The Debate over Danny Meyer's Bold Move Continues

Danny Meyer's decision to eliminate tipping could have a widespread effect on the industry.
Danny Meyer's decision to eliminate tipping could have a widespread effect on the industry. thinkstock

When it comes to tipping, opinions remain evenly divided between skeptics and supporters.

When Danny Meyer announced his intention to eliminate tipping throughout the Union Square Hospitality Group, we invited readers to email their opinions and we shared some of the initial comments on our website. Several weeks hence, responses continue to come in. Opinions are as evenly divided between supporters and skeptics as the red and blue political caucus. (I first wrote political circus, then thought better of it.)

Circus, however, is what many of the tip-elimination naysayers predict will ensue in the front of the house if waitstaff no longer have the opportunity to collect monetary votes for jobs well done. The two biggest concerns: Service will falter if there is no incentive to excel; and the best servers will leave for those greener pastures that still allow tips—which could mean diners also migrate to competitors across the street that serve the better dining experience.

What has been most surprising, however, is how rarely people mention the back of the house. If you read the intent of Meyer’s proposal, the driving objective was to improve compensation for the kitchen staff, who typically put in the longest hours for the lowest wages.

Compensation and career potential for cooks and kitchen workers must be addressed. That said, robbing Peter to pay Paul has rarely proved effective, and in this case the math simply doesn’t add up: What diners would have spent in tips is now bundled into menu prices that have been increased to the tune of 20 or 30 percent. However, the increase theoretically will go predominantly to BOH staff. Waitstaff and bartenders might see a marginal increase, but is it realistic to believe that servers will be able to match what they could formerly earn in gratuities? Most think not.

Fundamentally, the question of tipping becomes a function of time and place. What works for Danny Meyer in Manhattan simply may not be feasible at restaurants with more modest check averages and in middle markets around the U.S. However, in fine-dining and upscale restaurants, elevated price points that support higher wages throughout the house and no-tipping policies are actually nothing new. During my college years (circa late 70s), I worked as a waitress at a resort club where gratuities were not allowed. Across town, several friends worked at a steakhouse where wages were lower and tips were plentiful. We often compared notes—and concluded the main difference was that my earnings were consistent on a daily basis and throughout the seasons; their earnings came in weekend windfalls and peak tourist times.

The tipping debate will continue, as will the dilemma over recruiting and retaining quality kitchen staff, but one opinion resounded with nearly unanimous consent: Danny Meyer deserves kudos for his gutsy move, and if such an economic shift is to occur across the industry, he is likely the best candidate to lead the evolution.


One solution is to have 2 pay structure
Front of the house at 5.50$ and retains all tips and back of the house
High minimum wages ( California 15$) this way we can pay the kitchen staff 16 to 18 per hour.
If we pay 15$ the FH the gap with the BH will be enormous

I applaude Danny Meyer for going out front on the tipping issue. I hope he will set a trend that will become the norm. However, it seems to me, in order to replace the 18% tips all our servers enjoy our prices will need to be increased by more than 30%. Here is why I say this. First of all the increased wages will result in higher FICA, SDI taxes along with higher Workers Compensation rates on the new higher payroll. Those of us who have percentage rents will be paying 6 to 8% additional rent on the increased prices. For these reasons the price increases will need to be in the 30% range. The guest will have to pay sales tax on the 30% increased prices. In addition we will have to pay the credit card companies between 2 to 3% additional discount charge on the additional 30% sales. If we take some of the 30% price increases and share them with the "heart of the house team members" the servers will have to take a pay cut. Not to mention all their income will have to be on their pay check. Currently they are used to walking with cash every day or night.

Service does not suffer. FOH retention is significantly greater. No tipping works at mid price point restaurants. Servers income is much more consistent. Servers are much more conscious of up-selling and additions. Servers work harder on those activities required for running a restaurant but are not compensated by tips. It shifts business risk to the business instead of the employee, as it should. How do I know these things? I have been doing it at Packhouse in Newport for 2 years. I applaud Danny for making the change in a segment of the industry that will get the most employee push back.

People who think good service only come from tipping must never shop at other businesses where service is great despite no tipping. Many retail businesses offer excellent service without tips as do many other service roles. I've never thought that service at a restaurant was truly dependent on tips. I've had great waiters and waitresses and terrible ones just like in all businesses.
I also think that nay-sayers are underestimating the appeal of regular predictable compensation. There really is nothing like knowing you can count on the pay from your employer.

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