Danny Meyer owned the restaurant-industry conversation in October 2015 when he announced that he would start to eliminate tipping from the locations within his Union Square Hospitality Group restaurant empire.


The Modern was the first of his restaurants to adopt the new strategy in the fall. In a recent Fast Company piece, Meyer and several other USHG employees—from the chief culture officer to a server and a line cook—opened up about how the no-tipping policy’s been playing out.


In order to set up the Modern’s menu in the post-tipping era, Dino Lavorini, the restaurant’s director of operations, said that they wanted the final prices to be no more than what customers would have paid had they included a 20-percent tip on top of the original prices. Erin Moran, USHG’s chief culture officer, then figured out how to pay the staff.


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.

Meyer also sought suggestions from the staff before settling on a system. Sabato Sagaria, USHG’s chief restaurant officer, says that in order to make the gig feel less dog-eat-dog, workers were promised they would see their share of the revenue increase as they progressed through the company. “This [clear path to advancement] puts our own employees in the driver’s seat,” he told Fast Company. “It’s no longer just about outlasting your colleagues.

However, the experiment has received mixed reviews from employees. Ben Thomas, a server at the restaurant, claims he’s making about 15 to 20 percent less than before, while Kapi Berhanu, a line cook, claims to make about 33 percent more. From a purely financial perspective, it seems that the back-of-house staff has gained more equal footing with the front-of-house. However, Thomas explains why people shouldn’t focus solely on the new pay system.


[pullquote]Compared to when I was making tips, I’m making…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.[/pullquote]

In response to critics who believe eliminating gratuity will lead to inferior service, one regular patron told Fast Company that she hasn’t noticed a difference (although, the magazine’s sample size is small, so her anecdote should be taken with a grain of salt).


Meyer eliminated tipping at a second restaurant, Maialino, in February. While USHG higher-ups sound confident of the move working out well, a nationwide transition to no-tipping might be more difficult—especially if extended into the beverage world. When we asked eight bartenders last year about Meyer’s idea, the responses were mixed. Several of the interviewees were strongly against eliminating tipping altogether, saying that it would cheapen the experience and undermine service.

[via Fast Company]