In a sweeping change to how its restaurant employees are paid, the Union Square Hospitality Group will eliminate tipping at Gramercy Tavern, Union Square Cafe and its 11 other restaurants by the end of next year, the company's chief executive, Danny Meyer, said Wednesday.
The move will affect New York City restaurants that serve 40,000 to 50,000 meals a week and range from simple museum cafes to some of the most popular and acclaimed restaurants in the country. The first will be The Modern, inside the Museum of Modern Art, starting next month, with the others to gradually follow.
A small number of restaurants around the country have adopted no-tipping policies in the last several years. Some, like Benu and Atelier Crenn in San Francisco, levy a surcharge instead, allowing them to set the pay for all their employees. Others, including Bruno Pizza, a new restaurant in the East Village, factor the cost of an hourly wage for servers into their menu prices.
Union Square Hospitality Group will do the latter. Menus will explain that prices include "hospitality," and checks will not provide blank lines for a tip. "There will be one total, as if you were buying a sweater at Brooks Brothers," Meyer said.
Other restaurateurs will be watching closely to see whether Meyer can change the deeply ingrained culture of tipping and still make a profit.
"Danny has a lot of trust out there with his customer base," the chef and restaurateur Tom Colicchio said, "and if they're willing to pay higher prices, it's going to make it easier for everybody else. That's still my biggest concern, whether the dining public is up for it."
Colicchio said that the success of the car service Uber, whose fee includes service, "is making it possible at least for younger generations to swallow this."
His flagship restaurant, Craft, began serving lunch last month with service included in the price; tips are strongly discouraged. Colicchio said that he plans to decide soon whether to do the same at dinner and at some of his other restaurants.
"None of the waiters has quit yet, so that's a good sign," he said.
By increasing prices and ending tips, Meyer said he hoped to be able to raise pay for cooks, dishwashers and other kitchen workers, while keeping compensation roughly the same for servers, who currently get most of their income from tips. Under federal labor laws, pooled tips can be distributed only to customer-service workers who typically receive gratuities, and not shared with the kitchen staff.
"The gap between what the kitchen and dining room workers make has grown by leaps and bounds," Meyer said. During his 30 years in the business, he said, "Kitchen income has gone up no more than 25 per cent. Meanwhile dining room pay has gone up 200 per cent."
The Modern will be the pilot program, Meyer said, because its chef, Abram Bissell, has been agitating for higher pay to attract skilled cooks. The average hourly wage for kitchen employees at the restaurant is expected to rise to $US15.25 from $US11.75. Meyer said that restaurants such as his need to stay competitive as the state moves to a $US15 minimum wage for fast-food workers.
Scott Rosenberg, an owner of Sushi Yasuda in Manhattan, said in an interview in 2013 that he had eliminated tipping so his restaurant could more closely follow the customs of Japan, where tipping is rare. He said he also hoped his customers would enjoy leaving the table without having to solve a math problem.
Restaurants that pay servers a straight salary, however, give up a sizeable tax credit on tipped income. The Union Square Hospitality Group expects to lose between $US1 million and $US1.5 million -- "real money," as Meyer puts it -- on the tax credit alone.
