Danny Meyer Says Tipping Is a Hoax That Fosters Inequality

Tipping is an institution firmly embedded in American culture, but it’s one that many argue is terribly out of date — and no one has done more to oust it than Shake Shack founder and restaurateur extraordinaire Danny Meyer.

In October 2015, Meyer made the bombshell announcement that he was eliminating tipping across all his Union Square Hospitality Group restaurants, setting off a movement that numerous restaurants across the country have joined (to admittedly mixed results). Earlier this month, as Yahoo Finance reports, Meyer went on WNYC’s The Sporkful podcast to discuss why he believes tipping should go extinct:

Tipping is actually one of the biggest hoaxes ever pulled on an entire culture, the American culture. Tipping started in our country right after the Civil War. The restaurant industry, as well as the Pullman train car industry, successfully petitioned the United States government to make a dispensation for our industries that we would not pay our servers. But it wasn’t considered slavery because we would ask our customers to pay tips and therefore no one could say they were being enslaved. And no surprise, most of the people who were working in service professional jobs and restaurants and in Pullman train cars were African American.

That’s the history of how it started in this country. You don’t see it in Asia, you don’t see it primarily in most European countries. But that’s what it was, it created a completely false economy so that when you see a menu price at a restaurant, you know and I know that it includes the cost of the food, the cost of the linen, the rent, but it doesn’t include the service and here’s what finally moved me to my own tipping point a year ago.

What is a tip? It’s a multiplier of menu pricing and as menu prices have gone up, so too has the multiplier over the course of my career which is now 30, 31 years. Tipped employees, happily for them, are making about 300 percent of what they were 31 years ago. During that same period, everyone in the kitchen — the dishwasher, non-tip eligible employees — have seen their hourly income go up about 20 percent.

As host Dan Pashman points out, these days the majority of servers and other tipped front-of-house positions are white, while minorities are more likely to hold non-tipped positions where wages have stagnated. And the disparity doesn’t end there: A 2014 study found that “both white and black restaurant customers discriminate against black servers by tipping them less than their white co-workers.”

Meyer’s “Hospitality Included” plan put in place at all USHG restaurants implemented a hike in menu prices and an elimination of the tip line on bills, boosting pay for back-of-house workers to help smooth out the disparity between servers and kitchen staff. Meanwhile, Meyer’s wildly popular burger chain Shake Shack just raised menu prices slightly in order to give its workers a raise.

• The Restaurateur Who Got Rid of Tipping [The Sporkful]
• Danny Meyer Is Eliminating Tipping [E]
• Read Restaurateur Danny Meyer’s Post-Election Letter to Employees [E]

[H/T: Yahoo Finance]