This is going to rock the restaurant industry as we know it.
Danny Meyer, head of the Union Hospitality Group, has announced today that he is banning tips at all 13 of his restaurants, including Gramercy Tavern, Union Square Cafe and Shake Shack. Although eliminating tips has been done before, it’s never actually happened with casual restaurants. Meyer says that tips have been a huge problem for the industry, and that by increasing prices, the customer will end up paying the same amount.
Meyer plans to increase prices by 21%, which covers the average 20% tip that diners usually leave on a bill. What this will do is help even the wage gap between front of house servers and the kitchen staff—who usually get no tips and make at least 25% less than their co-workers. With the minimum wage rising up to $15 in major cities across the country, restauranteurs need to adapt quickly or lose their businesses.
Banning tips has been a long time coming, and many restauranteurs including Tom Collichio support it. However, everyone has been waiting for someone else to do it first. As one of the industry’s biggest restauranteurs, Danny Meyer decided to do just that. He told NPR that he “felt a responsibility to go first” and that it’s just the right thing to do. Major restauranteurs have already reacted on Twitter, many of whom have praised Danny Meyer for eliminating tips and for spearheading the movement. Most notably, Nick Kokonas, the restauranteur who adopted the first restaurant ticketing system at the three Michelin-starred Alinea, hails Danny Meyer’s revolutionizing move.
Who will follow suit next? Will eliminating the age-old custom actually backfire?
Interestingly enough, the opposite has happened on the West Coast. Two major San Francisco restaurants, Bar Agricole and Trou Normand, were early adopters in banning tips. However, 10 months later, they are bringing it back. The reason? “We haven’t been able to keep our servers,” says owner Thad Vogler.
Perhaps the game will change now that Danny Meyer has paved the way for other restaurants to follow suit.
What do you think this means for the hospitality industry?
As a diner, would you still prefer to have the power of tipping in order to reward quality of service?
Will increased dining prices actually help restaurants retain their talent?
Servers, sous chefs, cooks, bartenders, dishwashers and restaurant goers—what does this mean for you?
Leave your reactions below.