October 14, 2015 – Restaurateur Danny Meyer announces that he is eliminating tipping at his restaurants, showing that unlike most of us he understands the negative impact tipping actually has.
Danny Meyer, in charge of the Union Square Hospitality Group, desires to establish a more fair salary for his staff and is setting a new food industry standard. Only a small number of restaurants in the U.S. have decided to take this drastic step and eliminate tipping. The Atelier Crenn in San Francisco, for example, puts a surcharge on the bill, while others like Bruno Pizza in NYC include the cost of an hourly wage in their menu prices.
Other restaurants will be paying close attention whether Mayer will be able to eliminate tipping and still make a profit.
This is a much more fair deal, as under federal labor laws pooled tips can be shared only among those who serve the customers in some way, which means the kitchen staff and managers are completely left out. Mr. Meyer hopes to raise the wages of assistant cooks and junior dining room managers, dishwashers and other kitchen workers who work diligently but are paid less. Servers on the other hand will probably be paid roughly the same in this tip-less system and instead of a tip they will receive higher wages.
“The pay gap between kitchen and dining room workers has grown by leaps and bounds,” said Meyer. He has been in the business 30 years and in his experience, “while dining room servers’ pay has gone up 200 percent, kitchen workers’ income has gone up no more than 25 percent.” He continues by saying that tipping also sets an unjust system for the servers themselves, as their tip often depends on their attractiveness and race, and the mood of customers – factors that are in no connection with the quality of service.
Above all, tipping has created a two-tier system of pay which deeply impacts millions of workers. And let’s not forget that the federal labor law sets a lower minimum wage for tipped workers – which means it saves money for businesses.
Restaurants that eliminate tipping give up a considerable tax credit on tipped income. Mr. Meyer expects that the Union Square Hospitality Group is to lose around $1 million on tax credit alone.
Owner of ten restaurants, Drew Nieporent, doubts that the average customer could ever accept an increase in prices that he estimates at 20-plus percent, an increase that would make up for the considerable loses on tax credit. Besides, customers hold their right to reward hospitality dear (or to withhold the reward when necessary).
“In America, tipping is a way of life,” said Nieporent. “It might not be the best system, but it’s our system, the American system.”
One thing is certain, if we want to achieve this change across the nation, we must reform the law that has set a lover minimum wage for tipped workers. The fact that tipping in the U.S. was rooted in the 19th century, as business owners fought to keep the system claiming that tipping was a legitimate substitute for wages – particularly because most of their tipped workers were African-Americans, mostly freed slaves, and employers disliked having to pay them at all.