Danny Meyer Eliminates Tipping at his Restaurants
In an open letter, Danny Meyer, the man behind the Union Square Hospitality Group, announced that his 13 restaurants will no longer allow tipping. The first unit will be the Modern, a two-Michelin-star restaurant located in New York City’s Museum of Modern Art. In late November, the Modern will take the tip line off the check and raise the overall price of a meal by 20 to 35 percent. The other 12 restaurants are set to follow over the course of the next year.
In the letter, Meyer says the conversation centered around providing “even more meaningful career opportunities and advancement” for the company’s 1,800 employees. Among the obstacles Meyer has faced, he explains, is trying to provide equal compensation throughout his restaurants. Federal labor laws require that pooled tips be distributed only to customer service workers who typically receive gratuities. That leaves kitchen staff, like cooks and dishwashers, off the list. Additionally, attracting quality cooks and keeping them has been a long-held concern for restaurateurs—a problem magnified by New York’s September implementation of a $15 minimum wage hike for fast-food workers.
According to a story in The New York Times, Meyer was paying his kitchen employees an average of $11.75, a number expected to jump to $15.25 in the absence of tipping.
“There are countless laws and regulations that determine which positions in a restaurant may, and may not share in gratuities,” Meyer says in the letter. “We believe hospitality is a team sport, and that it takes an entire team to provide you with the experiences you have come to expect from us.”
Meyer goes on to say the change will help employees grow financially and professionally based on merit, which would essentially prevent a customer’s subjective feelings and whims from fluctuating a server’s pay. Currently, New York’s minimum wage for tipped workers is $5, with an increase to $7.50 going into effect on December 31. While the balance can swing to both extremes, think hectic, busy weekend nights against slow shifts and some foreign tourist visitors who aren’t familiar the U.S.’s custom of tipping, the same can’t be said of the fixed wages earned by kitchen staff. That discrepancy can make hospitality standards—something Meyer has always been known for—tough to define. The battle of earning certain shifts, serving specific sections and customers, won’t hold the same weight without the tipping equation.
The change in check price will also have to make up for, in some part, a hit Meyer told The New York Times would be in the $1 to $1.5 million range due to the absence of a hefty tax credit on tipped income.
“Once these changes are implemented, the total cost you pay to dine with us won’t differ much from what you pay now,” Meyer says. “But for our teams, the change will be significant. We will now have the ability to compensate all of our employees equitably, competitively, and professionally.”