Influential restaurateur Danny Meyer and his New York City-based Union Square Hospitality Group shocked the dining world today when they announced they would be doing away with tipping at all of their casual and fine dining restaurants, including the new Untitled at the Whitney Museum, the farm-to-table mainstay Gramercy Tavern, and The Modern, which recently received its second Michelin star. In order to raise paychecks to offset employees' loss of gratuity, the restaurants will be raising menu prices by up to 25 percent. The bold move came as a surprise to industry insiders. Reached for comment, here's how chefs and restaurateurs feel about the decision, which most agree was inevitable in today's market.
North Carolina chef/restaurateur Ashley Christensen:
"I think this is a noble and ground-breaking move. As a line cook-turned-CEO, I see so much value in bridging the financial gap between the front and back of house staff with a wage system that lives up to the culture of hospitality. But it's hard to imagine how we could adopt such a policy for our teams in our city. There's a significant blind spot, industry-wide, between this theoretical idea of abolishing tipping and how to successfully put it into practice.
"There’s a significant blind spot between this theoretical idea of abolishing tipping and how to successfully put it into practice."
Danny is taking the risk to live out the experiment, and it's nothing short of brave. I'm inspired by the trust that he is placing in his team and in the guests that dine in his restaurants; it speaks to an optimism and dedication regarding hospitality that I hope we, as a community, can rise to meet. Danny has always been a source of inspiration for our company, often raising the bar for what is possible in this industry. If anyone can forge a path to making this a common practice, it's him."
Atlanta chef/restaurateur Ford Fry who will soon to expand into Houston:
"A bold move! Going this route will highlight the value of kitchen staff... Line cooks, for instance, have technical jobs that require a polished skill set, and these folks should be recognized."
Chef/restaurateur Marc Vetri, who operates restaurants in Philadelphia (and soon, Austin):
"I think it's a great initiative to start, and there's no one better than Danny Meyer to start it. It's a broke system and it needs to be fixed. I applaud him for being the first. There is a reason why he is such a leader and motivator! It's obviously at the forefront of many discussions. We (restaurateurs) would all love to do away with the tipping system, and just pay a salary. The difficult thing is figuring out how to make it work. I'm interested to see how it can work."
New York City-based Altamarea Group's Managing Director Rocky Cirino:
"So I've given this a lot of a thought and as an organization we have as well. I will say as my initial reaction that it's incredibly brave and I tip my hat to Meyer and his organization for taking this leap. There is going to be a great deal of discomfort for all parties in this transition. It's going to be challenging to the waitstaff and the clients. It does threaten to dissuade diners because of the sticker stock. Of course Mr. Meyer has an outstanding reputation in the industry, which is going to help mitigate this shock. He can afford to do this with less fear than a smaller organization or a mom and pop.
It's no secret that we all have much higher costs coming down the pike, and you could argue that Meyer is using this as a cover to raise his prices."Here's how I see it: A lot of this has to do with the fact that wages are going up for tipped employees. Here in NYC they are phasing out the tip credit, and it's no secret that a dramatically higher minimum wage is coming. In addition, if you look at menu prices in general, they have not risen with commodity prices, with protein prices, with transportation costs. I'm familiar with how people see prices here in New York. The $30 entree, while it may seem like a lot to some people, the $40 entree is going to have to become the new normal. It's no secret that we all have much higher costs coming down the pike, and you could argue that Meyer is using this as a cover to raise his prices. That's totally fine, I'm not criticizing. We all have to absorb the rising prices in food and transportation. If he's raising prices 10 to 20 percent, I'd like to think that's not all going directly to staff. As a good business practice it wouldn't... but it would help offset some of these other costs. I have to assume with these increased prices, some of that profit is going to be finding its way into covering the food and transportation increases. It's not just the wage issues, it's other things. I think the public is so accustomed to these prices and that's got to change, and this is a way to lessen the blow."
Legendary New Orleans restaurateur Ralph Brennan:
"Evolution is inevitable, and Danny is certainly a pioneer in this endeavor. The industry will be watching closely."
Philadelphia chef/restaurateur Eli Kulp:
"This will be an absolute watershed moment for our industry and we applaud USHG for taking these steps. The idea of eliminating tipping has been a very big conversation in our company lately, as well. There are so many different complexities and potential pitfalls surrounding this that it has been difficult to fully understand not only how it can be done, but done in a fair and equitable way. Reading this, Union Square Hospitality Group has brought up even more of these complexities that we didn't account for. I am convinced that it will take a company like USHG to allow this move to truly gain traction.
There is no doubt that as an industry, we are facing new challenges, none of them greater then staffing quality people in the kitchen as well as our service teams. I think what they are saying here can potentially help fix a very broken system. There's a tipping point, and when the tipping point is met, there will be a universal acceptance of this new reality."
"It means a cultural shift of huge proportions... and in the short term, this could be disastrous for business."
Pok Pok empire builder Andy Ricker, who has restaurants in Portland, NYC, and Los Angeles:
"What Danny Meyer/USHG is about to do is what we all are going to have to do eventually in this sector of the industry if the labor market, and all the laws and rules that are coming down the pike, stay on their current trajectory. But it means a cultural shift of huge proportions, both from the standpoint of tipped employees and the dining public, and in the short term, this could be disastrous for business. If anybody can pull it off, he can. We'll all be watching."
Chef/empire builder Mario Batali:
"He is a genius and always ahead of the curve. This is the future of dining in the U.S., and all of the players on the team will find a more fair share of the sales in their pockets at the end of the week."
Donnie Madia, co-owner of Chicago's One-Off Hospitality Group:
"Who else but Danny Meyer could possibly pull this off? Our compliments to his and his team's innovation. There always has been a division between back of the house and front of the house pay, maybe this is an opportunity to level the playing field. We look forward to seeing how USHG puts this into play."