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Fine Dining’s Exploitative Tipping System Is Dying

Illustration by François Maumont

In the middle of October, Danny Meyer made a momentous announcement: He would eliminate tipping in all 13 of his restaurants by the end of 2016 and raise menu prices in order to boost his employees’ pay. Word came three weeks after Tom Colicchio, who long ago opened Gramercy Tavern with Meyer, announced he would eliminate tipping at lunch at Craft. Meyer’s “hospitality included” system will not be the familiar mandatory service charge for parties over six; there will be no “additional service” on the check guilting customers into paying more on top of the automatic gratuity. The change, which began in November at The Modern, his restaurant in the Museum of Modern Art, involves raising menu prices 20 to 35 percent and listing one total on the check: no tip line, no “additional service” line, no way to leave extra money except cold cash on the table or palmed on the way to the door. Meyer says he is emulating Uber, right down to a new five-star rating system for customers to fill out.

The change is long overdue, especially for anyone who faces human-adding-machine confusion at the end of a long dinner. Tipping is a ridiculous, antiquated system that almost never does what diners think it does and neglects half the staff working equally hard to give you a good dinner. Think a few dollars more will reward that nice server who brought you four bottles of Vouvray to help you find one you liked, or a few dollars less will punish the server who brought a 1995 Bordeaux to the table stone-cold and feigned condescending bafflement when you said red should never be served at less than 65 degrees? Think again. At almost any high-end restaurant, tips are pooled: An extra or withheld dollar or two will result in a few cents’ difference that will never be traced to you. Your gesture is both mute and moot.

The best way to get your message across is not through passive-aggressive punishment or misplaced largesse. It’s to say something to the server or manager at the exact moment you’re unhappy, give them a chance to right a wrong, and either come back or withhold your future business. Besides, most people tip what they tip no matter what they feel on a given night. The annual variance in tips, said Nick Kokonas, the owner with chef Grant Achatz of Chicago restaurants Alinea and Next, before his restaurants did away with tipping about five years ago, was 0.1 percent. Again: mute and moot.

Most galling to anyone like me who cares about the economic ecosystem of a restaurant, not to mention lofty matters like food justice and racial and gender equality, is that in most states tips, by law, belong to servers who are in view of diners. It is illegal in many states for owners to distribute them to workers who, through somewhat arbitrary definitions of the Fair Labor Standards Act, are not tip-eligible employees. Well-meaning attempts to let the almost-tip-eligible share tips—for instance, giving telephone-working “reservationists” a few hours at the check stand or sommeliers a cut of tips even though they’re salaried managers—can result in class-action lawsuits that cost restaurateurs millions in settlements. Not every restaurateur who tries to give busboys and prep cooks a share of the tips is noble, of course; large operators can try to systematically exploit the tip system to beef up miserly wages to non-tipped employees, and they deserve to be sued. But the stars you read about paying settlements—like Mario Batali and Daniel Boulud—are much too smart, nobility aside, to try to skim tips.

Meyer tried to do away with tips at Union Square Cafe more than 20 years ago only to have his servers balk. As Ryan Sutton reported in a comprehensive Eater piece about the announcement, just before the new system was to go into place, they suddenly forgot the snowy nights they were sent home early and empty-handed and the nights Meyer saw them in tears because a room full of European customers didn’t think we tip over here.

So what’s changed? For one, the increasing success of activists moving to end the tipped minimum wage, a jaw-droppingly low $2.13 in many of the 43 states that still allow it, with the excuse that servers will make more than the prevailing minimum wage if they get tips. In theory, owners are supposed to make good on any disparity if hours worked plus tips don’t add up to the regular minimum wage, but in practice enforcement is minimal to nonexistent. (The seeming slave wages have slavery in their history; tipping first arrived in this country when employers saw no reason to pay regular wages to recently emancipated slaves who found work as servers and porters.) For owners, tipping saves them FICA payroll taxes; servers are responsible for reporting and paying taxes on their tips. It’s a deal servers have been willing to live with for the prospect of a possible average $30 to $40 an hour when cooks are shvitzing unseen for an unvarying, say, $12 to $15 an hour.

