A New York restaurant empire is finally ending the injustice of tipping

Believe it or not, it makes everyone better off.
Believe it or not, it makes everyone better off.
Image: AP Photo/Elaine Thompson, File
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Star restauranteur Danny Meyer is getting rid of tipping at his restaurants—and is hiking prices to match. Meyer is the chief executive of Union Square Hospitality group, which owns a string of cosmopolitan New York dining staples like The Modern and Gramercy Tavern, and he announced the policy change today (Oct. 14) in a letter on the group’s website.

Meyer explained that tipping has emerged as a major obstacle to attracting and keeping talented staff. That’s because many of a restaurant’s most valuable employees, including cooks, dishwashers, and hostesses, are legally not allowed to receive a share of tips, which makes it especially difficult to reward them fairly.

Critics of tipping—ubiquitous in the United States, though rare in the rest of the world—say that it is inherently unfair, not only because it rewards food servers over food preparers, but because tips are not meted out based on the quality of service. In turn, it incentivizes servers to prejudge customers based on stereotypes about who tips well.

The big change at USHG—which will begin at The Modern and role out to the group’s other restaurants over the next year—will be risky. The restaurants will pay for the new policy by hiking prices significantly: the food blog Eater, which broke the news, reports that USHG will start with a 20% hike on menu prices, and potentially going as high as 35% to make it possible to pay a living wage to all of its employees.

“We believe hospitality is a team sport,” said Meyer, whose restaurants are famous for valuing the customer experience above all else. He is calling the new policy “Hospitality Included.”

The group will also launch a revenue share program to boost the wages of waiters, bartenders, and other front-of-house-staff. USHG chief restaurant officer Sabato Sagaria wouldn’t share any details about how exactly that model will work, but predicted 79% of the dining room staff would see their pay go up.

Could this all scare away customers? Sure—Eater notes that the price of Maialino’s much-loved devil’s chicken could go from $29 to $39. But Meyer said he hopes that rolling out the no-tipping practice one restaurant at a time will give patrons and staff time to get used to the change. He said the group will also be “highly strategic” about how the overall price increase is distributed between menu items.