitchen talent. Most restaurateurs would balk at raising menu prices, but it will work for Danny Meyer because he has built so much equity in these restaurants. Plus, he is getting a lot of buzz from being the first to do this which will help his business.”

Peter Nolan, Chief Brand Officer, Roti Modern Mediterranean, Chicago

“The move towards a no-tipped model is still somewhat of a bourgeoning concept within the industry. I wouldn’t call it a trend as only a handful of restaurants across the country have implemented this system—usually in the fine-dining segment in more urban areas. With over 1 million restaurants across numerous segments, what might work for one restaurant may not work for another. In an industry as fast paced and ever-evolving as the restaurant industry, America’s restaurateurs should continue to have the freedom to do what what’s best for their business and their workforce.”

Christin Fernandez, Director, Media Relations & Public Affairs, National Restaurant Association, Washington, D.C.

“I do not feel it would be in the best interest of the restaurant patrons to eliminate tipping. Neither will it be in the best interest of the small, independent restaurants. Our costs are high enough as it is, and we are continually having difficulty competing with the large chain restaurants that can absorb the costs a little easier. At the end of the day, the restaurant patrons are bearing the brunt of the cost whether in the tip or in the cost of their meals. Regarding the service, we have been in business for the past 22 years in the same location. We have seen many servers come and go. The days of the "career server" are gone. What restaurants are left with nowadays are students paying their way through college. They're here today; gone tomorrow. Without the incentive of tips based on their level of service, I feel the restaurant patron will not get the best service they deserve because there is no incentive on the part of the server to go above and beyond for that guest. When their income is directly affected by their level of service, the guest will have a better dining experience whether it be in a small mom and pop shop like ours or a large chain restaurant. People work hard for their money and deserve to be treated well.”

A. John Aouad, Owner/Master Chef, Osta's Lebanese Cuisine, Grand Rapids, Michigan

“I'm going to be meeting with Danny Meyer and other folks on Monday to discuss ending tipped wages. I am very much on board and want to see this happen.”

Andy Shallal, Owner, Busboys and Poets, Washington, D.C.

“Wait staff prefer tips over [a] wage increase. Their best waiters will leave; quality of service will diminish.”

Steven Carroll, Director of HR/Training, Hooters of New England/NY

“A great move forward for a big restaurant group but I worry that our customers (we are a small, single-location restaurant) would be faced with sticker shock if we were to raise our prices enough to offset the payroll increase.”

Sasha Miranda, Miranda Restaurant, Brooklyn, New York

“In the short-run, sometimes it’s pioneers who take the arrows, as the top earners under the existing system are candidates for changing employers. Our concept is full-service cinema dining. For us there may be applicability of either Danny Meyer’s approach or a separately stated service charge—not because the tipping system creates inequalities among different positions (we pay our starting cooks market wages with further merit increases above market), but because a significant portion of our patrons don’t understand that our service staff lives on gratuities.”

Allan L. Reagan, President and Chief Enthusiasm Officer, FLIX Entertainment Group (Flix Brewhouse), Round Rock, Texas

“Something has to change to make it possible for independent restaurants to survive. When you combine the addition of line items in restaurant P&Ls like Open Table, mandatory sick time, and crackdowns by the DOL and DOR—restaurant margins keep shrinking. In addition, when sales are almost 100 percent credit card taking about 3 percent off the top hurts as well. In the end of the day, most chefs that I speak with want to increase pay for the kitchen team, but there is very little money after operations to give raises. It seems to me something has to change, but the specifics need to be worked out in a way that allows owners to make an informed decision on which way to go when laws vary from state to state. I think that a service fee to the guest makes more sense than raising menu prices because the guests’ price perspective is way behind the increase in ingredient [costs] that we have seen over the past 6-10 years. Combining a profit sharing system that is based on performance and longevity in the job might allow service not to suffer and encourage employees to excel and also progress in their career.”

Jeffrey P. Fournier, Chef / Owner, 51 Lincoln / Waban Kitchen, Newton Highlands, Massachusetts

“I believe that you are going to see a lot more industry leaders begin to take this step. Both the minimum wage increase and the ACA implications are going to have drastic impacts on the hospitality industry (as well as many other businesses). We recently sold a restaurant (Pasta Pane) due to these very reasons. Absorbing these costs will be next to impossible while continuing to provide our guests with a great product at a reasonable cost. Danny Myer is smart to make this move. This will test the industry to see if we are ready to eliminate tipping as a way to balance the effects of these two major costs. My only concern is "we" as an industry are going to have to find a way to encourage waitstaff to remain sales people, possibly by adding sales goals so they do not get complacent.”

