New York Restaurateur Danny Meyer Bans Tipping; Is This A Game-Changer For The U.S. Restaurant Industry?

New York City restaurant owner Danny Meyer, whose holding company owns a dozen or so of The Big Apple’s toniest eateries, has announced a plan to ban tipping at all of his restaurants, instead paying servers a higher wage and increasing menu prices significantly, the New York Post is reporting.

Danny Meyer tipping

Meyer’s Union Square Hospitality Group owns 13 top-tier restaurants in New York, including Blue Smoke, The Gramercy Tavern, and The Modern, located inside the Museum of Modern Art. The Modern will be the first of Meyer’s restaurants to institute the tipping ban. If it works, Meyer’s other NYC restaurants will introduce tipping bans as well, with all 12 of his restaurants going no-tipping by the end of 2016.

Meyer’s motives for banning tipping aren’t 100 percent altruistic, however. As New York Post lifestyle writer Steve Cuozzo notes, looming minimum wage increases in New York City are bound to shake up the restaurant industry, and banning tipping in favor of more uniform wages may make more sense financially.

Danny Meyer Tipping Ban

The move also puts Meyer’s restaurants in a position to attract better talent, both in the back of the house – that is, cooks, dishwashers, and the like – and the front of the house – servers, busboys, and such. Thanks to a new revenue-sharing program in place of tips, no back-of-the-house employee in Meyer’s restaurants will make less than $11 per hour, and no one in front will make less than $9 per hour.

“Unfortunately, many of our colleagues — our cooks, reservationists and dishwashers, to name a few — aren’t able to share in our guests’ generosity, even though their contributions are just as vital to the outcome of your experience at one of our restaurants.”

The cost of providing higher wages will be passed on to diners. Rather than having to do quick calculations when presented with the bill, diners will simply pay about 20 to 25 percent more than they’re paying now. That means the price of the tasting menu at The Modern (currently $138) will go up to $167 or more once tipping is banned.

Cuozzo is convinced that Meyer’s no-tipping policy will transform the American dining landscape, considering the clout his restaurants have in the U.S. culinary scene.

“Many customers and employees will go bananas — at first. But the new way of doing business might save the American dining scene from its lack of professionalism compared with other countries.”

Cuozzo points out that the current culture of tipping in restaurants puts servers in a position where they have to “grovel” to win the favor of their patrons and make a living wage. Further, he says, creating a tipping pool from which back-of-the-house employees draw some of their pay leads to them earning a “pittance.” Further, restaurant managers are known to take a cut of the tips off the top just because they can.

This culture, he says, leads to a lack of professionalism and a high turnover rate in American restaurants. And if Meyer’s no-tipping policy in New York takes hold, expect a seismic shift in the American dining experience outside of New York.

On a busy weekday lunch service at The Modern, however, not all customers were on board with the proposed no-tipping policy. Diner C. Green, who came all the way from Florida, said that it’s up to the customer to determine how much a server gets paid.

“I don’t think the price could get any higher. I would say the tip is better because then the patron is the one who gauges the service.”

Do you think Danny Meyer’s plan to eliminate tipping is a good idea for the restaurant industry? Share your thoughts in the comments below.

[Image courtesy of: Shutterstock/Jason Lund]