Union Square Hospitality Group, the business behind such New York eateries as Gramercy Tavern and Union Square Cafe, will eliminate tips at its 13 full-service venues and raise menu prices to pay its staff in November, Eater reports.
A number of upscale restaurants in the country have done away with tipping, but this will be the first that a major American restaurant group including casual eateries will institute a zero-gratuity policy.
Among other New York City restaurants to eliminate tipping are Amanda Cohen's Dirt Candy, the Japanese restaurants Riki and Sushi Yasuda, the high end establishments Per Se, Atera and Chef's Table at Brooklyn Fare. Some of these establishments added a flat service fee to customers' bills; other increased menu prices.
Union Square Hospitality Group C.E.O. Danny Meyer tried to eliminate tipping back in the 1990s, but the servers who worked for him balked at the idea, preferring to work on commission.
The company's new tip-free approach will favor all restaurant employees equally, Meyer told Eater, distributing benefits among the serving and kitchen staff. And there are other plusses: banishing tipping simplifies bookkeeping, reduces the sexual harrassment of female servers and discrimination of minorities, and eradicates the possibility of waitstaff being stiffed by diners.
Meyer will first introduce his new system, which he's calling "Hospitality Included," at the Modern, his most expensive and popular establishment. If everything goes according to plan, all 13 USHG restaurants in Manhattan and Chicago will be tipless by the end of 2016.
As for the impact on USHG employees, back-of-the-house workers will earn no less than $11 per hour. Dining room staff will start at $9 per hour, New York state's full minimum wage rather than the "tipped minimum" of $5. (That minimum is set to rise to $7.50 in January.) The "Hospitality Included" system will reward experience and seniority.
The risks for the business include scaring off customers with higher prices, losing waitstaff opposed to the new policy, and alienating investors and stakeholders. Prices on menus may rise as much as much as 25 percent, Meyer said.
But Meyer hopes that supporting fair labor practices will become as appealing to virtuous consumers as buying organic. As for the loss of power and control that comes with the abolition of tipping, Meyer thinks there are other ways can share their opinions about service and food, like an online feedback platform.
“We think that the more of our restaurants we do this with, the safer it will be for all of them," Meyer said, "And we think the more of the restaurants we change over, the more courage, hopefully, that will create for other restaurants to join in, which would then turn this into a virtuous cycle.”
Some say this could be a harbinger for a shift in the city's restaurant industry. "A prominent company like the Union Square Hospitality Group's decision to eliminate tipping will surely pave the road for other restaurants to consider eliminating tipping," said Andrew Rigie, executive director of the New York City Hospitality Alliance, in an email.