Nancy Bambara, Vice President, COO, DZ Restaurants, Saratoga Springs, New York

“As a consumer, it would be great. However I’ve experienced this in a country club as the executive chef, and I don’t think it works very well. Certainly not for a restaurant owner who is trying to be competitive in the market. The system doesn’t motivate servers to apply their best at resolving their own customers’ needs. I think new-hire motivated servers quickly fall into the complacency of the “behavioral normal” of the servers “as a group” when they know they are making the same amount as other servers who really don’t care.”

Dustin Crenshaw, Manager, Jakin & Boaz, Restaurant Development & Group Purchasing, Oklahoma City

“All eyes will be on Danny to see how happy he keeps his staff and guests. As a guest I don’t mind paying more and not tipping as long as the food and service are worth paying for. There is a need to pay high-end cooks and chefs better wages and this may help. About the front of the house—as long as they are able to balance slow nights and busy nights and pay accordingly. It may require a “shift premium” to work very busy nights like weekends. Weekends are worth premium money to servers and I’m not sure $15-$20 per hour will compare to tips. We’ll see!”

Lauri Wright, Contract Manager, Proud Employee Owner, VGM Club, Resorts and Gaming, Waterloo, Iowa

Danny Meyer’s decision to install a no-tipping policy in his restaurants is a misdirected solution to a real problem of kitchen workers not being properly compensated. The level of importance kitchen staff and cooks represent in the restaurant industry is clearly equal to all waitstaff positions in any restaurant. The inequity is simply absurd when a wait-person can earn twice the income for half of the hours worked per week to most kitchen staff employees. Danny said in an interview today that it’s against the law to force waitstaff to share their tips with kitchen staff. For me, that’s where the problem sits. Danny should place his good will efforts towards changing the law to fix this compensation dilemma. The no-tipping policy looks good on the marquee. The details won’t support the fix he’s proposing for his staff.”

Steven K. Abourisk, Partner, Southern Hospitality Tableware, Raleigh, North Carolina

“Have found tips a great way for service staff to get instant feedback on their performance from the very person they were serving. It is not perfect, but has worked well. This is not a question of unreported income either, since credit cards account for 90 percent of revenues for most establishments—and these are all reported. This change is about optics—and getting in front of the notion that the business needs to pay $15 an hour ON TOP OF tips. Many in the industry are making $35+ per hour, making it a great part time job while going to school or augmenting a family income.”

Teddi Davis, Owner, The Exchange Tavern, Westminster, Colorado

“I think that as we see minimum wages rise across the country this practice will become more standard, since traditionally restaurant-worker wages are very low with the understanding it will be made up in tips. I have already heard of it being implemented in some restaurants in San Francisco. Restaurant workers both in the back and the front of house are skilled professionals in their trade and deserve to be compensated as such. I’m glad to see someone taking it out of the hands of customers and putting it in the hands of their bosses.”

Paris Landen, General Manager, West Coast Tavern, San Diego

“I think it is another attempt to turn our country toward socialism. Meyers attempt to even wages in the restaurant, FOH and BOH, is ridiculous. The kitchen is where I started, as a dishwasher. Then prep, then line cook, and then to the front as a bartender. I now own two restaurants. viThe American Dream. And that is what makes our country great, why everyone in the world wants to come to America. Now there are some shortsighted people who want to make what once was the greatest country in the world just like every other country!! I cant tell you how many BOH employees have moved to the front only to say, "to hell with that," and ask to go back to their old position. There are some positions in the kitchen that are entry-level, like dishwasher. But at my restaurants not even the dishwashers are started at minimum wage. All BOH employees are given yearly raises based on performance and attitude. Some who have been around for a long time make more than the servers. If people in the restaurant business want to get their BOH employees more money then they should pull out their checkbooks and give them more money. But don't ask the FOH servers or the customers to do it!!

Bill Hall, Owner, Vics on the River, Savannah, Georgia

“When I came to the USA, I did not speak any English so the only job I could do in the restaurant [was] washing dishes, then busboy, and finally when I could speak some English, I became a waiter. The tips motivated me so much that I took three jobs, breakfast shift in one restaurant, lunch shift in another, and dinner shift in another restaurant. I was making so much in tips at twenty years old. By then I had been in the USA for two years, I bought myself a car and rented a nice apartment, all because of the tips. In 1978, I averaged $20 an hour. I was so motivated because of the tips I decided to work six days a week because I had a dream of opening a little restaurant in three years. In 1981 my dream came true. Being in America for four years without speaking any English and going into business all because of the incentive of making more tips. Better service equals more tips. Now I own a five-location Mexican restaurant chain, named Mamacita’s, in Texas, including the real estate, and gross $20 million annually. Service is the most important element of a successful business—especially in the restaurant business. The only way possible is to give the waitstaff an incentive to give better service: more tips! I love this country!”

