Restaurateur Danny Meyer's bid to revolutionize the dining industry by eliminating tipping appears to have had a rocky rollout in the two years since the "Hospitality Included" model was first introduced at The Modern. An article written by a former Union Square Cafe server published on Grub Street reveals turmoil in both front and back of house operations, including high rates of staff turnover at the Union Square Hospitality Group restaurants that have implemented the practice.
After seeing dips in paychecks—one front of house worker reports a drop of $10,000 annually from her typical annual pay of $60,000 at Union Square Cafe, for example—there have been mass exoduses from Union Square Cafe and Gramercy Tavern, where the company says turnover was "up in the third quarter this year." Since 2016, most of the front of house staff at Maialino has turned over twice, and the article states that "a significant group" of both front and back of house staff have left from North End Grill.
When the practice first debuted, non-salaried employees received an hourly wage and were enrolled in a "revenue share program" directly tied to the restaurant's earnings. But the restaurants haven't been able to maintain the volume of diners that showed up prior to the Hospitality Included model; as a result, employee paycheck amounts have reportedly dropped. USHG's chief culture officer Erin Moran told Grub Street the situation has "dramatically affect[ed] our front of house teams."
The high volume of turnover feeds back into the system negatively in the form of undertrained staff, which, when the whole point is excellent hospitality, doesn't sit well with diners. And those staff who do stay are now in a position of having to apply for raises to see an increase in their salaries, though staff do concede that the company offers a better benefits package than most service industry gigs.
Amanda Cohen, owner of Dirt Candy, went through her own adjustment period after eliminating tipping and implementing first an "administrative fee" and then to the service included model to compensate her staff. Though she says the road has been tough, she would "never go back" to the old tipping model.
"It's hard to do the right thing and treat your servers as valued staff members and not as servants who work for tips, but just because it's hard, it doesn't mean it's not worth doing," Cohen told Gothamist in an email today. "Dirt Candy went no tipping long before Danny Meyer, and all the challenges he's facing are ones we had to deal with, too. But Dirt Candy learned to deal with them. Going no tipping isn't a spray-on solution, it's the most intense change to your business model you'll ever undertake and you need to do it shoulder-to-shoulder with your staff, your managers, and your customers, and it requires constant work."
At the end of the day, it seems Meyer's staff are open to the idea of Hospitality Included, but haven't yet been satisfied by the manner in which the program was introduced. "In the long run, if Hospitality Included ever works, I wouldn't be surprised. But it's going to take a while," one former employee told Grub Street. "There are too many moving parts before they figure it out."
A lot of that future success also depends on diners making the leap to increased prices on dishes or adapting to things like administrative or service fees added on to checks. Recently, Meyer and other restaurateurs in NYC and San Francisco were named in a new proposed class action lawsuit that alleges that the no-tipping practice is part of a "sophisticated unlawful conspiracy to put that money into [restaurant owners'] own pockets."