Danny Meyer's 'no-tipping' restaurant policy stirs up New York dining debate

Time was, a Manhattan cook labouring over a squab and foie gras croustillant might hope to earn half as much as the server who brings that dish to a table.

But the times are a-changing at The Modern, one of New York City's culinary jewels, and the first in a family of high-profile eateries about to introduce a "no-tipping" policy that might even change the way Canadians pay for restaurant fare.

Union Square Hospitality Group, which operates The Modern as well as a dozen other upscale dining spots in the city, made international headlines this week when it announced it would turn to a new business model next month for its 1,800 workers, one that eliminates gratuities and redistributes revenues to more fairly compensate the so-called "back of the house" kitchen staff.

At The Modern, that means menu items like the restaurant's signature squab sandwich may inch up in price by a "nominal" percentage, possibly in the mid-20s, according to the company.

"We believe hospitality is a team sport, and that it takes an entire team to provide you with the experiences you have come to expect from us," CEO Danny Meyer explained in a memo to customers.

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"Unfortunately, many of our colleagues our cooks, reservationists and dishwashers to name a few aren't able to share in our guests' generosity, even though their contributions are just as vital to the outcome of your experience at one of our restaurants."

Canadian precedent

Abolishing tips is a bold move, and the culinary world is watching for one particularly good reason: Meyer is widely considered among the most respected restaurateurs in America.

And if he is trying to establish a new business model, Canadian establishments will almost certainly consider following, says David Jones, the B.C. owner of Smoke 'N Water, which seats 190 diners and opened in 2014 as a no-tipping restaurant, reportedly the first in Canada to do so.

But after just three months and a wave of customer backlash and media attention, Jones abandoned the experiment and restored gratuities.

"We had to change it really just to survive financially," he said. Still, he predicts that "no-tipping is going to be the biggest restaurant trend in the U.S." within the next decade.

To make up for the lack of tips, Jones gave 15 per cent of gross income to remunerate servers at his Vancouver Island restaurant. He now wishes he had offered fixed wages instead.

"I met later with 30 restaurateurs in Nanaimo Park, and they were all saying we were hoping you'd make it," he said. "If I can find three, four, five more restaurant owners who want to try it, I'd do it again in a heartbeat."

Dirt Candy

The gratuity-free movement in New York's fine-dining scene was spurred in part by another Canadian, Toronto chef Amanda Cohen.

Her award-winning Dirt Candy in the city's Lower East Side became the talk of the town not only for its vegetables-only menu, but because it also reopened in a new location in February as a no-tipping experience.

Guests' bills include a 20 per cent administrative charge, which allows her to pay her staff above the going rates.

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"Amanda and her team at Dirt Candy really paved the way for Union Square Hospitality Group to take the plunge," USHG acknowledged in an email.

Cohen said some front-of-house staff at her old restaurant might take home $500-700 a night, whereas a cook might reap about $120.

"Part of me was like, there's got to be a way we can redo this, and I want to guarantee my back of house a higher living wage so they can stay in New York."

'Awkward for all parties'

For his part, Meyer has favoured a no-tipping policy as far back as 1994, when he wrote an op-ed in a restaurant newsletter calling the gratuities system "awkward for all parties involved."

"New York wasn't ready for it at the time," says Sabato Sagaria, USHG's chief restaurant officer. But that was before the ubiquity of the no-tipping Uber economy, as well as changes in the restaurant industry that have somewhat forced the move.

A strong countrywide food scene means cooks graduating from culinary school no longer need to make their bones in New York or San Francisco.

"Now we're having a shortage here in New York in terms of finding great culinary talent, so recruitment and retention is even more of a topic than it has ever been," says Sagaria.

At the company's landmark Union Square Cafe, he estimates servers over the last 30 years have seen earnings increase by 200 per cent, while the back of the house is only receiving 25 per cent more.

Helping push the change is the fact that minimum wages in New York's fast-food industry are also going up to $15 an hour next year.

"For someone coming out of culinary school to say, 'Mom, Dad, I'm going to work at a white-tablecloth restaurant but I'll be making less than I would at a fast-food restaurant,' that doesn't feel right," Sagaria says. "Fine dining should be driving the industry, not fast food in that sense."

He added that Cohen's success with Dirt Candy showed high-calibre restaurant patrons were up to the challenge.

'Canadian social justice'

Cohen, who was born in Ottawa, credits her "Canadianism" for inspiring the change at her Manhattan restaurant.

"I think it's sort of this sense of Canadian social justice that lives in me. I can't ask my cooks to come work for me for 10 hours a day, make $12 an hour and commute these long ways to live in an apartment with like seven other people," she said. "That's awful."

So far, she said, her servers have appreciated being able to earn as much as $200, even on ordinary weeknights. Customers have generally received the practice well.

Eventually, Cohen says, she may adopt USHG's model of rolling the hospitality costs into her menu prices.

Back at The Modern this week, where Vancouverite Phillip Low and his friend Beth Couch had just split a bottle of Chardonnay, the no-tipping idea went down as well as their black truffle cavatteli, king crab fritters and flambe with speck.

"It's a great idea, but I used to live in Europe, where tips were built into the bill," Low said. "It's more simple, like buying a garment. The price you pay is on the label."

Under The Modern's "Hospitality Included" pilot next month, the pair's dining bill would carry only a sales tax charge, but no space to write a tip, only a line for a signature.

For Low, that's another bonus of the simplified checks.

"It's better not to have to do the math," he said. "Especially if you've just had a bottle of wine at lunch."