Hossein Hagigholam (Hagi), CEO and president, Mamacita’s Restaurant, San Antonio, Texas

“I have been a restaurant owner in South Carolina for 31years. I have often said it would be wonderful if everyone was paid like a server. Servers are compensated based on a small set of criteria. Servers are tipped on their performance. They enter into an "agreement " with their customer that they will be providing a service that will be judged by this customer and the customer is obligated to pay for this service. Of course, the customer determines the rate of compensation, and normally the better the performance the better the compensation. The performance is completely controlled by the server. The negatives to this method of compensation are the factors beyond the control of the server, and there are many. A truly gifted server can overcome most any setback. The positive experience of the customer is what determines the compensation for the server. I wish everyone was paid like this.”

Joey Bagwell, Owner, Capri’s Italian, Greenwood, South Carolina

“This is crap!! If we bend to the $15.00 minimum wage that's being thought of, full-service restaurants will disappear. This is another socialist ploy by the left. Why do you think servers despise waiting on Europeans? Think before you vote! Good luck Danny Meyers. I've been in the fine-dining industry for 39 years.”

Bill (Myron) Been, Owner, Myron’s Prime Steakhouse, New Braunfels, Texas

“In short, between the Affordable Care Act, Minimum Wage, and Paid Sick Leave Legislation the typical Restaurant Income Statement has been flipped upside down. I think Restaurant Companies are going to begin testing various scenarios in an effort to minimize the impact of such. Philosophically, I think what Danny has down with this approach to tipping, is set the table to re-engineer how Front-of-the-House Teams work together, to deliver an exceptional customer experience.”

Paul Tuennerman, Co-Founder, Tales of the Cocktail, New Orleans

“I'm a general manager of an Irish Pub and I bartend three nights a week and fill in as a server if needed. I would not bartend three nights a week if I was making enough money as a manager. The fact is, I'm making anywhere between $35–$60 an hour with my tips and no pay increase in the world is going to stand up to that. I can't imagine his servers or bartenders staying, I wouldn't. This is the reason so many people with degrees are in the restaurant business, TIPS... You can't make this kind of money working 9-5 jobs.”

Terri Matthews, General Manager, O’Sullivan’s Irish Pub, Carlsbad, California

“I applaud Danny Meyer for being proactive in his management of our industry's future wage challenges. We are faced with an incredible balancing act: forced wage increases affect employee satisfaction, service standards, menu pricing, store-level profitability, and ultimately the guest experience. What is the answer? We don't know at this point, but the industry is a resilient bunch and we will figure it out. I'm not sure [that]what Danny Meyer accomplishes in his terrific organization will be easy to replicate in the larger casual and fine-dining chains spread out across the country, but it will provide much needed insight.”

Kevin Kruse, Chief Development Officer, Hurricane Grill & Wings

“I am surprised that an astute man like Danny Meyer came out with such a system. I grew up in Italy and in my early years as a waiter I remembered the more we smiled the better tips we received. The reason was we had an incentive to give better service. Since then, Italy and Europe, in general, changed the system and put everyone on salary. The incentive to smile and give good service has almost disappeared. It became almost like a communist system with no more incentives to give great service. I hope Mr. Meyer will reconsider his decision because it will ruin the service industry.”

Alberto Lombardi, CEO, Lombardi Family Concepts, Dallas

“We're thrilled that Danny Meyer is addressing the inequity in pay between the front and back of the house. The hospitality industry should pay a fair wage to professionals across the board for their time and talent. We've struggled with this for the past few years, so it's satisfying to see such a well-known and well-respected restaurateur put a public face on the issue. We are facing a hiring crisis for back-of-the-house positions, and we think USHG's bold move will attract more passionate, hospitality-driven people to work in kitchens where their passion is appropriately rewarded. We hope that USHG is willing to share its experience moving to a tip-free paradigm so the rest of us have an example of how it works.”

Chad Smyser, Director of Operation, North Square, New York City

“I think this is a smart move by Danny Meyer. I believe there will be some resistance at first, but other restaurants will follow and customers will eventually accept it. The massive minimum wage increases that are being passed in so many states are causing everyone to rethink the financial model for restaurants. I believe the no-tipping model will be the standard in the future.”

Jim Materese, Owner, The Melting Pot, Buffalo, New York

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