The activism you’ve likely seen around food-service workers and minimum wage—the marches on McDonald’s—is not in Meyer-Colicchio-style restaurants. It’s for fast-food service workers, predominantly women (66 percent) and predominantly racial minorities, who have consistently been denied full-salaried 40-hour-per-week jobs. These are the workers the Restaurant Opportunities Centers United have been fighting to help. ROC wants to abolish the tipped minimum wage nationally and make all restaurants pay all workers, front and back of house, “one fair wage.”

Kokonas, who had been a derivatives trader before becoming a restaurateur, was shocked to discover how difficult it is to do just that. He said he went into the restaurant business assuming he could “pay everyone a salary and annual bonus, have performance reviews, treat it like a law firm or an internet company.” But no. The job definitions of the Fair Labor Standards Act, which he thinks are essential to protect fast-food and low-wage workers, allows few cooks or servers to be paid salaries instead of hourly wages. Even if an owner wants to, he or she can’t simply call all the waiters managers.

The deal is not one that cooks have been willing—or able—to live with. Owners from Minneapolis to New York City report a chef shortage, mostly because wages can’t keep up with other vocations and are falling farther and farther behind servers’ wages. Meyer reports that for the first time in his more than 30 years as a restaurateur, more graduates of the Culinary Institute of America—which costs $30,000 a year—are working in the dining room of his North End Grill than in the kitchen. Service is barely taught at culinary schools. It has traditionally been beneath their notice. But now graduates can’t pay off student loans on a cook’s salary, let alone live. Thus cooks in fancy restaurants who ask to pick up a few server shifts.

Several trends, then, make this the moment to abolish tipping in high-end restaurants. As activist groups like ROC succeed in more states, or Andrew Cuomo succeeds in raising the New York state minimum wage to $15, as he says he will, restaurant owners will need to pass on their costs in higher menu prices. The already untenable disparity between front- and back-of-house workers will only grow, as servers get higher tips based on bigger checks. Meyer thinks this makes now the right time for other owners to risk the inevitable sticker shock. It can be high: If owners figure in the cost of FICA on top of the standard 18 to 22 percent tip, per-item increases can rise more than 30 percent.

Customers aren’t particularly rational, Kokonas points out: They might balk at a $13 hamburger and go around the corner for one that’s $9.99, even if with a tip they’d end up paying the same. Servers might not be so rational either, particularly workers looking for quick seasonal hits. After six or twelve months, Meyer told me, “Tipped employees [will] need to be very, very happy, or I fear it won’t work.” Much will depend on the formula of raising menu prices so as not to scare diners away and distributing the extra 20 to 30 percent equitably and openly. As Kokonas points out, restaurant owners are free to pocket the rise in menu prices, while tips carry mandatory (and inequitable) distribution requirements. Company culture makes successful teamwork, the management saw goes, and it’s one Meyer built a company on (and spelled out in Setting the Table, a much-read book in the industry). It’s what most reliably produces good service. And company culture is what will bring customers back and build staff loyalty.

But culture can go just so far, and how far that will be is something Meyer will be watching this winter. The new distribution of income does seem certain to bring in cooks. One piece of data Meyer shared with me was the rise in interest in working in The Modern’s kitchen: Abram Bissell, the executive chef, told Meyer he’d gotten two to three applications a day in the two weeks after the no-tips announcement, compared with two to three applications a month in the previous year. “Let’s hope the interest continues,” he added. “Trueonly a few weeks,” Meyer wrote me. “But that’s a 2,500 percent increase!”

I hope the rest of the news is good. I’d like the assurance of knowing that the people I can’t see will be treated as fairly as the people I can see. I’d also like not to be a human calculator after every meal.