To tip or not to tip? Part 2: What actually happens when restaurants ban tipping

From feedproxy.google.com, by Justina Huddleston
To tip or not to tip? Part 2: What actually happens when restaurants ban tipping

Photo by Al / Flickr

Photo by Al / Flickr

The restaurant industry is seeing big changes in the way it pays its workers. I’ve covered the details here, but how are restaurants putting alternative tipping and payments into practice?

Let’s look at some of the more notable instances below and get a more comprehensive look at the pros and cons of the no-tipping trend.

Alinea

Staff at Alinea in Chicago benefit from a mandatory 20 percent service charge that goes towards their salaries. Like many upscale restaurants, the restaurants has never operated on a standard tipping model – however, Alinea (and its sister restaurant Next) is unique in that customers pay the service charge upfront, when they book a table.

Bar Marco

At Bar Marco in Pittsburgh, servers are paid a base salary of $35,000 a year, including benefits and paid time off – but don’t receive tips. They do, however, receive bonuses, and after the first two months operating under the no-tipping model, management reported increased profits.

Fedora

Restaurateur Gabe Stulman experimented with a no-tipping policy for four months at his New York restaurant Fedora, but switched back to the traditional model. Apparently, Stulman struggled to balance menu price hikes with reasonable wages – customers were turned off by the higher prices, but staff was (understandably) reluctant to accept a pay cut. They reverted back to a regular tipping policy in the spring of 2016, but kept a small menu price hike to help continue paying back-of-the-house staff a better wage.

Joe’s Crab Shack

Joe’s Crab Shack believed in the no-tipping hype and jumped on board in late 2015, making it the first national chain to do so. Joe’s eliminated tipping and increased menu prices at 18 locations, while giving servers a starting hourly wage of $14.

However, after a drop in sales and a higher employee turnover rate, in May 2016 the chain switched 14 of its 18 test locations back to the traditional tipping model.

Momofuku Nishi

David Chang’s Momofuku Nishi in New York initially opened with a no-tipping model, but after five months, it switched to a traditional tipping model in June 2016. Menu prices, which had previously been hiked to cover the cost of the employees’ wages, were reduced as a result of the switch. The restaurant had faced criticism over the cost of some of its dishes.

Roman’s

Brooklyn restaurateur Andrew Tarlow converted his Italian restaurant Roman’s to a no-tipping model in January 2016. But the transition was a struggle. Once tips were eliminated, some front-of-the-house staff saw a big drop in pay, even after being guaranteed $15-$17 an hour. Back-of-the-house got a raise to $15 an hour, which helped even the scales between front- and back-of- house, but even so, many of the servers were dissatisfied with the change. Management stands by its decision to switch to a no-tipping model, believing that the guaranteed wages for both BOH and FOH staff are fair, and that over time it will become the norm.

In spite of the difficulties faced during the transition at Roman’s, this May, Tarlow eliminated tipping at two of his other restaurants, Reynard and the Ides.

Sushi Yasuda

This high-end New York sushi restaurant follows the Japanese model – all employees are paid a living wage in their salary, and tips are not accepted. The restaurant eliminated tipping in 2013, and is proof that a non-tipping model can be successful.

The Modern

Perhaps the poster child for the no-tipping policy, restaurateur Danny Meyer eliminated tipping at New York’s The Modern in November 2015. It was the first of his 13 restaurants to ban tipping – hospitality is included in the menu prices instead. In the months following the switch, The Modern boasted its most profitable month in history, saw a decreased employee turnover rate, and received a record number of job applications.

Cooks saw a $2/hour wage increase, the manager salary was raised to $50,000 a year, and servers were paid a wage based on the assumption of a 21 percent tip on each bill. The cost was offset by raising menu prices.

Meyer admits that not all restaurants can expect such success when switching over to the no-tipping model – not even his own. The Modern received considerable press before making the switch, which likely influenced the amount of business it saw in the months following. Nevertheless, he has since eliminated tipping at all of his restaurants – and only time will tell if it sticks.

"To tip or not to tip? Part 2: What actually happens when restaurants ban tipping" originally published on The Menuism Dining Blog.