Restaurant tipping has always been awkward. How much to leave? Do you include the tax? Did your server ever actually bring that sriracha you requested? It’s also not the fairest of compensation models, benefiting front-of-the-house staff rather than cooks, dishwashers, and other by-the-hour workers. That’s why last October renowned restaurateur Danny Meyer announced that he would begin eliminating tipping from his 13 New York restaurants, starting with fine-dining destination the Modern.
Danny Meyer, CEO, Union Square Hospitality Group (USHG): I guess I’ve never met a mountain I didn’t want to climb. This is something I’ve been talking about for 22 years. When you go to a restaurant, you assume that the menu price pays the dishwasher, the florist, the landlord. You pay for the piece of fish, the wine. Then separately, you’re asked to pay for the waiter. For hourly workers in the kitchen, who can’t legally receive tips, it’s impossible to build a sustainable career. I didn’t know how to be the coach of a team where the offense is thriving and the defense is hurting.
Erin Moran, chief culture officer, USHG: In 1995, the minimum wage for tipped employees was $1.68, compared to $7.50 today. But line cooks were making $9 an hour in 1985, compared to [just] $11 an hour today. That dining room server is making significantly more than our team in the kitchen preparing food. That doesn’t feel great.
Meyer: We weren’t able to attract enough qualified cooks to our kitchens. When we started hearing about the $15-an-hour minimum for fast-food workers, cooks who trained at fine culinary institutions were up in arms. Every internal discussion came back to the inability to share tips with our cooks. Finally, we said, who wrote the rule that you have to [use] the tipping system? Not us. Let’s [instead] charge a menu price that accurately reflects the total cost to put food on your table.
Dino Lavorini, director of operations, the Modern: Our goal was to end up with very little difference in what customers paid, assuming that in the past they would have left, on average, a 20% gratuity.
Moran: We landed on a base hourly wage of $9 plus a weekly revenue-share program. With the revenue share, we are mitigating some of the volatility associated with a slow night.
In September, Meyer held a series of meetings at the Modern for the entire USHG staff. The idea was to get input on how to make the system work and also to win over skeptics. Servers, in particular, were worried about earning less.
Ben Thomas, server, the Modern: There were a lot of questions. There was a lot of worry, doubt, and fear. Money was a huge concern.
Meyer: We guaranteed that for at least the first three months, you will not make a penny less than you would have made under the old system. There have been weeks we subsidized the [servers’] pay and weeks we didn’t.
Sabato Sagaria, chief restaurant officer, USHG: We want to create opportunities for servers and kitchen staff to grow internally. There are [different] levels for these positions. As you gain experience and contribute more to the team, you progress to the next level and get more of the revenue share. This [clear path to advancement] puts our own employees in the driver’s seat. It’s no longer just about outlasting your colleagues.
Kapi Berhanu, line cook, the Modern: Under the old system, you had to ask somebody for a raise, which is very uncomfortable in our industry. Every day was kind of a test where you prove yourself. If you had a bad two days, that means, Oh, I don’t feel like I should ask for a raise. It’s not like an office job, where you do x, y, and z and you get promoted. As a cook, you’re kind of told, like, this is what you make.
The system went into effect at the Modern on November 19. New menus and wine lists were printed with a prominent line explaining the no-tipping policy, and checks now arrive without the customary line for a gratuity. The company says response has been highly positive so far, but not everyone on staff is convinced.
Meyer: Our waiters have enjoyed this, because they don’t have to serve you with this cloud hanging over their head, where you’re wondering if the only reason they’re being nice is to help themselves to some of your wallet at the end of the meal. That’s not why they do it.
Jason Hopple, senior server, the Modern: Now we’re not always working those [busier] nights that are most needed to pad our pay. You have the opportunity to work a lunch shift here and there, then go home and cook dinner or go out with your partner.
Thomas: Compared to when I was making tips, I’m making about 15% to 20% less. That is a con to the whole thing. There are some positive things that help weigh that out. A lot of us were working overtime to make ends meet. A normal workweek would be about 50 hours, but [now] a lot of servers are working 40 to 45 hours at the most.
Berhanu: [With the new system], I’m making maybe 33% more. It’s not a whirlwind of difference. But it does feel nice to do the things normal people take for granted. You can buy a coffee in the morning and you’re not like, Shit, I splurged on coffee, I should reel it in. You can live. In the past, a lot of us were working to survive.
The company is still tweaking the mechanics of the program, and it’s possible the revenue-share percentage could increase. Meanwhile, another USHG restaurant, Maialino, adopted the policy in February with the new Union Square Café and others to follow.
Hopple: People still try to leave tips. We adjusted our tasting menu for a gentleman who was pescatarian, and he left an extra $40. I said, "I know you’re aware [of the no-tipping policy], but I wanted to make sure that was your intention." It’s what he wanted to do. At that point, turning it away just ruins the connection you made.
Jennifer, recent lunch customer at the Modern: I work nearby and come maybe three times a year. I didn’t notice a difference in service—it’s always great. It was nice to be able to [tip more] for the people I like, but it doesn’t matter much to me.
Abram Bissell, executive chef, the Modern: We’ve seen a 200% increase in [cook] applications since we started. It’s been a huge change.
Meyer: A lot of guests are willing to pay a little more for local produce, for responsibly raised animals. Now we’re explaining, "Guess what: You need to pay a little more for how we take care of people, not just plants and animals." Tipping is like a bad drug, and it’s really hard to kick the habit. But more restaurants are joining us. I believe this is something that our industry and our society will ultimately embrace.
"There was a lot of worry, doubt, and fear. Money was a huge concern."
Ben Thomas, server, the Modern
A version of this article appeared in the April 2016 issue of Fast Company magazine.