Another casualty of the COVID-19 pandemic is Danny Meyer’s initiative to do away with tipping. The head of the Union Square Hospitality Group in New York City announced Monday that he was ending the company’s Hospitality Included system, in which menu prices were raised to cover higher pay and benefits for servers, and tips were politely refused.
“…we are concluding the chapter on Hospitality Included, and reopening with tips, all the while advocating for policy changes that will introduce much-needed equity into the compensation system,” Meyer said in a post on LinkedIn.
He said the tip-free system he implemented had always gone against cultural norms, and that against the “precarious and unpredictable backdrop” of the pandemic, he was allowing tipping again.
In an interview with The New York Times, Meyer said he didn’t want to deny extra money that servers might be able to earn.
“We don’t know how often people will be eating out, we don’t know what they are going to be willing to pay. We do know that guests want to tip generously right now,” he said.
When Meyer announced the elimination of tips, he said he was doing it to create a more equitable system in which back-of-the-house staff could be compensated similarly to front-of-the-house staff, noting that servers, in effect, got raises any time menu prices went up.
On Monday he said his opinion on the source of the problem had changed.
“We’ve come to believe that it’s the inability to share tips that is the problem, not the tips themselves,” he said.
The jurisdictions where USHG operates, New York City and Washington, D.C., do not allow tips to be shared with back-of-the-house employees, although federal law does allow it at restaurants that pay servers the full minimum wage, according to a United States Department of Labor Ruling last year.
“Our ultimate goal is for your tips to be shared among our entire team, so both kitchen and dining room teams can benefit when a guest has a great experience,” Meyer said on LinkedIn. “That will take a shift in public policy and we are actively doing all we can to persuade state and federal lawmakers to make that change.”
In the meantime, he said, USHG restaurants would be providing a share of revenue to kitchen staff and “and will be increasing total compensation by an average of 25% across our full-service restaurants.”
Meyer’s implementation of Hospitality Included in 2015 opened a debate about the restaurant system, and many operators also tried to do away with tipping, although most ended their experiments in response to dissatisfied servers and, often even more so, customers who balked at higher menu prices: Seeing a steak that was once $35 suddenly priced 20% higher to $42, for example, caused traffic and sales to suffer.
A few restaurateurs did make it work, however. Amanda Cohen, chef and owner of Dirt Candy in New York City, actually did away with tipping before Meyer, in early 2015.
Others, such as Alinea in Chicago, have moved to a pre-paid ticket model, in which reservations booked and paid for in full in advance, just like buying tickets to live performances.
The examination of the restaurant industry’s inequitable system has actually gained momentum during the pandemic and the shutdown of restaurants that ensued as the fragility of the system, and of the livelihood of restaurant workers, has been laid bare.
As dining rooms reopen, more of them are reworking their models to fit into a tip-free system, such as Olivia in Denver.
Olivia co-owner Austin Carson told Restaurant Hospitality that during the shutdown, “We’ve all got a really good look at this house of cards this whole business actually is. Within 24 hours of the governor announcing the shutdown [in Colorado], we had to furlough virtually everyone on our staff. People got a really visceral look at how little margin for error there is.”
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